20/12/2011 (The Star) - OIL palm biomass waste is fast turning into a highly-prized commodity in Malaysia.

What more with the National Biomass Strategy 2020 targeting at wealth creation for the palm oil industry recently officiated by Prime Minister Datuk Seri Najib Tun Razak.

This strongly reflects the Government's full recognition of the tremendous potential from the oil palm biomass and the creation of new downstream operations from it.

In fact, the biomass strategy which was prepared by Agensi Inovasi Malaysia, a unit under the Prime Minister's Department, also highlighted that there would be a significant contribution to the country's gross national income (GNI) of about RM30bil by 2020 via full utilisation of the palm oil industry by-product such as the empty fruit bunches, shells, mesocarp fibre, felled tree fronds and trunk as well as palm oil mill effluent.

The local palm oil sector generates an estimated 80 million tonnes of biomass last year, and is expected to increase to about 100 million tonnes by 2020, primarily due to increases in yields.

From the oil palm waste, more downstream operations such as the production of wood products, pellets, bio-energy, biofuel and bio-based chemicals can be created, thus generating about 66,000 jobs by 2020.

In a nutshell, the indepth biomass strategy is like a road map for palm oil industry players such as plantation operators and palm oil millers to realise that there are indeed big bucks to be made from the humble oil palm biomass waste.

However, while the targeted RM30bil GNI by 2020 certainly looks impressive on paper, one question that quickly comes to mind is whether the actual implementation will be a successful one.

For example, the cost to transport the oil palm biomass itself can be quite high especially from plantations located in remote areas where good infrastructure is still lacking.

Furthermore, apart from the sufficient feed-in-tariff rates for oil palm operators which use their biomass for renewable energy (RE) projects, what other incentives will the Government offer to encourage more palm oil industry players to venture into other new downstream projects using biomass as feedstock?

While large plantation companies like Sime Darby, IOI Bhd and even Felda Group, given their strong financial back-up, are making steady progress in several oil palm biomass related projects, others like independent medium and small-sized planters and palm oil millers despite having deep interests, are still trying to convince banks for loans on such projects.

Therefore, the Government as a follow-up to the National Biomass Strategy 2020 will certainly need to come out with a more transparent policy and more attractive incentives on the oil palm biomass related projects to ensure full success.

Towards this, Agensi Inovasi Malaysia has made several recommendations such as new policies to reduce the private sector risk for the Government to consider.

This includes the formation of cooperatives among plantation owners, transparency in potential opportunities and a sound portfolio approach as well as creation of two new entry point projects under the Palm Oil National Key Economic Area.

It is paramount for Malaysia, as the world's second-largest producer and largest exporter of palm oil, to capture the “biomass” opportunity via significant coordination and cooperation among all multi-stakeholders within the industry, and not let it fall into the wrong hands of opportunists.