LAST_UPDATEMon, 16 Jul 2018 1pm

Malaysia Committed To B10 Biodiesel Plan

FilePic: New Straits TimesFilePic: New Straits TimesKUALA LUMPUR: Malaysia is committed to its plan to raise its biodiesel mandate to 10%, undeterred by a slump in global fossil fuel prices, in a bid to boost demand for palm oil, Plantation Industries and Commodities Minister Datuk Amar Douglas Uggah Embas said yesterday.

The so-called B10 programme, which mandates a minimum 10% of bio content in diesel, will help mop up more palm oil for blending purposes in the world’s No. 2 producer of the tropical oil and underpin benchmark prices that are near a three-week top of RM2,495 a tonne.

Malaysia is in the final stages of consultation with stakeholders on the B10 programme and will submit a Cabinet paper on this by the end of February, Uggah said at an industry seminar.

“Yes impacted, but price is not our only consideration,” the minister said when asked if low oil prices would result in a change of plans. “There are various considerations and the sum of that will guide the government’s biodiesel utilisation.”

Oil prices slumped to their lowest since 2003 this week as the market anticipated a rise in Iranian exports after the lifting of sanctions against Tehran over the weekend.

Industry officials and producers say Indonesia and Malaysia may have to curb plans to channel more palm oil into biodiesel as tumbling crude oil prices render the edible oil twice as expensive as its fossil fuel alternative.

Indonesia expects to raise the minimum bio content of gasoil in the country by a quarter to 20% in 2016.

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 7%.

Palm oil was one of the few commodities to finish 2015 on a positive note, rising close to 10%, buoyed by talk of lower yields due to an El Nino weather pattern and expectations of higher biodiesel consumption.

“Biodiesel helps us to stabilise price, enables us to reduce stock by increasing domestic consumption, which has an impact on palm oil,” Uggah said. “We have committed to reduce our carbon dioxide emissions in the country, by using biodiesel.”