| Summary: | One of the most challenging problems in palm oil industry in Malaysia is the management of palm oil mill effluent (POME). Majority of the palm oil mills treat POME using anaerobic ponding system, which is not environmentally friendly as large amount of generated greenhouse gases is not captured but released to the atmosphere. Therefore, it is crucial to ensure a sustainable practise of closed anaerobic digestion system in the palm oil industry. This study was mainly aimed to provide evidence-based policy enhancement for POME treatment to energy generation. For this, life cycle assessment (LCA) was carried out to assess environmental impacts and life cycle cost-benefit analysis to assess the economic aspects focusing on two commercially available POME treatment technologies which are covered lagoon bio-digester (CLB, representing 36 palm oil mills with covered lagoon system) and continuous stirred tank reactor (CSTR, representing majority of the 54 palm oil mills employing closed tank system). Based on the output of life cycle analysis and interviews with palm oil mill management, thirteen possible solutions for policy enhancement were suggested. Possible solutions were ranked by experts and weighting were assigned to the possible solutions by using analytical hierarchy process, which were then used for policy enhancement. In terms of LCA, the global warming potential and acidification potential for CSTR were -4.48 kg CO2 eq/kWh and -2.21 kg SO2 eq/kWh, respectively, while for CLB the values were -4.09 kg CO2 eq/kWh and -0.15 kg SO2 eq/kWh. Both technologies produced a negative result, which equates to a net environmental benefit. However, both systems had a negative impact in terms of eutrophication potential. The CSTR nevertheless achieved a better eutrophication potential result of 0.048 kg PO43-eq/kWh than the CLB with 0.054 kg PO43-eq/kWh. With respect to life cycle cost (LCC), CSTR has a higher LCC of RM 2.60 million/year compared to CLB with LCC value of RM 2.29 million/year. In terms of cost-benefit, CSTR has a higher net present value (NPV) of RM 2.21 million/year, higher return on investment (ROI) of 11.80% and shorter payback period (PP) of 8.5 years compared to the CLB system with NPV of RM 0.91 million/year, ROI of 7.79% and PP of 12.8 years. 'Provide detailed environmental guidelines' followed by 'standardise technical guidelines for biogas installation' and 'cover open pond wall using lining' were the top three possible solutions to be considered in order to improve the existing policy for the POME treatment for energy generation. Future researchers may wish to consider social aspects related to job creation, safety and health of workers besides environmental and economic aspects. As a whole, this study allows policy makers to understand the current situation faced by palm oil mill managers and the rankings of possible solutions, offering important inputs for consideration in policy development for the treatment of POME for energy generation.
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