B10 mandate takes a backseat after EU palm oil ban

Malaysian lawmakers not serious with the B10 biodiesel policy implementation with several delays in recent years

By ALIFAH ZAINUDDIN / Pic By TMR

The B10 biodiesel mandate has been pushed to the back-burner following the European Union (EU) Parliament’s decision to vote against the use of palm oil in biofuels.

IJM Plantations Bhd ED and CFO Purushothaman Kumaran

Purushothaman says the price gap between diesel and palm oil to be reduced was not an issue (Pic: TMRpic)

IJM Plantations Bhd ED and CFO Purushothaman Kumaran said any hope for the B10 mandate to come into force soon had been dashed after EU lawmakers approved draft measures to ban the use of palm oil in motor fuels by 2021.

“No, we do not know what the latest development on the B10 mandate is. Now that the EU Parliament has decided to pass the law on bio-fuels, B10 has taken a backseat. There is nothing to be excited about,” Purushothaman told The Malaysian Reserve.

He added that the government does not seem to be too serious about the implementation of the policy, which would effectively increase the quantity of palm oil methyl ester blend in petroleum diesel to 10% from the current 7%.

“Malaysia is not serious. Our lawmakers are not putting enough effort on it. We have been waiting for it to happen over the last 10 years,” Purushothaman said.

The B10 biodiesel mandate has faced several delays in recent years. The government had anticipated for the policy to be introduced on Dec 1, 2016.

However, it was postponed twice in 2017, to June and later July. No time frame has been given since In August last year, Plantation Industries and Commodities Minister Datuk Seri Mah Siew Keong said the B10 mandate was still on the cards as the government was in the middle of gathering statistical evidence to prove that locally produced palm biodiesel does not harm diesel engines.

The efforts were also dampened by pessimistic comments from automakers. German companies BMW AG and Volkswagen AG, for instance, had said that the B10 mixture is not compatible with their current diesel engines.

“We have to convince car-makers to extend the warranty to above the current 7%. This is an issue we cannot deny and we are close to solving it. The Malaysian Palm Oil Board (MPOB) has done tests and there have been no issues,” Mah said.

In addition to compatibility tests, Mah said the government was also waiting for the right time to implement the mandate when the price gap between diesel and palm oil is reduced.

However, Purushothaman said the matter was not an issue. “Technically, it should not be an issue because we are not substituting the oil. The prices will remain fluid. Therefore, it is not a problem because there will be opportunities for money to be made,” he said.

MPOB had said that the execution of the B10 mandate would consume between 700,000 and 800,000 tonnes of palm oil a year, spurring the local economy’s growth.

The palm oil industry is the fourth-largest contributor of the country’s gross national income, accounting for about 8% or equivalent to RM50 billion.

Malaysia is the second- \largest producer of palm oil, generating 39% of the world’s consumption.