25/12/05 (NSTP)  -  MALAYSIA started work on biodiesel two decades ago, but the idea of palm oil powering machines on a large scale did not catch on until four months ago.
When global oil prices went through the roof and with the increasing realisation that emissions from fossil fuel were choking the atmosphere, the world started looking seriously for an alternative.

The answer is biofuel, which includes biodiesel, and with that, the palm oil sector found its Holy Grail and planters immediately saw even better times ahead.

Even without this prospect, palm oil is a RM30 billion-a-year revenue-earner.

As the world’s leading producer of palm oil, the most important component of biodiesel, Malaysia is a major new source of biofuel.

The Government wasted no time in providing full backing to research and development in biodiesel.

From Jan 1, state-owned diesel-powered transport vehicles, army trucks and the plantation industry are to begin using biodiesel on a trial basis.

Around the country, major plantation companies have quickly drawn up plans to venture into biodiesel.

Plantation Industries and Commodities Minister Datuk Peter Chin Fah Kui said biodiesel would make its debut in sectors under the purview of three ministries — Defence, Transport and his own.

The composition of palm oil in the biodiesel blend will be the B5 blend (five per cent palm oil to 95 per cent petroleum diesel).

"The move is a preparatory measure by the Government before the green oil is fully commercialised and ready for general use from Jan 1, 2007," Chin said.

"2006 will be a trial period to identify any teething problems. Selected public buses, taxis and army trucks and 4-wheel drive vehicles will use biodiesel while oil palm millers will feed their generators with biofuel to power their mills."

Local companies which have announced their biodiesel venture plans include Sabah-based Palm Oil Biodiesel International Sdn Bhd, IOI Corp Bhd, Golden Hope Plantations Bhd, Johor-based Carotino Sdn Bhd, Ipoh-based Carotech Bhd, Kumpulan Fima Bhd, Kulim (Malaysia) Bhd, TSH Resources Bhd and the Federal Land Development Authority (Felda).

Malaysian Palm Oil Association (MPOA) chairman Datuk Sabri Ahmad said that palm oil had come a long way from being a food ingredient to oleochemicals, biomass and now a renewable fuel for transportation and power generation.

Sabri said gone were the days when crude palm oil (CPO) prices dipped below RM1,000 a tonne.

MPOA forecasts CPO prices to stay between RM1,500 and RM1,600 a tonne next year and between RM1,600 and RM1,700 a tonne in 2007. CPO prices are now hovering around RM1,400.

IOI Corp executive chairman Tan Sri Lee Shin Cheng is equally optimistic about the country’s golden crop.

"Prospects are getting better and better due to palm oil’s growing versatility from oleochemicals and now to biodiesel," he said at the company’s meeting recently.

Biodiesel, to be used in diesel car engines and biofuel for power generators are a combination of any vegetable oil — palm oil, rapeseed or sunflower oil — with petroleum diesel at a pre-determined ratio.

Research and development on biodiesel has been carried out for decades worldwide.

Work on palm oil-based biodiesel started in Malaysia in the 1980s and was spearheaded by the Malaysian Palm Oil Board (MPOB).

However, it received lukewarm response.

Today, the MPOB said Malaysia was collaborating with South Korea, Hong Kong and Germany in producing biodiesel.

"The world now realises that crude oil prices can touch US$100 (RM370) a barrel and efforts to find other sustainable sources of energy must begin now, hence the sudden interest in biodiesel," said a RHB Group plantation stocks analyst.