Malaysia plans phased expansion of biodiesel programme, minister says
Reuters (07/04/2026) - KUALA LUMPUR, April 7 (Reuters) - Malaysia plans to expand its palm-based B20 biodiesel programme nationwide in phases, taking into account the price sensitivity of palm oil relative to petroleum prices, the Plantation and Commodities Minister said on Tuesday.
Malaysia, the world's second-largest palm oil producer, currently imposes a 10% biodiesel - or B10 - mandate for the transportation sector, although a 20% biodiesel mandate has been implemented in the federal territory of Labuan, Langkawi island and the state of Sarawak excluding the town of Bintulu.
Soaring crude oil prices driven by the Iran war and closure of the Strait of Hormuz, however, have renewed pressure on the government to accelerate the biodiesel programme.
In response to questions from Reuters, Noraini Ahmad said the government remained committed to implementing initiatives to progressively increase biodiesel blend usage over time.
"Currently, most areas in Malaysia are still on a B10 blend for the transportation sector," she said. "Therefore, there is still significant room to support an increase in the national biodiesel blend from B10 to B20 and B30."
Top palm oil producer Indonesia has implemented its mandatory B40 biodiesel programme and is looking to begin implementing B50 in July this year. Previously, Indonesia's higher domestic blending mandates created global supply tightness, making palm oil more expensive than rival oils.
Malaysia's biodiesel production hit 975,207 metric tons in 2025, meaning biodiesel production plants are operating well below their maximum production capacity of 2.36 million tons, Noraini said.
The availability of blending depot infrastructure across the country must be prioritised for upgrading, she said.
Under a five-year programme, allocations have been approved to upgrade the biodiesel blending depot facilities to B20/B30 in areas including Sandakan, Tawau, Sepanggar, and Bintulu in order to support low-carbon alternative fuel usage, she added.
"This biodiesel blending depot upgrade project will be implemented in phases to allow infrastructure improvements to be carried out in a planned and effective manner, in line with the country's current financial situation," Noraini said.