Palm oil Bio-Diesel fuels, Malaya and China get together

"Travelling in a car fuelled by biodiesel seems like a great, environmentally-friendly thing to do. However, if the biodiesel has come from soya planted in the Brazilian Amazon or palm oil from Indonesia, the green consumer is likely to be unwittingly driving another nail into the coffin of the world's great ecosystems."

—Ariel Brunner, BirdLife


Malaysia The World's Biggest Oil Palm Producer

Malaysia currently accounts for 51 % of world palm oil production and 62% of world exports, and therefore also for 8% and 22% of the world's total production and exports of oils and fats. As the biggest producer and exporter of palm oil and palm oil products, Malaysia has an important role to play in fulfilling the growing global need for oils and fats in general and now for bio-diesel fuels.

The oil palm is a highly efficient producer , requiring only 0.25 hectares to produce one tonne of oil while soybean, sunflower and rapeseed need 2.15, 1.50 and 0.75 hectares respectively.

The oil palm tree Elaeis guineensis ( elaia = olive) is endemic to West Africa and has long been developed as an agricultural crop. First introduced to Malaya in early 1870’s as an ornamental plant by Europeans more interested in developing rubber, it wasn't until 1917 the first first commercial planting took place in Tennamaran Estate in Selangor, laying the foundations for today's vast oil palm plantations (3.88 million hectares of land in Malaysia is under oil palm cultivation producing 14 million tonnes of palm oil in 2004) and the world's premier palm oil industry.

The Malaysian government in the 60's sought to diversify the economy from oil and tin and palm oil was developed under a very effective agricultural diversification programme.

Later land settlement schemes for planting oil palm, were used as a means to eradicate poverty for landless farmers and smallholders. The oil palm plantations in Malaysia are largely based on the estate management system and small holders scheme.

Palm oil squeezed from the fruits, is used for manufacture of soaps and candles, and more recently, in manufacture of margarine and cooking fats.

Palm kernel oil is extracted from the kernel of endosperm, and contains about 50% oil. Similar to coconut oil, with high content of saturated acids, mainly lauric, it is solid at normal temperatures in temperate areas, and is nearly colorless, varying from white to slightly yellow. This non-drying oil is used in edible fats, in making ice cream and mayonnaise, in baked goods and confectioneries.

Malaya and China get together to develop Palm Oil products

For the last 2 days the Malayan Palm Oil Council (MPOC) have held a seminar in Shanghai to promote sales to China. As a result of these efforts there have been 2 significant developments worth noting.

1. China's third largest oil company, China National Offshore Oil Corp (CNOOC) has made a formal agreement with KL based Bio Sweet Sdn Bhd which specialises in biotech and palm diesel research and development,to develop palm oil-based biodiesel in a shift towards renewable energy sources.

Under this Memorandum of Understanding (MOU) , CNOOC will build a plant in Hainan Island in 12 months with a capacity of 120,000 tonnes. It will also set up a joint venture called CNOOC (Malaysia) Biofuel Sdn Bhd with a view for a listing in Malaysia eventually. As an indication of the importance of the deal CNOOC President Fu Chengyu was present.

2. Golden Hope Plantations are a major player in the market and plan to have 6 biodiesel plants including 3 outside Malaysia to tap the demand for cheaper and renewable sources.

They have now announced 3 projects in Malaysia and a fourth in Holland (Malaya's biggest export market for palm oil products) which are expected to be up and running by end 2007

Plans are also advanced to set up a plant in South Korea with a capacity of 100,000 tonnes and another in mainland China.

The China project will probably be located in Guangzhou. China requires 70 million tonnes of diesel annually (now) and Government plans are to have, 20 % from sustainable sources within 5 years.

Golden Hope’s three current Malayan plants are ;

1. Banting with a capacity of 35,000 tonnes
2. A Joint venture with Malaysian Palm Oil Board in Port Klang with output of 60,000 tonnes
3. Bintulu with a capacity of 100,000 tonnes.

The planned Dutch facility will produce biodiesel using 50 percent palm oil and 50 percent soya oil for the European market.

Dennis Maxfield, publisher of Trade News Service for the oils and fats industry gave atalk this afternoon and explained that , except in the European Union, biodiesel is very much an infant industry.

“It takes time to construct new plants and an infrastructure to market the product. Renewable fuels are here, prices have become more competitive and the demand will continue to increase. It is happening not only in Europe and the U.S but in China as well,” Lord Patel has posted here about the launch of China Biodiesel on the LSE AIM market recently.

Dennis Maxfield estimated that Malaysia would produce 1.5 million tonnes of biodiesel next year.

The Malaysian government has made two major decisions to boost the [roduction of Palm Oil diesels;

1. It has set aside 6 million tonnes of its existing 15 million tonnes annual output for the biodiesel industry.

2. Envo Diesel, a newly developed biofuel of 5% processed palm oil and 95 % petroleum diesel is to be introduced next year for government vehicles.

But not everyone is happy - with this environmentall friendly program

George Monbiot, (the mna changing his mind about nuclear power) recently wrote an article "Worse Than Fossil Fuel" (6/12/05) highlighting how the import of palm oil as a biofuel component will probably worsen greenhouse gas discharges, alongside rainforest destruction.

The UK government has refused to disqualify palm oil from EU-driven government targets for biofuels as a proportion of motor fuels, or indeed bioethanol from Brazilian sugar cane, fearing (they say) legal challenges. See Guradian

The future for some seems to consist of living in caves, wearing grass skirts and eating your children.

Stop deforestation for biofuels - of course the forest are already de-forested.

Development of palm oil plantations is growing rapidly in the Far East, and the ravaged timber forests are being replaced with square miles of palm oil planations (see pic) - this also leads to other environmental problems.

Peat fires in Indonesia, linked to palm oil expansion, are reported to be contributing massively to climate change, see these sories here in the Guradian and BBC Online.

Several NGOs, including WWF, Greenpeace, and BirdLife International (but not yet FoE, as far as Lord Patel has been told) have in fact spoken out against the use of palm oil in biofuels. See Bird Life here and quote at top. More here as well.

Whatever the critics may say, the development of bio-diesel fuels from agricultural sources is going to be a major development. It would be nice to think that Africa, the home of the plant, could seize the opportunities that Malaya are making and taking.