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Japanese engineering company JGC Holdings Corporation and energy firm Japan NUS (JANUS) have signed a memorandum of understanding with the Malaysian natural gas, marketing and distribution company Gas Malaysia Bhd (GMB) for a joint study into the conversion of palm oil waste into fuel.

Malaysia is the world’s second largest producer of palm oil after Indonesia and, although, palm oil has a wide range of uses, palm oil mill effluent (POME) and empty fruit bunches from the production process emit large amounts of methane gas, which is said to have a greenhouse effect 25 times that of CO2.

This environmental issue holds back the country's efforts toward carbon neutrality, JGC said on 3 March.

Another challenge was that the palm oil industry discards thinned wood, waste wood and other potential raw materials for biocrude oil or biochemicals without using it, the company said.

JGC said the project would study the feasibility of converting methane from POME and EFB into biomethane fuel and pellet fuel. Potential biocrude oil and biochemical applications for thinned and waste wood would also be investigated.

As part of the agreement, GMB would provide information on facilities with good access to feedstock in Peninsular Malaysia and on bioenergy (including natural gas) distribution networks, JGC said.

In partnership with JANUS, JGC said it would study processes to convert industrial POME, EFB and thinned/waste wood to biofuel and biochemicals. The supply chain would also be studied.

This research would extend to the use of carbon credits, biomethane certification and other systems that enhanced the sustainable value of any products resulting from the project, JGC said.

The joint study would tie in with the Asia Zero Emission Community (AZEC) Initiative announced last year by the Japanese government.

JGC has experience of plant construction for liquefied natural gas (LNG), oil refineries and other facilities in Malaysia.