B20 biodiesel mandate in Malaysia expected to absorb one million tonnes of CPO, says industry expert

UR Unnithan (Photo by Sam Fong/The Edge)

UR Unnithan (Photo by Sam Fong/The Edge)

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KUALA LUMPUR (March 23): The B20 biodiesel mandate in Malaysia is expected to utilise over one million tonnes of crude palm oil (CPO), said Malaysian Biodiesel Association (MBA) president UR Unnithan.

The implementation of the mandate to roll out B20 — biofuel with a 20% CPO component — for the transport sector has been delayed to December 2021 in Peninsular Malaysia.

It has already been implemented in Sarawak since September 2020 and is scheduled to be rolled out in Sabah in June 2021.

Speaking at the virtual Palm and Lauric Oils Price Outlook Conference, Unnithan also said that Indonesia may be implementing the B40 mandate as funding for biodiesel in the republic grows following a revision in export taxes. The taxes rose to as high as US$348 (RM1,435) per tonne this month.

Indonesia has so far implemented a B30 biodiesel mandate.

Unnithan, who is also the chief executive officer of Sumwin Group, said Malaysian biodiesel exports are unlikely to best the performance seen in 2019 due to the European Union's Delegated RED II Act, which has capped palm oil-derived biofuel use as part of renewable energy targets, set at 2019 levels.

In 2019, it was estimated by the MBA that the EU used 6.2 million tonnes of palm-based biofuels.

Unnithan expects Malaysia's biodiesel exports to fall to 350,000 tonnes in 2021, from 378,582 tonnes in 2020.

In terms of the global biodiesel sector, Unnithan is forecasting a paradigm shift.

"The emphasis for higher and higher local mandates, driven by policies to support local agri sectors, is going to only increase.

"You will see higher production and consumption in the US, EU and Asia, but all with their respective crops. This is going to be a trend where you will find domestic production taking over from export trade in biofuels," he said.

The Delegated RED II Act has capped the use of palm oil for transportation fuel at 2019's levels following deforestation concerns arising from the cultivation of the oil, with the aim to eventually phase out its use by 2030.

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S Kanagaraju