Argus Media Limited

03/10/2023 | News release | Distributed by Public on 03/10/2023 03:57

Biodiesel group sees higher Malaysian blending by 2025

Malaysian biodiesel blending is expected to increase to 1.3mn t/yr by 2025 if the government fully rolls out its planned 20pc on-road mandate (B20) nationwide, according to Malaysian Biodiesel Association (MBA) president U.R. Unnithan.

He hopes B20 can be implemented fully this year, he said at the Palm Oil Conference 2023 in Malaysia, although it has been repeatedly delayed from an originally planned 2020 rollout because of political upheaval in the country, which has seen three governments over the past three years.

The key roadblock to ramping up biodiesel rates is insufficient blending facilities to support nationwide B20, Unnithan said on the sidelines of the event. But while the previous cabinet had committed 50mn ringgit ($11.1bn) to upgrade infrastructure at 30-35 depots, no similar funding has been proposed by the current government in its most recent budget.

Boosting domestic blending is important, as Malaysian biodiesel exports are forecast to reach their lowest in six years at just below 300,000t in 2023 as palm methyl ester (PME) receipts continue to decline from the EU, Unnithan said. Exports fell to 310,000t in 2022, down from 362,000t the previous year, and the lowest since 2017, according to Malaysian Palm Oil Board (MPOB) data.

The projected increased blend rate would be up from 1.17mn t recorded in 2022, according to consumption data from local oil companies. But despite hitting a new record high and rising significantly from 814,000t in 2021, domestic on-road biodiesel blending remains well below Malaysian nameplate production capacity, which is currently around 2.5mn t/yr according to Unnithan.

Absorbing this entire capacity domestically would require a nationwide B30 mandate, which he hopes will be reached in 2030.

Malaysia's biodiesel blending programme should be framed as a solution to lower national greenhouse gas (GHG) emissions, rather than solely a market to support palm oil prices, Unnithan added. B20 on-road alongside a B7 mandate for industry would avoid emissions of 3.88mn t/yr CO2 equivalent, according to data from MPOB and the Ministry of Plantation Industries and Commodities.

Too good to waste

The PME sector faces challenges overseas, but there are biofuels opportunities for Malaysia in the growing global markets for waste biofuel feedstock used cooking oil (UCO) and hydrotreated vegetable oil (HVO).

The MBA has proposed that the government introduce capital subsidies for setting up pre-treatment plants for feedstocks like UCO in Malaysia, Unnithan said. This would allow local companies to take advantage of upcoming growth in global HVO capacity, which requires feedstocks that have been pre-treated to lower metals and impurities content.

UCO exports rose by 18pc in 2022 compared with the year before, Unnithan said, while PME exports fell by roughly the same percentage over the period.

By Lauren Moffitt