Dec 6, Sepang - AS the progress made in converting crude palm oil intopalm diesel by the Malaysian Palm Oil Board shows, there is no shortage ofrenewable sources of energy.But there are significant costs involved in developing them and these arenot the type of investments that provide short-term returns. Which is whyit takes shock waves from steep rises in oil prices to make themcandidates in the search for alternative solutions to fossil fuels.

While Plantation Industries and Commodities Minister Datuk Peter Chin FahKui has correctly said that if biofuel were to become a viable commercialproposition, the Government would have to stop the diesel subsidy, sinceat 85 sen per litre it costs two sen more than the pump price of diesel,price is probably the least of the problems involved in promoting andmarketing palm diesel. As the Malaysian experience with natural gasvehicles suggests, it will take more than low fuel prices to make morevehicles run on biofuel and in volumes large enough to make a significantdent in the usage of diesel. Any meaningful shift from diesel or petrolwould require major investments in infrastructure and incentives tomotorists. The success of alternative energy sources like biofuels dependson the development of favourable regulatory and commercial conditions bythe Government.

Moreover, while there is no doubt that we have to start thinking aboutsubstituting fossil energy with alternative fuels, it will take time tomake such changes. In the meantime, the reality is that in the foreseeablefuture, we will continue to remain dependent on fossil fuels. Since thereis every likelihood that oil prices will continue to rise, making thealready-costly subsidies of petrol and diesel even less sustainable,Malaysian consumers have to come to terms with the fact that cheap oil isa thing of the past. Oil products are going to cost more and at issue isnot whether the subsidies should be cut but by how much.

While it would not completely replace diesel or petrol, it is time,therefore, for the Government to make concerted efforts in the short andmedium terms to push for the switch to natural gas. We have large naturalgas reserves, a network of pipelines, and the experience with NGV taxis.With sufficient filling facilities and tax breaks, there is every reasonto believe that the fleets of buses and lorries can be persuaded to makethe transition to natural gas. Like all structural changes, there will bethe inevitable problems, but the operators and consumers will benefit fromthe cheaper cost of using natural gas.

In the long-term, we must pursue sound energy policies that promotenon-polluting, environmentally-friendly fuels like palm diesel because theoil subsidies are not only a heavy burden on government finances but alsotaking a heavy toll on our environment. We need a policy that reducesdependence on oil and deals with local air-quality issues and globalclimate changes related to the burning of fossil fuels.