FRIENDS have asked for my five cents’ worth on biodiesel in today’s unsettled climate.
Let me begin with a confession: I was once involved in a biodiesel joint venture, and the shifting government mandates that followed proved a rather stern education in policy, prices and politics.
Since then, through conversations and advocacy circles, I have come to see that biodiesel is never merely about fuel. It is a snakes-and-ladders intertwining of 4Ms - markets, mandates, ministries and money.
In today’s climate, one might add a fifth: the Middle East.
A debate reawakened
Malaysia’s biodiesel debate has been pushed back into the daylight, not least by Seputeh Member of Parliament Teresa Kok’s recent call for a faster rollout of B20.
The price of diesel has increased 50 sen to RM6.02 per litre for the week of April 2 to April 8, 2026.
Kok argued diesel price at this level has turned biodiesel from a worthy environmental goal into a more urgent economic instrument.
That is not an unreasonable view. When imported diesel becomes painfully expensive, every litre replaced by locally produced palm methyl ester starts to look less like environmental theatre and more like strategic cushioning.
When oil misbehaves
This debate has returned at a moment when the global energy market has misplaced its manners.
In late March, Brent crude moved above US$110 a barrel and briefly climbed higher during a sharp, war-driven surge, as the widening Middle East conflict and fears over Hormuz and regional shipping routes rattled markets.
However, as reported earlier, Putrajaya has had no immediate plan to move nationwide from B10 to B20 because the required infrastructure would cost about RM643mil, and neither government nor industry has shown much appetite for footing the bill.
In such moments, biodiesel ceases to be a technical file about blending ratios.
It becomes part hedge, part buffer, part political temptation.
Energy security, it turns out, is attractive until the invoice arrives.
Indonesia’s more muscular script
Across the straits, Indonesia has chosen a bolder script.
Reuters reported that President Prabowo said Indonesia would proceed with B50 this year, raising the biodiesel blend from 40% to 50%, after earlier hesitation over technical and funding issues.
Indonesia’s biodiesel programme is levy-backed and unapologetically strategic. It is not merely green policy.
It is also industrial policy, farmer policy, import-substitution policy and energy-security policy wearing the same batik shirt.
That contrast matters because biodiesel is not, at heart, a moral category. It is a statecraft choice. Indonesia sees a strategic tool.
Malaysia sees the same possibility, but also the depot bill, the fiscal exposure and the political complications that follow when edible oil and fuel begin competing more directly.
The world is already doing it
The food-versus-fuel debate often arrives dressed as moral philosophy. In truth, it is mostly economics wearing a moral tie.
The world is already participating.
America has expanded biofuel quotas. Brazil has kept and reconsidered biodiesel blend levels in response to food-price pressures.
India continues pursuing ethanol blending. Europe still relies heavily on biodiesel from feedstocks such as rapeseed and waste oils.
So when people ask whether edible crops should be turned into fuel, the honest answer is that many countries have already said yes, each in its own accent and with its own caveats.
That strengthens the case made by biodiesel’s supporters. Biofuels, they argue, are renewable, domestically sourced and strategically useful.
They can also provide price support to producers when commodity markets soften.
When crude rises, biodiesel looks commercially clever. When crop prices weaken, mandates can absorb supply.
From that angle, asking why palm should be denied a role already granted to soy, corn, rapeseed and sugarcane is hardly unreasonable.
A wider energy story
Yet even this framing is now too narrow.
Biodiesel is no longer just about turning vegetable oil into fuel.
It now sits inside a larger bioenergy ecosystem that includes bioethanol, biogas and other plant-based pathways.
Within palm oil itself, the list has lengthened. Palm oil mill effluent, or Pome, is no longer just a source of biogas.
Under the European Union’s Renewable Energy Directive, it is treated as an advanced biofuel feedstock. Palm fatty acid distillate, palm acid oil and even used cooking oil have also entered the wider biofuel conversation.
What was once a single-lane road from plantation to tank has become a busier network of side roads, diversions and competing narratives.
Biology still votes
Yet for all the policy enthusiasm, biology remains inconveniently sovereign.
Even if Malaysia and Indonesia wished to push biodiesel harder, supply does not always oblige ambition.
Current forecasts still struggle to show Malaysian output moving sustainably much beyond the 20 million tonnes mark.
Ageing palms and ageing smallholders remain structural drags on supply in both Malaysia and Indonesia.
Demand can be mandated. Supply, in agriculture, must still be cultivated – patiently and expensively.
Then comes a practical truth that policy enthusiasm sometimes glides past: biodiesel blending still needs diesel.
B10 to B50 do not abolish diesel; they dilute it. The higher the blend, the greater the substitution, but the dependence does not disappear.
So, when diesel itself becomes scarce, expensive or strategically strained, biodiesel programmes also begin to feel the limit, because they operate not outside diesel reality, but squarely within it.
There is also a quieter constraint: methanol. Palm methyl ester depends on it, and methanol availability and cost have tightened during current energy disruptions.
The case against is not foolish
None of this invalidates biodiesel. But it does make the objections harder to dismiss.
Critics warn that once edible crops are diverted into fuel, the plate begins competing with the tank, and the poorer the household, the crueler that contest becomes.
Principle, after all, is one thing. Grocery bills are another.
Higher energy prices can lift biodiesel demand. Higher biodiesel demand can tighten edible oil balances.
