Palm experts to meet EU on sustainability criteria

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KUALA LUMPUR: Industry experts from Malaysia's palm and biodiesel sector plan to meet officials from the European Commission (EC) on its recent amendment to the renewable energy directives which hinders the export of biodiesel to the region.

Malaysian Biodiesel Association vice-president UN Unnithan said palm players were discussing the European Union's (EU) sustainability criteria on the minimum greenhouse gas (GHG) savings of 35%. Based on EU's estimates, the default value on palm oil's GHG savings was around 19%.

"There is a difference between the methodologies used by experts in Malaysia and the EU on GHG savings. Based on our estimates, Malaysia's palm industry is saving as much as 50% in GHG, so the experts would need to resolve this," he told The Edge Financial Daily on the sidelines of a biofuel conference here recently.

If palm millers adopt a methane gas capture technology, the sector could save as much as 60% in GHG, said Unnithan, who is also the executive director of Carotino Sdn Bhd.

He said there was no alternative but for biodiesel players to comply with the various sustainability criteria announced.

Meanwhile, a government official was quoted as saying Malaysia's biodiesel exports had risen to 16,330 tonnes in February from 2,502 tonnes a year earlier. February's figures were also higher than in January, when some 12,732 tonnes of biodiesel were exported.

February's exports were valued at RM40.35 million, up significantly from RM6.62 million previously. Based on published reports, Malaysia's biodiesel exports rose to 182,108 tonnes from 95,013 tonnes in 2007.

This translated to RM610.7 million in biodiesel export value from RM253.2 million in 2007 on higher volumes and attractive prices when crude oil prices were high.

Unnithan also said Malaysia's biodiesel exports could go up on the EU's decision to impose anti-dumping and anti-subsidy duties on imports from the US, adding that biodiesel exports could go up to 30,000 tonnes in the next few months.

Currently, there are 14 biodiesel plants in operation with a combined capacity of 1.67 million tonnes per annum in the country. Four new plants, with a total annual capacity of 190,000 tonnes, will start production this year.

Palm-based biodiesel would also be more attractive when the new duties were imposed on US biofuel shipments, Unnithan said.

According to the EU, American exporters would have to pay additional anti-dumping duties of up to 29%, and anti-subsidy duties of 29% to 41% for an initial six months.

About 80% of US biodiesel production is exported to Europe, where it had benefited from tax exemption on top of US subsidies.  

The EC also estimated in January that US exports of a particular biodiesel blend known as B99 had surged by 40% in 2008 from 2007, threatening the viability of European producers.