biodiesel

The slump in global oil prices hasn’t altered the Malaysia’s plan to raise its biodiesel mandate to 10%, with the government saying it remains committed on this front despite tumbling crude oil prices having made palm oil twice as expensive as its fossil fuel alternative, Reuters reports.

According to Plantation Industries and Commodities Minister Datuk Amar Douglas Uggah Embas, while current oil prices have had an impact on proceedings, price is not the government’s only consideration. He said this in response to a question posed by reporters at an industry seminar, which asked if low oil prices would result in a change of plans for the B10 biodiesel programme.

“There are various considerations and the sum of that will guide the government’s biodiesel utilisation. Biodiesel helps us to stabilise (the) price, enables us to reduce stock by increasing domestic consumption, which has an impact on palm oil. We have committed to reduce our carbon dioxide emissions in the country by using biodiesel,” he said.

He added that the government is in the final stages of consultation with stakeholders on the B10 programme, and a Cabinet paper on the subject is set to be submitted by the end of February.

diesel-cap

In February 2013, the government announced its decision to upgrade its existing B5 programme, which had been in place since 2011, to B10, a blend of 10% palm-based biodiesel and 90% petroleum diesel. Following a pilot programme in 2013, B10 was supposed to have been fully implemented nationwide by October 2015, a move that Uggah said would result in raising domestic consumption of crude palm oil by one million tonnes per year.

The Reuters report adds that industry officials and producers say Malaysia – as well as Indonesia – may have to curb plans to channel more palm oil into biodiesel, given the slump in crude oil prices. Analysts expect Indonesia to at best achieve a 10% mandate in 2016 and Malaysia’s blending level to likely fall below its 2015 goal of seven percent, the news agency stated.

Last year, following the news of B10’s impending introduction, a number of car companies announced that the introduction of the blend required further consideration with regards to its use in their diesel engines, with BMW, UMW Toyota, Isuzu and Volkswagen Malaysia issuing similarly-toned statements on the matter.