12/08/05 (Bernama) - A TOTAL of 500,000 tonnes of palm oil will be neededeach year to respond to the Government’s call to produce and use palmoil-based biofuel, Malaysia Palm Oil Association (MPOA) said.

This is because the fixing of the composition of the biofuel wouldcomprise 5% processed palm oil biofuel and 95% diesel oil (B5 Blend).

MPOA chairman Datuk Sabri Ahmad said the mere 5% increase in the sale ofpalm oil would result in additional revenue of RM1bil in the industry.

"As many countries race towards reducing greenhouse gases by 5% relativeto the 1990 level by 2008-2012, the demand for biofuel will increasetremendously," he said in a statement yesterday.

Biodiesel is seen as a solution to the escalating price of fossil fuel andits inevitable depletion.

Yesterday, Prime Minister Datuk Seri Abdullah Ahmad Badawi announced athree-pronged plan under the National BioFuel Policy that would in manyways contribute to the nation’s economy as well as a healthierenvironment.

Sabri said besides boosting the local palm oil industry, the long-awaitedpolicy would help reduce the country’s dependence on fossil fuel.

Biodiesel refers to chemically reacted vegetable oils to produce themethyl esters that have properties similar to petroleum-based diesel. Itis made from rapeseed oil, soy oil, palm oil, sunflower and other edibleoils.

Sabri said Malaysia’s move towards biofuel would also help stabilise theprice of palm oil as proven in the case of other vegetable oils used inbiodiesel, and that it could be the country’s first step towards becominga main producer like Germany, France and Italy.

He hoped that the Government would consider providing incentives such ascorporate tax rebates for palm oil producers to venture into theproduction of biofuel. – Bernama