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Time to implement Malaysia's biodiesel mandate

PETALING JAYA: It is timely to re-activate the country’s stalled B10 biodiesel mandate, given the widening spread between crude palm oil (CPO) prices and the Brent crude oil and gas prices, according to industry observers.

The latest development has made it more viable for a speedy implementation of the B10 programme (a blend of 10% palm methyl ester or PME and 90% petroleum diesel) in the transport sector.

CPO, which is trading below RM2,200 per tonne, is the main feedstock to produce PME or biodiesel.

A planter from a local public-listed plantation group told StarBiz that the government must seriously look at the B10 biodiesel implementation, as “it would be able to take up to 750,000 tonnes annually from the country’s bloating palm oil stockpile”.

“Just imagine, the introduction of the B10 biodiesel or even higher blended biodiesel in the near future would significantly help to pare down the palm oil stockpile to about 1.44 million tonnes.

“This would help to shore up CPO prices, which have been on the downtrend due to the stockpile and weak demand situation,” explained the planter.

CPO is currently hovering at a two-year low of RM2,160-RM2,200 per tonne.

He pointed out that “a higher CPO price has a significant impact on the economy. Just a RM100-per-tonne increase in CPO would amount to RM2bil in revenue for the industry.

“A higher CPO price could also support thousands of smallholders, who are dependent on this commodity for their livelihood.

“Furthermore, the leverage of the biodiesel mandate for Malaysia could also result in much higher export and foreign-exchange earnings, as 90% of local palm oil products are exported,” the planter added.

Hence, there should be more subsidies or incentives given to the industry players involved in production as well as the export of biodiesel.

Meanwhile, Malaysian Biodiesel Association (MBA) president UR Unnithan said the association is expected to meet up with the new Primary Industries Minister Teresa Kok on the B10 biodiesel programme and issues affecting the industry.

He noted that a vibrant biodiesel industry would spur the growth of auxiliary industries and create more employment domestically.

“Palm-based biodiesel is also a long-term CPO price driver mechanism. Local players seriously need the support of the government.

“Indonesia is so far ahead of Malaysia and accelerating the use of the higher-blend B30 biodiesel by next year,” said Unnithan, adding that Malaysia should also follow suit to ensure the sustainbility and competitiveness of the industry.

Currently, MBA has 17 member companies with a combined installed capacity of 2.05 million tonnes of biodiesel per annum.

The MBA members have collectively invested about RM2.2bil since 2006.

Unnithan noted that the members have been supplying palm biodiesel to the national biodiesel mandate in the transport sector, which commenced in June 2011 with the B5 programme.

The blending percentage was subsequently increased to B7 in November 2014.

Apart from domestic consumption, local palm biodiesel has been exported since 2006 to the European Union, Asia and the United States, said Unnithan.

From January to June this year, Malaysia exported 199,758 tonnes of biodiesel.

In 2017, the country’s biodiesel export stood at 235,291 tonnes.


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