According to an expert, this sector also needs to evaluate its performance during extreme weather changes
By LYDIA NATHAN / Pic By TMR
The government’s plan to implement the B10 and B7 mandate must be done with strict industry standards to ensure it does not cause more harm than good.
Association of Water and Energy Research Malaysia (AWER) president S Piarapakaran said biodiesel should enhance the combustion performance, while maintaining operation and maintenance cost in the long term.
“This sector also needs to evaluate its performance during extreme weather changes that may decrease yield in a food or fuel crisis, making it a contributing factor for flooding,” he told The Malaysian Reserve (TMR) in a telephone interview recently.
Piarapakaran said implementation of the B10 biodiesel programme for the transportation sector and B7 for the industrial sector, if not properly mitigated, could incur additional costs to the country.
As such, he said all quarters must work together to maintain fuel standards.
“Vehicle manufacturers must be willing to take responsibility if something goes wrong and not pass the buck to consumers,” he added.
On producing sustainable palm oil, Piarapakaran said a prolonged wet or dry season would affect the yield — which would also affect other industries such as food and cosmetics.
“We understand that the ministry wants the industry to grow, but at the same time, risk must be identified and methods on how to control it must be ready,” he said.
When tabling Budget 2019 last Friday, Finance Minister Lim Guan Eng said palm oil and rubber are the two export-oriented commodities that have contributed significantly to the economy over the years.
He added that the palm oil sector is a major source of income for smallholders in the country.
“In order to raise the demand for palm oil and increase the sustainability of our energy resources, the government will implement the biodiesel B10 programme (comprising a mix of 10% palm oil) for the transportation sector and B7 for the industrial sector in 2019,” he said.
The budget also saw an allocation of RM30 million to assist smallholders in obtaining the Malaysian Sustainable Palm Oil certification.
Meanwhile, the government is committed to increasing the use of local rubber as a composite material for the construction of roads to boost durability and reduce maintenance cost.
Piarapakaran believes that a number of research had been carried out for the purpose, and that it would be a safe alternative.
“I think only certain roads will be constructed using this method and that is good. This way, it can be monitored closely to see if the maintenance cost could be brought down and that will be a good long-term solution,” he said.
Additionally, a Rubber Production Incentive with an allocation of RM50 million will be provided to smallholders to protect them from the effects of escalating rubber prices.
Another RM47 million will be given for the research and development of higher production of seeds, grains and fruits; while RM18 million will be used as an incentive for automation of the agro-food industry.
The agriculture industry is expected to expand a positive 3.1% in 2019 on the back of good palm oil yield, an improvement on the 0.2% projected growth this year.
The gross export growth is most likely to ease next year from 4.4% to 3.9% from its initial projection, while gross imports are estimated to grow at 4.1% in 2019.
Meanwhile, CIMB Investment Bank Bhd analyst Ivy Ng Lee Fang told TMR that the plan is nothing new and it would have a mild positive effect for crude palm oil prices, should it be implemented.
“Our rough estimate suggests that Malaysia’s biodiesel consumption could increase by around 230,000 tonnes to 767,000 tonnes with the implementation of B10 for the transportation sector, while the industrial sector could potentially soak up an additional 280,000 to 300,000 tonnes of biodiesel,” she added.