Optimal location and allocation for the development of oil palm eco-industrial town: case study in state of Johor

Abstract

In 2015, there were about 160 Mt of oil palm biomass produced by the oil palm industry nationwide. In this article, oil palm based eco-industrial town (EIT) is proposed to improve the profitability of oil palm industry while optimally utilise the availability of oil palm biomass and network infrastructure. The oil palm EIT is the integration of nine palm oil based industry and a community at the same location to promote energy and material sharing via industry symbiosis. The energy usage and waste generation are expected to reduce within the collaborated industries in the EIT. Due to the geographical location of existing palm oil mills in State of Johor, a crucial decision is required to choose a cost effective operating system and location for the development of oil palm EIT. A mixed integer linear programming (MILP) model is formulated to maximise economic performances, while selecting a cost effective operational system, either to employ centralised or decentralised system. Geographical information system (GIS) tool ArcGIS 10 was used to identify the location of existing crude palm oil mills, potential locations of oil palm EIT, and transportation network including roads and railways. Network analysis was performed to rank and calculate the most efficient network to transport oil biomass from oil palm plantation (surrounding existing palm oil mills) to the potential EIT locations via roads and railways. Generated results from network analysis were formulate as MILP model and optimised using General Algebraic Modelling System (GAMS). The optimisation results show that decentralised oil palm EIT system was the most profitable system with USD 241.54 M/y profit. The optimised model also suggested that the most efficient way to utilise abundant oil palm biomass are via crude palm oil mill, paper mill, livestock production, medium density fibre board mill, bio-diesel and bio-gas mill. The model shall assist the decision maker to identify system, location and the subindustries in the EIT in order to promote sustainability in oil palm industry and bring benefits to the industry and community.