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The Malaysian biofuels industrial output is largely comprised of downstream palm oil products, such as biomass and biodiesel. The biodiesel industry has wavered from lack of clear direction and drive from the government, and doubts remain over its automotive uses. However, the outlook for downstream palm oil, particularly Palm Oil Methyl Ester (POME), remains more positive. The main products of the biofuel industry are pelletized dried waste produce from palm, biofuel gas, liquid biofuel, and biomass power. These four are expected to contribute enough power equivalent to a respective 15, 16, 13, and 75 million tons of coal by 2020. Currently, there is around 25 million tons of biomass available for export annually. Overall the bio-economy is expected to reach markets in Japan, China, Thailand, and Europe to grow 15% by 2030.


The value-adding process of making biofuel from POME is a solution that creates other downstream uses for the one of Malaysia’s primary industries. Around 650kg of POME is created per ton of processed Fresh Fruit Bunches (FFB), which emits high volumes of methane and can deplete oxygen levels when disposed of through ponding systems; causing yet more waste. When processed for biogas the POME is anaerobically digested and the resulting gas, around 20 cubic meters per ton, is collected though biogas recovery rates of around 76%.
While the biofuel sector is not the most financially lucrative, it is a smart way of turning waste in to wealth, and it coincides with the 11th Malaysia Plan (11MP). The plan is a five-year budget, which pays attention to socio-economic development and environmental protection, while the country looks to accelerate industry in pursuit of the 2020 goal of a developed nation status.

The industry is providing a tangible use for waste produce, and while it won’t revolutionize the downstream palm oil sector, this process is addressing an issue before the problem arises. Malaysia is being prudent about waste from their largest agro-industry.

The state-owned energy supplier in Sarawak, Sarawak Energy Berhad (SEB), reports that they generate 360 GWh annually from POME derived methane gas, based on a conversion efficiency of 38%. A healthy return from almost 10 million FFB a year, especially considering the Murum hydroelectric dam generates 5,542GWh and cost the company $800 million.


Biomass essentially makes use of all the washed and dried waste products that result from cropping FFB and extracting the oil. These can be used in several ways including as fertilizer, boiler insulator, co-firing (mixing biomass with either gas or coal in a combustion chamber) and even in the production of mattresses. Government expectations are that by 2020, solid biomass will rise to between 85-110 million tons and combined with the POME, it will bring in $6.83 billion and create employment for 70,000.


At the time of writing, biodiesel exports were up 12 fold YoY, to 46,601mt from 3,610mt in July 2014. These were the highest exports recorded by the Malaysian Palm Oil Board and were even 105% up on the previous month, with exports valued at $29.03 million. The market is in flux, drawn on by the 17-year-low for the ringgit against the dollar, which attracted a spike in trade with Europe, with biodiesel importers taking advantage.
The export market will be where the country will have the most success in developing the industry. Plans to roll out biodiesel across the nation have never really taken off. There are 3,197 petrol stations currently supplying biodiesel, but its impact has been relatively muted. The aim of the B7 program is to consume 575,000 tons of biodiesel, which will contribute towards a savings of 667.6 million liters of diesel a year.
The two-pronged approach of the program is to make fiscal savings through reduced diesel imports while taking advantage of export markets. This entails cutting commercial diesel with palm methyl ester, and the government has attempted to roll out programs of making B3, B5, and B10 diesel—with 3, 5 and 10% palm oil content respectively—commercially available.

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