13/03/2012 (Bernama) - Malaysia has not optimised fully the potential of its palm oil industry, although it is the world's second largest producer of crude palm oil.

So far, palm oil has been seen as the provider of vegetable oil, but with more and more environment-friendly steps being taken, palm oil biomass could well become the source of renewable energy.

And looking at Malaysia's enviable position in the palm oil industry, the country is expected to position itself strategically in order to take advantage palm oil's potential.

Recognising the possibilities, the government has come up with the Malaysian Biomass Initiative (MBI), one of the three quick-win projects under the Global Science and Innovation Advisory Council (GSIAC).

The GSIAC is chaired by the prime minister, the joint-secretariat being the Malaysia Industry-Government Group for High Technology (MIGHT) and the New York Academy of Sciences (NYAS).

BIOMASS' POTENTIAL IN MALAYSIA
MYBIOMASS Sdn Bhd Managing Director Puvaneswari Ramasamy, said much needed to be done to tap the potential of palm oil biomass, especially by the local plantation companies that are currently focusing on upstream activities.

"It is estimated that Malaysia generates up to 80 million tonnes of residue or waste annually from palm plantation, largely consisting of empty fruit bunches (EFBs), trunks, fronds, shells and palm kernel cakes. However, the residue's potential has ne been tapped yet," she told Bernama in an interview recently.

According to a report, in Europe alone, biomass accounts for almost 70 per cent of all renewable energy and the 800 solid biomass power plants across the region are a proof of this.

A similar trend is also seen in countries rich with biomass resources, such as China, India, Indonesia and Thailand, where heavy investments have been made in order to capitalise on the potential of forestry residues, agricultural waste, industrial waste and much more.

Biomass is not only useful as an energy source, but also as a feedstock for high-value chemical production. The use of biomass for industrial production could be more paying than the use of biomass in electricity generation only.

MYBIOMASS TO FASTTRACK BIOMASS DEVELOPMENT
Puvaneswari, who oversees the special purpose vehicle (SPV), set up under the MBI, said local plantation companies were gradually realising the potential of these downstream activities that involved biomass as feedstock.

She said the SPV would help continuous supply of biomass through coordinated collection and aggregation, and also in setting up the facilities for conversion technology.

The by-product from these facilities could still contribute to the renewable energy target and fertilizer market.

Apart from that, this initiative would also create research potential and promote the development of the country's human capital, particularly in the palm oil industry, she said.

In addition, MYBIOMASS would also act as a long-term purchaser of palm biomass and bring it to the market for further optimisation of the resources by moving it into more productive processes, Puvaneswari added.

At present, MYBIOMASS is in talks with several international technology companies to work out joint ventures for high-value chemical plants in the country using palm oil biomass as feedstock.

MALAYSIA A FRONTRUNNER IN BIOMASS INDUSTRY
Meanwhile, Managing Director of Burrill & Co., Dr Roger Wyse, noted that many companies in the United States were keen to address Asean, and the Asian market, which include India and China.

"They are coming to these regions with the technologies and to get access to the renewable feedstock which is palm biomass," he said.

On the other hand, countries in these regions are gradually investing in sustainability and looking for technologies that could help them reduce carbon dioxide emission in order to address the issue of climate change, said Wyse, one of the council members of the GSIAC.

"The country is attractive compared to its counterparts because of its stable government and a superior infrastructure for a growing economy.

English is also spoken here, which is important in order to attract these companies," he said.

Wyse said Malaysia had to step up its efforts as neighbouring countries were also competing for a slice of the growing market for biomass.

COMPELLING BUSINESS MODEL FOR BIOMASS PLAYERS
Wyse said one of the ways for Malaysia to have competitive advantage was by putting together a compelling business model to lure international companies that have the right technology for biomass.

"The business model has to cover the entire value chain for biomass, the technology and the markets. It also needs to cover the pricing of biomass and the opportunity for the plantation companies to capture some of the downstream value," he said.

He said the country must develop a strategy to compete with them; for example, creating or facilitating access to biomass, access to capital to build their facilities and to create a better operating environment, which means adequate workforce.

In terms of sustainability, Wyse said the utilisation of waste from palm oil would actually increase the sustainability of the industry itself.

"The value of the EFB and trunks could almost double or could even equal the value of the palm oil they harvest today, which means double the value per hectare and optimisation of the existing land," he noted.

MOVING FORWARD
Wyse said, as Malaysia progresses from natural resource-based manufacturing economy to an innovation-driven high value creating economy, it must have a combination of local resources and high-value technologies to step up the economic growth.

"To make that happen, you also need to strengthen your internal research and development (R&D) activities that focus on applying global technologies to the local economy.

"Apart from that, working together with other international bodies that have experience in the industry can help realise this initiative," he said.

MIGHT, which co-chairs the secretariat for the GSIAC, which in turn oversees the MBI, also works hand-in-hand with the EU-Malaysia Biomass Sustainable Production Initiative (Biomass-SP), to realise the potential of biomass.