08/05/2026 (New Straits Times) - FOR years, Malaysia's biodiesel policy has behaved a little like a plantation road after rain - passable, promising but never entirely smooth.

At times, the journey advanced with confidence.

At other times, it slowed behind the familiar potholes of infrastructure cost, subsidy anxiety, depot readiness, engine concerns and that old argument between the dinner plate and the diesel tank.

Now the engine has started again.

With B15 biodiesel production scheduled to begin from June 1 through 19 licensed plants, Malaysia is being invited to revisit a question that has never quite gone away: should palm biodiesel remain a cautious blending programme, or become a more deliberate pillar of national energy security?

The move is expected to begin with B15, progress to B20, and possibly reach B50 within two to three years.

The question matters because the world outside is not exactly behaving politely.

Crude oil prices remain exposed to conflict at Hormuz, shipping anxieties and geopolitical surprises.

Diesel imports can be expensive. Fuel subsidies are heavy. And when energy markets sneeze, national budgets tend to catch more than a cold.

Against that backdrop, Malaysia has something many countries would envy: a home-grown oil crop, existing biodiesel plants, spare capacity, and a value chain that supports both rural incomes and industrial resilience.

Yet having the asset is one thing. Using it wisely is another.

The Numbers Behind B15

For clarity, the figures matter. Malaysia's total biodiesel production capacity is about 2.4 million tonnes a year.

In 2025, actual production stood at around 1.3 million tonnes. Of this, the existing B10 blending programme absorbed about one million tonnes.

Moving from B10 to B15 would require another 400,000 tonnes, bringing total B15 blending demand to about 1.4 million tonnes.

In other words, Malaysia is not being asked to invent a new industry overnight.

The capacity exists. The plants exist. The palm oil exists.

The harder question is whether production, logistics, blending infrastructure, pricing and policy coordination can move in step.

As always, the palm oil train can move - provided the tracks, signals and station masters are properly aligned.

The cost comparison also explains why biodiesel has returned to the policy table.

CNA indicated industry estimates that diesel was close to RM6.20 per litre, while biodiesel was about RM4.50 per litre.

That spread makes biodiesel increasingly attractive when conventional diesel prices are vulnerable to global disruptions.

But arithmetic on paper must still travel through pipes, depots, engines, pumps and public confidence.

Policy may be announced at the rostrum, but implementation is tested at the terminal.

The Depot Is Not a Detail

Malaysia currently mandates B10 for motorists, meaning 10 per cent biodiesel and 90 per cent petroleum diesel.

Scaling up to B15, B20 or B30 is therefore not only a matter of asking producers to produce more.

It requires blending readiness, terminal upgrades, storage systems, quality control, logistics and confidence from vehicle users.

Here lies one of the less glamorous but very real constraints.

Malaysia has biodiesel blending depots, most designed around B10 capacity.

Upgrading this infrastructure could take one to two years, while moving towards B30 may require more than RM600 million in terminal and infrastructure spending.

This is why biodiesel cannot be sold merely as a slogan.

A mandate must eventually pass through steel, pumps, tanks, fittings and invoices. In policy, enthusiasm is free. Infrastructure is not.

Yet infrastructure should not become an excuse for permanent hesitation.

If Malaysia wishes to treat biodiesel seriously, blending infrastructure must also be treated as strategic energy infrastructure.

Otherwise, we will keep rediscovering the same problem every time crude oil turns rude.

A Crop That Can Do More

Malaysia produces roughly 20 million tonnes of palm oil annually, but only about 1.3 million tonnes is used for biodiesel.

That suggests room to think more boldly about how palm oil fits into the country's energy and industrial strategy.

For too long, palm oil has often been asked to defend itself only as food. Yet it is more than that.

It is a rural income generator, export earner, industrial feedstock, oleochemical base, biomass source and, increasingly, a bioenergy instrument.

To recognise palm biodiesel as strategic is not to abandon food security.

It is to understand that a national crop of this scale should not be trapped inside a narrow conversation.

The palm oil value chain must keep asking how every tonne, residue and side stream can create greater value.