Tighter balances can aggravate food inflation. Buyers do not applaud such arithmetic. They ration, delay, substitute and complain.
Politics and lobbies
There is also the political layer, which deserves plain speaking. Ever since biodiesel entered the palm oil conversation, the debate has swung between promise and caution without ever
settling comfortably on a single doctrinal perch.
The planter sees stronger demand. The downstream refiner sees costlier feedstock. The food manufacturer sees margin pressure. The consumer sees the kitchen bill rising. The treasury sees subsidy risk.
The politician hears all of them at once, each certain that its own inconvenience is a national emergency. In such debates, perspective is rarely accidental; it often follows where capital sits and who pays the salary.
That is why biodiesel remains so contentious. The economics are real, the interests are real, and the subsidy question is never far from the table.
Across many countries, the pattern is familiar: governments do not ask only whether biofuels are technically feasible.
They also ask who gains, who pays, who protests, and how loudly. That is not cynicism. It is policy.
Malaysia’s real question
Malaysia’s problem, then, is not whether biodiesel is imaginable. It is whether palm oil should be treated more boldly as a strategic national asset when crude shocks recur.
Supporters say yes: higher blends could cut diesel imports and give the golden crop a more strategic role.
Cautionists respond that once the state commits to that path, it must also shoulder the bill -upfront infrastructure, later depot upgrades, logistics, compatibility issues, pricing distortions, and the politics of protection when edible-oil prices start to bite.
Both sides are, in their own way, right. One is looking at the fuel tank. The other is staring at the budget book. Neither is staring at the wrong object.
A market less forgiving than before
This debate is also unfolding in a more fragile market than before. The era of cheap palm oil may be slipping away as output growth slows and biodiesel demand rises, especially in Indonesia.
Slower supply expansion, tighter future export availability, and the structural burden of ageing trees and ageing growers are no longer abstract concerns. They are increasingly part of the market’s hard arithmetic.
The World Meteorological Organisation said on March 3 that El Nino–Southern Oscillation-neutral conditions remain the most likely outcome in the near term, while El Nino odds rise later in 2026.
Other forecasters have been somewhat more bullish on El Nino development beyond that window.
Judging by the heat already pressing upon us now, one could be forgiven for thinking the weather has begun rehearsing ahead of schedule.
Add to that the Middle East conflict, which has raised concern over fertiliser feedstocks and input costs, and the concern becomes clearer.
The risk is not merely that more palm oil is pulled toward fuel. It is that future production may itself be weakened by costlier inputs and climatic stress.
That is how a market becomes vulnerable to what might politely be called a different kind of perfect storm.
Could CPO run to RM7,000?
Plantation stocks have rallied, and with current realities intertwining, the inevitable question follows: could crude palm oil (CPO) prices climb back toward the heights of 2022, or even beyond?
The last time CPO truly went airborne was in 2022, when the Ukraine war and Indonesia’s export restrictions helped push prices above RM7,000.
That episode showed how quickly palm oil can behave less like a crop and more like a geopolitical commodity when supply shocks and policy tremors collide.
Today’s ingredients are not identical, but they are familiar enough to make the comparison worth revisiting.
A move from today’s RM4,600-plus range toward RM7,000 would be no routine rally. It would take an unusual convergence of forces - war, firmer crude oil, biodiesel pull, El Nino risk, sluggish production and perhaps a dose of speculative enthusiasm.
That combination still sits in the lower-probability range by broad consensus, but it no longer sounds entirely fanciful.
Speculation can amplify price swings beyond underlying fundamentals.
If speculative appetite rises alongside supportive market signals, a run toward RM7,000 is not inconceivable - though what speculation helps lift, it can just as quickly unsettle.
The best cure for high prices
The larger risk, as always, is affordability. An old market saying has a habit of proving true: the best cure for high prices is high prices. Once prices rise too far, demand begins to blink.
Buyers delay purchases, importers trim volumes, consumers switch, and the market begins correcting its own excesses.
Palm oil is no exception. The irony is that while demand can soften quickly, supply does not respond with equal agility.
One cannot bully an ageing palm into greater output. So high prices may contain the seeds of their own correction, but not before first giving importers indigestion, governments a headache, and the supply chain a fresh round of arguments.
Between promise and prudence
A sensible conclusion on biodiesel should resist both romance and hysteria. Biodiesel is neither saint nor sinner; it is a strategic instrument, useful in parts, but never without consequence.
It can support renewable energy, import substitution and growers’ incomes. It can also intensify food-price pressure, stretch subsidy systems and invite awkward policy interventions.
The real question, therefore, is no longer whether biodiesel is good or bad. It is how far, how fast, with whose money, and under what safeguards.
On that question, the tank, the kitchen, the treasury and the plantation gate will keep arguing for some time yet. And perhaps they should. A debate this consequential deserves more than slogans.
Ultimately, biodiesel is best viewed not as a temporary crisis remedy, but as a strategic long-term instrument for fuel security and steady support for CPO.
Malaysia would do well to study it in that light, rather than treating it as a stop-gap only in moments of stress.
All in all, one can only pray that the conflicts in the Middle East find their quiet end sooner rather than later, for the ripples they send across the world are too vast, and too troubling, to be fully imagined.
Joseph Tek Choon Yee has over 30 years of experience in the plantation industry, with a strong background in oil palm research and development, C-suite leadership and industry advocacy. The views expressed here are the writer’s own.
