Assessing the environmental and economic potential of remanufactured and refurbished engines in countries without domestic OEM facilities: A case study from Indonesia

In Indonesia, remanufacturing and refurbishment are still less familiar than other circular economy strategies such as reuse, repair, or recycling. However, these approaches offer strong potential to support the country’s goal toward Net-Zero Emissions by 2060 and contribute to the national circular economy roadmap. Among the industries applying recovery strategies, the heavy equipment sector stands out, especially given Indonesia’s active mining industry and high demand for machinery such as excavators and dump trucks. At the same time, Indonesia has no domestic original equipment manufacturer (OEM) facilities for heavy equipment engines, making recovery-based strategies more relevant and practical. This study compares remanufacturing and refurbishment strategies using Life Cycle Assessment (LCA) with the ReCiPe 2016 method, focusing on the global warming impact category. The environmental impact results are then translated into estimated carbon tax values using Indonesia’s official rate of IDR 30 per kg CO₂-equivalent. The analysis confirms that both remanufacturing and refurbishment can reduce environmental impacts compared to producing new engine components. When translated into carbon tax, these strategies also offer measurable financial savings, around USD 9.33 per unit for remanufacturing and USD 1.11 for refurbishment, compared to producing new engine components. Although current carbon tax policy applies only to coal power plants, the findings suggest it could be extended to manufacturing and heavy equipment sectors. These results help companies decide whether to remanufacture, refurbish, reuse, or replace specific parts, based not only on cost and technical factors but also on environmental impact and policy direction.