Expansion of the palm oil industry — which many hope will provide the fuel of the future — must be sustainable, environmentally-friendly and protect local communities, Malaysia's deputy prime minister said in a speech at the launch of the International Biofuel and Alternative Energy Conference in Kuala Lumpur.
Since the 1990s, the area under palm oil cultivation globally has increased by 43 percent, mostly in Malaysia and Indonesia, the world's number 1 and 2 exporters of palm oil respectively. "Based on current trends, the oil palm industry is set to continue to grow to satisfy global demand," Deputy Prime Minister Najib Razak said in a speech prepared for him at the biofuel conference. "However, it is important that the expansion be sustainable."
Malaysia is projecting one million tonnes in biofuel production next year for exports, more than double the production of 400,000 tonnes this year. Speaking at the same event, Datuk Sabri Ahmad, chairman of the Malaysian Palm Oil Association (MPOA), says biofuel demand in Europe and the United States was expanding rapidly in line with the requirement for more environmentally friendly energy. Sabri says that by 2012, Europe would require 10 million tonnes of biodiesel compared to four million tonnes currently. He hopes Malaysia will become a main supplier.
The top five plantation companies in Malaysia would have the capacity to produce the projected one million tonnes of biofuel next year, he said at the media briefing. Sabri said this year, 72 companies were involved in biodiesel projects with a total investment of 7.01 billion ringgit (€1.47/1.97 billion), of which 4.87 billion ringgit came from local companies and the balance of 2.14 billion ringgit from foreign companies.
Increasing efficiency, towards 'sustainability'?
Plantation Industries and Commodities Ministry's Parliamentary Secretary Senator Datuk Dr S. Vijayaratnam said in line with the robust demand for biofuel, Malaysia would step up efforts to increase production and efficiency yields in plantation crops, in order to make the sector more sustainable.
"We will not focus on increasing land hectarage but on increasing the yield or efficiency level by engaging in research and development, and utilising high quality seeds to produce better crop," he said. "We target an oil extraction rate of 25 percent and a production yield of 35 tonnes per hectare per year," he added. [Note: current extraction rates are around 20% on average for 19 tonnes of fruit bunches per year - see the 2005 data at the Malaysian Palm Oil Board.]
Vijayaratnam said there have been criticisms that Malaysian oil palm plantations were adversely affecting the habitat of the orang utan and environment, affecting Malaysia's reputation as one of the major palm oil producers to some degree, but these were not based on facts. To underscore the seriousness of its self-defined efforts towards more 'sustainability', Malaysia is taking several measures and lines of thought to embellish the image of the palm oil sector:
1. It launches a Palm Oil Wildlife Conservation Fund with an anticipated outlay of 20 million ringgit (€4.2/US$5.6 million). It will fund ideas and proposals to enhance biodiversity linked to palm oil production worldwide:
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2. Increasing the use of palm biomass: biomass utilisation is gaining momentum in recent years largely due to global concerns over environmental pollution. The vast biomass resources available in the industry have not been fully exploited until now. “The Government would like the industry to tap all the available biomass and come up with value-added products that will enhance the industry's growth, competitiveness and sustainability,” Najib says.
3. Most of the oil palm plantations were and will be located on former rubber estates or plantations of other crops which switched to oil palm as it was more commercially profitable.
4. In the case of Indonesia, the oil palm plantations were located on land formerly used for logging, which means the land is used productively twice - so the argument goes.
It takes two to tango: EU/US imports surge
Sabri said palm oil exports to Europe and the US was growing steadily. The 10 percent growth in exports next year was achievable based on previous trends, he added.
According to the Malaysian Palm Oil Promotion Council website, exports of palm oil to the European Union from January to October 2006 stood at 2,078,988 tonnes, up from 1,832,273 tonnes in the same period last year. Palm oil exports to the US from January to October 2006 amounted to 549,646 tonnes, an increase from 462,345 tonnes in the same period last year. The council's chief executive officer Tan Sri Dr Yusof Basiron said demand for palm oil in the US food industry was expected to go up, especially with the increasing consumer demand for food with less trans fatty acid.
Palm biofuels to dominate market
Because bio-fuels emit 80 percent less emissions than fossil fuels, "the future is becoming clear," Najib said in his speech. "As oil prices continue to soar and supplies become depleted, bio-fuels are looking more appealing as an alternative transport fuel."
The government introduced a National Biofuel Policy in 2005, aiming to reduce gasoline imports and to shore up palm oil prices during periods of low export demand. The diesel-palm oil blend has been used in recent years to power selected electricity generators in Malaysia. Palm-oil blended diesel is a technologically proven fuel for transport.
Officials announced last week that three Malaysian government-linked palm oil companies planned to merge to create the world's biggest palm oil business worth around 31.4 billion ringgit (€6.5 billion/US$8.66 billion). Shareholders have yet to approve the proposal.
Bernama: M'sia Projects One Mln Tonnes In Biofuel Production In 2007 - December 5, 2006
International Herald Tribune / AP: Malaysia calls for sustainable expansion of palm oil plantations - Dec. 5, 2006
The Star: RM20mil Palm Oil Wildlife Conservation Fund launched - Dec. 5, 2006