17/8/07 (Daily Yomiuri Online)  - The government has formulated a policy to provide Malaysia with technological assistance to produce biofuel, which can help curtail greenhouse gas emissions, government sources said Thursday.

The plan, which will offer technological assistance to convert palm oil into biofuel, could be implemented as early as fiscal 2008. The cooperative agreement between the two nations likely will be concluded during a visit to Malaysia by Prime Minister Shinzo Abe from Aug. 23.

Biofuels are produced from plants and include bioethanol fuels, such as one made from corn, and biodiesel fuels made from edible oil, such as palm oil. Biofuels are usually mixed with gasoline or diesel and used as car fuel. Such fuels are considered to have a carbon dioxide output of zero, since the plants from which they have been manufactured have already absorbed CO2 in the atmosphere.

Malaysia is the world's leading producer of palm oil, producing about 45 percent of the global total. The Malaysian government is trying to promote the use of biofuel made from palm oil, aiming to revitalize its agricultural sector and distance itself from an over-dependence on crude oil.

Malaysian Prime Minister Abdullah Ahmad Badawi asked Abe for the assistance when he visited Japan in May.

The New Energy and Industrial Technology Development Organization--under the Economy, Trade and Industry Ministry--likely will be in charge of the project.

Major car manufacturers also have show interest in the scheme, which is estimated to be worth as much as several billion yen.