KUALA LUMPUR: Malaysia's palm oil-based biodiesel consumption is set to rise by more than 300,000 metric tons annually, the Malaysian Palm Oil Board said, as the country joins top producer Indonesia in raising blending mandates to reduce reliance on energy imports.
On Tuesday, the Malaysian government said it would increase its 10% biodiesel mandate, known as B10, to a 15% biodiesel blend without giving a timeline. It will start with a 12% blend without incurring any additional production costs and using only existing biodiesel blending plants.
Malaysia, the world's second-largest palm oil producer, currently imposes the B10 mandate for the transportation sector, though a 20% mandate has been implemented in the federal territory of Labuan, Langkawi island and the state of Sarawak, excluding the town of Bintulu.
The move from B10 to B12 is expected to increase biodiesel consumption by an additional 130,000 tons per year, while the subsequent expansion to B15 is estimated to boost consumption by about 204,000 tons annually, MPOB Director General Ahmad Parveez Ghulam Kadir told Reuters on Thursday in an email response.
"The new mandate will benefit the national economy by alleviating dependency on imported fossil fuels, strengthening crude palm oil (CPO) price and reducing the burden of diesel users," he said.
The biodiesel mandate will cover the diesel fuel sold at retail stations and other subsidised sectors, Ahmad Parveez said, adding that the government may consider future expansion to the industrial sector, subject to policy decisions aligned with national interest.
The incremental increase in domestic biodiesel consumption is projected to have only a marginal impact on palm oil exports, Ahmad Parveez said, as Malaysia's CPO production capacity remains robust. "Overall export volumes are expected to remain largely stable," he said.
Malaysia produced 20.28 million tons of CPO last year and palm oil exports amounted to 15.27 million tons. (Reporting by Ashley Tang; Editing by Subhranshu Sahu)
