Malaysia Biofuels Activities
Here you'll find information about Malaysia's work in biofuels. Learn more about its:
Background
The development of biofuels in Malaysia has been identified as a new source of growth for the plantation commodities industry. The concentration is on biodiesel from palm oil, because of the large domestic production of this feedstock. An opportunity for cellulosic ethanol production exists from the oil palm biomass (part of it left unutilized), but this technology is yet to be commercialized. Meanwhile, the economy is focused on creating a successful industry with what exists, which is palm biodiesel. The main concern for expanding biodiesel production in Malaysia is land availability and associated sustainability and biodiversity issues.
Production
Biodiesel production in Malaysia was 120,000 tonnes in 2006. There were five operating plants as of December 2006 with a total capacity of 258,000 tonnes per year. The government has approved licenses for the establishment of 84 biodiesel plants with a potential annual capacity of 9.26 million tonnes. However, the pace of commercialization is expected to slow down, due to the rapid increase in the cost of palm oil.
Feedstock
The primary feedstock for biodiesel production in the member economy is palm oil. Until recently, Malaysia was the world's largest palm oil producer; however, Indonesia surpassed Malaysia in 2007. Together, these economies produce about 90% of the world's palm oil. In Malaysia, nearly 11% of the total land area (about 62% of the economy's agricultural land) is devoted to oil palm. The production more than doubled during the past 10-11 years, from 7.81 million tonnes in 1995 to 16.5 million tonnes in 2006. Malaysian government policy currently allows only 6.0 million tonnes of palm oil to be converted into biodiesel.
Economics
A study by Tatsuji Koizumi and Keiji Ohga indicates that the cost of producing biodiesel from crude palm oil (CPO) was roughly U.S.$0.54 per liter in 2006. The raw material is about 80% of the total cost. Due to the increased price of palm oil in 2007, the production cost of biodiesel from palm oil in Malaysia today is probably double that in 2006.
Biofuels in Use
Malaysia introduced a type of biodiesel known as Envo Diesel, which is a mixture of 95% petroleum diesel and 5% processed palm oil (RBD palm olein). Envo Diesel is different from the biodiesel blend B5 used in Europe (it uses straight palm oil, not a methyl ester), and it is intended for local use. For export markets — and local use, only if necessary — the industry produces biodiesel (methyl ester) from palm oil and methanol.
Infrastructure and Vehicles
A small number of government-owned vehicles currently use biodiesel, comprising mainly palm oil, but commercial sales have yet to start.
Trade
According to the Malaysian Timber Industry Board (MTIB), from August 2006 until February 2007, 52,654 tonnes of biodiesel had been exported to the United States, European Union, and Japan, generating RM132 million in revenue. Malaysia may export biodiesel to European markets at the range of 300-350 thousand tons by 2010.
Policy
The National Biofuel Policy was implemented in March 2006 to encourage the production of biofuels, particularly biodiesel from palm oil, for local use and for export. The ministry formulated the Malaysian Biofuel Industry Act, which will introduce a B-5 mandate, equivalent to a biodiesel demand of 500,000 tonnes, from 2008. However, the implementation of the act has been delayed due to soaring palm oil prices. The government will wait until prices for RBD (refined, bleached, and deodorized) palm oil fall to MYR2,000 ($1=MYR3.49511) per tonne, or below, before it decides on the exact date of the introduction of the biodiesel mandate.
Sources
- Malaysia Palm Oil Board (MPOB)
- Ministry of Plantation Industries and Commodities (MPIC)
- Department of Agriculture, "GAIN Report 2007" (PDF 17 KB) Download Adobe Reader.
- Tatsuji Koizumi and Keiji Ohga, "Biofuels Polices in Asia: Trade effects on World Agricultural and Biofuels Trade," presentation at the 2007 Agricultural Forum, Arlington, Virginia, March 2007.