17/09/05 BANGI, (Bernama) -- Higher crude oil prices may not be all thatbad, considering that they serve as a double blessing for Malaysia's"golden crop" of crude palm oil (CPO).

As global crude oil prices breached an astounding high of US$70 per barrelrecently, there has been heightened interest in biofuels derived from CPO.

Malaysian Palm Oil Board (MPOB) director-general Tan Sri Dr Yusof Basironsaid this was an exciting and tremendous opportunity to further developspin-offs to complement the local palm oil industry.

New legislation and government incentives in the European Union and otherdeveloped countries strongly support the use of biofuels. EU is thelargest producer of biodiesel while Japan, South Korea and China hadexpressed strong interest in biodiesel.

"All these developments underscore the environmental benefits in terms oflesser greenhouse emissions, reduced dependence on fossil fuels and thepositive impact on agriculture," Dr Yusof said in an interview.

"The production of palm biodiesel is very viable, especially for exportmarkets where petroleum diesel is not subsidised," he said.

In Europe, petroleum products are subjected to carbon tax, makingbiodiesel very competitive in terms of price. In Germany especially, theprice of petroleum diesel and biodiesel at petrol stations are 1.14 and0.91 euros per litre respectively.

Dr Yusof said the use of CPO as a raw material for biodiesel would augurwell for its future price. Not only is CPO cheaper and its supply is fargreater than all other edible oils put together, in terms of biofuelavailability, palm oil will serve Malaysia well, the world's largestproducer and exporter.

"We are so versatile in terms of palm oil raw materials that we are verycost effective," said Dr Yusof, citing that biodiesel production in Europehad raised the price of rapeseed oil to about US$150 to US$200 a tonne.

The cost-effectiveness of CPO can be seen from its yield per unit area atfive to 10 times higher than rapeseed and soybean respectively.

"When the world is looking at vegetable oils as renewable fuel, palm oilwill undoubtedly stand out among other vegetable oils," said Dr Yusof.

"This yield factor alone is adequate for the world to decide whichvegetable oils should be produced to meet the expanding requirement for`greener and cleaner energy' for its growing population," he added.

However, Dr Yusof explained that the law of supply states that raw palmoil must be in abundance for the biofuel product to be well-received.

"Supply is a very big factor in terms of gauging the biofuel potential inthe future. If not, there is no point in talking so much about biofuel,"he said.

When it comes to application, palm oil is so versatile that it can be usednot only as itself, but as a bio-fuel blend raw material, or it could bemodified into palm ester or palm diesel.

"The oil itself, or the palm olein can go into different biofuelrequirements, depending on the country's climate," said Dr Yusof.

Similarly, he believes that the price of palm oil stands a good chance ofrising further due to the diversification into biofuel.

"This is a new use. So whatever the supply balance now will be slightlystimulated in terms of price," he said.

This would push the CPO price to be on par with other vegetable oils.

Dr Yusof said the minor components in palm oil could also further improvethe economies of scale of the biodiesel project.

Given the uniqueness of CPO, the resulting palm biodiesel produced byMPOB's patented process contains two very high-value components --carotenoids and vitamin E.

"MPOB has successfully developed processes to recover these valuableproducts as well," he said.

"It is estimated that if the carotenes and vitamin E are recovered, theincome generated from their sales will be able to pay for the investment," said Dr Yusof, adding that the economic analysis would be totallydifferent and make such "green" projects even more viable.

He also said the Malaysian government was fully committed to a clean andhealthy environment as well as supporting the local palm oil industry.

Such commitments could be seen from various programmes, including the useof CPO in 2001 in power stations, to check the price decline when theprice of the commodity fell to below RM900 a tonne.

Dr Yusof also said the authorities could introduce new legislation to makethe use of palm biofuel mandatory under the country's biofuel policy.

-- BERNAMA