That wider bioenergy story is already emerging.

Palm oil mill effluent, used cooking oil, palm fatty acid distillate, palm acid oil and other residues are becoming part of the broader biofuel conversation.

Biodiesel may be today's policy focus, but tomorrow's opportunity may also include sustainable aviation fuel, hydrogenated vegetable oil, bio-naphtha and other renewable pathways.

In that sense, B15 should not be viewed as the final destination. It may be better understood as a necessary gear change.

Indonesia's Bolder Script

Across the straits, Indonesia has moved more aggressively.

Its biodiesel programme is not merely green policy.

It is import-substitution policy, farmer policy, industrial policy and energy-security policy wearing the same batik shirt.

Malaysia has often been more cautious, partly because its fuel import dependency and fiscal structure differ from Indonesia's.

CNA reported that Indonesia imported 35.2 per cent of its crude oil in 2023, compared with Malaysia's 15.6 per cent, which partly explains why Indonesia has pushed harder on biodiesel.

Malaysia does not need to copy Indonesia wholesale.

Different countries have different economics, policy tools and political pressures. But Malaysia should still learn from the seriousness with which Indonesia treats biodiesel as a strategic instrument.

The question is not whether Malaysia should become Indonesia.

The question is whether Malaysia should become more Malaysian in using what Malaysia already has.

The Table Still Has a Say

Still, biodiesel is never only about the tank. It also touches the table.

The food-versus-fuel debate often sounds moral, but it is mostly economics wearing a moral tie.

Higher biodiesel demand can support CPO prices and growers' incomes.

But it can also squeeze refiners, food manufacturers, consumers and the treasury if edible oil prices rise too sharply.

That is why biodiesel policy must be honest. It can reduce fossil-fuel reliance, strengthen domestic demand, support rural income and lower emissions.

But pushed too far, too fast, it may intensify food-price pressures.

The wiser question is not whether biodiesel is good or bad. It is how far, how fast, with whose money, and under what safeguards.

Biology Still Votes

There is another inconvenient truth: demand can be mandated, but supply must be grown.

Malaysia's palm oil production has struggled to move sustainably beyond the 20 million tonne.

Ageing palms, slow replanting, labour constraints, climate stress and rising input costs all limit how far ambition can outrun agronomy.

A blending mandate can create demand, but it cannot make old palms young, or replace replanting, mechanisation, fertiliser discipline, field supervision and smallholder renewal.

In short, biodiesel can support palm oil prices. But if Malaysia wants a stronger biodiesel programme, it must also strengthen the upstream sector.

Between Promise and Prudence

Where does that leave Malaysia? Between promise and prudence.

Biodiesel is not a magic potion. It cannot abolish diesel, end fuel-price pressures or turn old palms young again.

But neither is it a decorative green label to be dusted off only during crises. It is a strategic instrument - useful, imperfect, and too important for slogans.

Used wisely, it can reduce import dependence, support growers, strengthen downstream industry, improve energy resilience and give palm oil a stronger role in a lower-carbon world.

Used carelessly, it can strain consumers, distort markets and invite subsidy headaches.

The B15 move should therefore be welcomed, but not romanticised.

The industry must be ready, depots upgraded, standards clear, the public informed, and the fiscal burden honest.

Malaysia has a golden crop. It should use it strategically, but not mistake strategy for slogan.

In the end, biodiesel is best seen not as a crisis remedy, but as a long-term national instrument - part energy security, part rural economy, part climate response and part palm oil value creation.

The tank, the table and the treasury will continue to argue. Perhaps they should.

A debate this consequential deserves clear thinking, steady execution and enough humility to remember that in palm oil, as in policy, the fruit bunch may be heavy - but the consequences are heavier.

*Joseph Tek has over 30 years of experience in the plantation industry, with a strong background in oil palm R&D, executive leadership and industry advocacy through MEOA and MPOA. The views expressed in this article are his own.

https://www.nst.com.my/business/insight/2026/05/1435083/malaysias-biodiesel-moment?source=widget