Malaysia to blend 2 percent biodiesel in 2008 depsite rising costs, as palm oil continue to soar

In Malaysia, the nation plans to implement the blending of 2 percent biodiesel into petroleum diesel this year, despite concerns over the rising cost of the palm oil feedstock. Frost & Sullivan has projected that biodiesel demand in Malaysia will increase five-fold by 2013 to 563,000 tonnes, and Malaysia is expanding production capacity from 1.04 million tonnes per year to 1.98 million tonnes by year end, but plants were near-idle due to palm oil costs, and most fuel being produced was for export markets governed by mandates, such as the EU.

The Malaysian national government has proposed a $103 billion “Sarawak Corridor of Renewable Energy” (SCORE) development plan, which includes heavy investment in jatropha and palm-based biodiesel production. It is not clear how the recent losses by the ruling UMNO coalition in Malaysia elections owuld affect the plan. The government made the announcement after plans were revealed for a $308 million development in Sarawak by a Malaysian-Japanese consortium that would develop 220,000 acres of oil palm and jatropha plantations to produce 240,000 tonnes of biodiesel per year.

Recently, Malaysian development efforts in palm and jatropha have been more focused on neighboring Sabah state.

Sabah announced last month that it would seek $304 million over 18 years from the Federal Government to assist in the development of its Palm Oil Industrial Cluster (POIC) in Lahad Datu.

The Sabah Land Development Board (SLDB) also demonstrated jatropha biodiesel in a Toyota Land Cruiser trial conducted at the Sabah Development Corridor Expo. The SLDB has proposed expansion of jatropha capacity in Malaysia as a poverty-reduction program, saying that farmers could earn RM 1500 per month from farming 6-acre plots of jatropha curcus, from seedlings provided by Borneo Alam Ria Biomatrix.

The SLDB general manager said that Nihon Biotech, Kelana Stabil and TKM Resources have indicated that they would invest up to RM 300 million in jatropha cultivation and would purchase the fuel for export to the US, Japan and South Korea.

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