The Edge, 3 November, 2006

Three Malaysia biodiesel plants meet winter spec

Only three of Malaysia's dozens of planned biodiesel plants are now licensed by the government to produce fuel that can withstand winter temperatures in Europe and North Asia, a government official said on Nov 3.

Plants producing about 180,000 tonnes a year of special "Winter Grade" biodiesel, which remains liquid as low as minus 21 degrees Celsius, will be in operation by mid-2007, Michael Dosim Lunjew, Secretary General for the Ministry of Plantation Industries and Commodities, told a conference.

But analysts say failure to upgrade more of Malaysia's 52 planned palm oil-based biodiesel plants to meet sub-zero standards may dampen producers' hopes of breaking into the big consuming markets in Europe, Japan and North America.

Its standard summer-grade palm-based biodiesel has a pour point of plus 15 Celsius, below which it begins to solidify.

"Palm biodiesel produced using Malaysian Palm Oil Board production technologies will meet (European and American) biodiesel standards," Lunjew said.

The technology has been licensed to Carotino Sdn Bhd's 60,000-tonne biodiesel plant, while giant Golden Hope Plantations Bhd and Kumpulan Fima Bhd will have similar capacity plants running by the first half of 2007, he said.

Some producers have been exploring other means to lower their biodiesel pour point by adding agents to it, on hopes they can sell their product to colder nations, one industry source said.

To date, Malaysia, the world's top producer of palm oil, has approved licences for 52 biodiesel plants with a combined capacity of more than five million tonnes each year.

Producers are counting on strong demand for the fuel from Europe, which officials say may consider turning its voluntary goal to use 5.75% biofuel in its motor fuel mix into a binding target to help local farmers and curb emissions.

While Europe has resisted imported supplies so far thanks to subsidies and government incentives, producers in Southeast Asia are hopeful it will eventually turn to foreign supplies, provided they meet its specifications.

Most European biodiesel now is produced from locally grown rapeseed, which has a much lower pour point.

Carotino sold about 10,000 tonnes of palm biodiesel to Europe at around US$720 (RM2,625) a tonne, free on board, in August. Their clients include transport firms directly using biodiesel and oil companies blending it with petroleum products. -- Reuters