Biodiesel blend still relevant for domestic use


THE implementation of biodiesel for the domestic sector is still worth it, according to FGV Holdings Bhd as the group could channel Malaysia’s crude palm oil (CPO) as the main feedstock to produce biodiesel under the Malaysian 10% palm oil blend in diesel known as B10 or B20.

“Biodiesel outlook for this year is expected to be steadier compared to the previous year with an overall annual local demand of up to 700,000 metric tonnes (MT) of biodiesel blended locally under the Malaysian B10 Automotive and B7 Industrial mandate,” FGV spokesperson told The Malaysian Reserve (TMR) in an interview.

“However, Malaysia’s annual exports of palm-based biodiesel are likely to fall between 250,000MT to 300,000MT due to unfavourable palm oil-gas oil spread and European Union restrictions limiting the usage of palm as feedstocks for biofuel,” the spokesperson added.

Malaysia has set a target mandate of B10, which was implemented in 2019, but the adoption has been relatively low.

It is reported that Malaysia plans to implement its nationwide adoption of the B20 palm oil biofuel programme by the end of 2022.

The mandate to manufacture biofuel with a 20% palm oil component known as B20 for the transport sector was first rolled out in January 2020 but faced delays due to movement curbs imposed to contain the coronavirus outbreaks.

Commenting on that, FGV spokesperson said the latest development with regards to the B20 mandate implementation tentatively by end of 2022 as terminal upgrading needs to be worked out.

“However, staggered implementation had been done for several areas, for example Labuan and Langkawi since January 2020 and Sarawak since October 2020.

“Under the 12th Malaysia Plan, the government will conduct the necessary assessments to identify the gaps and costs required to upgrade blending depots to be B30-compliant. The government will also engage with stakeholders to address issues of manufacturers’ acceptance of B30 biodiesel,” the spokesperson added.

FGV has a market share of about 60% in the east coast region as it is the one and only biodiesel plant located in Kuantan catering for the supply of biodiesel mainly to the petroleum terminals in Kuantan and Kerteh.

“We expect a slight growth this year bearing no further Covid-19 resurgence and decline in nationwide diesel or gas oil demand,” said its spokesperson.

Meanwhile, infrastructure policy analyst and environmentalist Sharan Raj said biodiesel is still relevant in the short term because it has lower sulphur content compared to fossil-diesel.

He said electric vehicle (EV) buses have reached a financially viable stage but EV lorries have not reached a financially viable stage yet while the research to improve battery density is ongoing but it will take another eight to 10 years to become mainstream.

“B30 should be an optimal target for Malaysia as biodiesel should mop the CPO surplus and not pursue anymore expansion of palm oil plantations to protect our rainforest. However, Malaysia can begin to incentivise new methods to curb usage of diesel, especially in buses by incentivising the adoption of EV bus modification kits.

“There are existing EV technology kits to modify diesel engine buses into EV buses.

Neighbouring Singapore had adopted these methods. This is a better and cheaper option than buying new EV buses. The government should mandate that all new public transit buses should be EV and avoid funding new diesel buses,” he told TMR.

Citing Indonesia for an example, he said Indonesia is pursuing B100 by rapidly adopting B30 due to large fuel import bill as Indonesia is not a fossil fuel self-sufficient nation which is hurting the rupiah.

“Adopting B30 from B20 will cut Indonesia’s diesel import bill by RM16.3 billion per annum. Second reason is the large domestic surplus of CPO. Thus, president Joko Widodo is utilising the biodiesel policy to ‘kill 2 birds with one stone’.

“However, Indonesia’s material conditions are not applicable to Malaysia so it is inaccurate to compare Malaysia to Indonesia,” he said.