Delays for Malaysian and Indonesian biodiesel mandates

Malaysia's B20 biodiesel blending mandate will be delayed by about six months, according to Plantation Industries and Commodities Ministry secretary general Ravi Muthayah.

"Nationwide we are giving priority for to the government's post COVID-19 economic recovery plan, which is more crucial. We have limited resources and must identify priorities,” The Star quoted the minister as saying on 7 January.

The mandate to make biofuel with a 20% palm oil component (B20) for the transport sector was first rolled out in January 2020, and was set to be fully implemented across the country by mid-June this year, the Malaysian newspaper reported.

"We have implemented B10 biodiesel for the transportation sector and B7 for the industry since 2019,” Muthayah said. “We have implemented the B20 programme in Langkawi and Labuan as well, and next we will proceed to Sarawak and Sabah, once we have upgraded the depots,” he added.

Malaysia is the second largest global producer of palm oil. In Indonesia ­– the world’s top producer ­– plans to roll out B40 palm-based biodiesel could be delayed beyond the end of 2022, the virtual Malaysian Palm Oil Trade Fair and Seminar 2021 (POTS Digital 2021) heard.

Indonesian Palm Oil Association (GAPKI) vice chairman Togar Sitanggang told the conference that he did not see B40 happening so fast, even in 2020.

“It will depend on the economic and pandemic situations in 2021," The Star quoted him as saying. Sitanggang added that the pandemic had created problems in terms of logistics, machinery and support staff, as they were not allowed to enter the country which resulted in delays to the commissioning process.

Meanwhile, Sitanggang said GAPKI has requested that the government reformulate its biodiesel blending rates or revise the palm oil export levy if palm oil prices reached 4,000 ringgit/tonne, Reuters reported on 7 January.

Malaysian crude palm oil (CPO) prices started 2021 at near 10-year highs, trading at US$950.81/tonne and further widening its premium over crude petroleum oil, making it a less sustainable option for biodiesel feedstock.

Togar vice chairman of the GAPKI, said he will request the government to rethink its biodiesel blending rate or export levy if palm prices reach 4,000 ringgit (US$987)/tonne.

“We need to maybe reformulate the export levy because the spread [against crude oil] is getting wider,” he said.

Indonesia’s biodiesel blending capacity was 10.2M tonnes in 2020, and set to rise to 12.2M tonnes this year and to 13.2M tonnes in 2022, Togar said.

Its biodiesel consumption this year was expected to rise to 8M tonnes from 7.2M tonnes in 2020, he added.