3.1.1 : Biomass / Agriculture Residue

Malaysia is well known as a biggest exporter of the palm oil in the world. In 2007, Malaysia produced more than 15.8 million tonnes of crude palm oil and about 4.1 million tonnes of palm kernel. These are the 2 major products that being derived from oil palm industry and it representing only about 10% of the total biomass produced by the industry. The remaining, 90 % of it is in the form of lignocellulosic material, whether in the form of EFB, palm frond, palm trunk, palm shell, and palm oil mill effluents (POME) which are under utilized. These biomass which accounting about more than 60 million (dry basis) is still considered as a by product with little commercial values.

Currently there are 4.3 million hectares of oil palm planted in Malaysia with 406 palm oil mills in operation throughout Malaysia in 2007. Based on the crude palm oil production in 2007 (20% on oil extraction rate) which is 15.2 million tonnes, it is estimated that 17.5 million tones (moisture ~ 65%) of empty fruit bunches (EFB) is generated and the potential energy that can be harnessed from these EFB as a boiler fuel is estimated about 4 million tones of oil equivalent (MTOE). While the energy generated from biogas of the anaerobic palm oil mill effluent treatment is also a potential energy resources especially for electricity generation. Table 5 and 6 show a number of palm oil mill in Malaysia and the supply outlook of biomass from oil palm industry.

Table 5 : Palm Oil Mills in Malaysia in 2007

Malaysia also encourage the industry to turning these biomass for the power generation for the grid connection under the Small Renewable Energy Programme (SREP) and currently a few small power plant based on biomass is being constructed and in operation with the capacity ranges from 10 MW to 15 MW and this plant has been built throughout Malaysia. SREP plants that using the EFB as a boiler fuel need to consider the logistic supply of the EFB and also the nearest grid connection available for the economic viability of the project. Currently there are 22 plants under SREP being constructed by the private company that using the biomass. Electricity generated by the renewable energy based on the biomass and agriculture residues currently represent more than 5% of all prime energy used as targeted by Malaysian government.

Table 6 : Oil Palm Biomass supply Outlook in Peninsular Malaysia (2007 -2020)

Year	Felled trunk (mill.tonnes/yr)	Prunned frond (mill.tonnes/yr)	EFB (mill. tonnes/yr)
2007-2010	3.23	6.89	282
2011-2013	4.28	6.80	2.83
2014-2016	3.58	7.05	2.91
2017-2020	2.97	7.14	2.81

At present, biomass fuels account for about 16% of the energy consumption in the country, of which 51% is from palm oil biomass and 22% from wood waste. Biomass-based power generation capacity in the country stands at 138 MW, of which 100 MW is used in the palm oil industry

RE contributions to the national economy from biomass alone can reach up to RM 10 billion per year. Even with only a 5% RE share of the national electricity generation, the country saves RM 2.8 billion in coal import costs over 20 years.

The Ninth Malaysia Plan calls for the further development and utilizations of RE resources by supporting initiatives such as the Small Renewable Energy Power Programme (SREP) and Renewable Energy Power Purchase Agreement (REPPA). By 2010, RE is expected to generate and connect about 300 MW of power to the grid in Peninsula Malaysia; with 50MW added to the grid in Sabah. The Plan also encourages other RE sources, such as solar hybrids and the expansion of biomass co-generation.

3.1.2 Others source of renewable energy

Others sources of renewable energy such as solar, wind, thermal energy and PV are contributed a small portion of the electricity generated. Most of them being used for in house uses such as for water heating or for drying of crops product.

However the hydropower has contributed a significant portion (9.4%) for the electricity generated in Malaysia. Table 7 shows a major hydro power station in Malaysia with their installed capacity.

Table 7 : Installed capacity of major hydro power station in Malaysia

Malaysia has embarked on an extensive biodiesel research programme since 1982. The palm biodiesel programme includes development of production technology to convert palm oil into methyl esters (palm biodiesel), pilot plant study of palm biodiesel production as well as exhaustive evaluation of palm biodiesel as diesel substitute in conventional diesel engines (both stationary and exhaustive field trials) locally and overseas. Malaysian Palm Oil Board (MPOB) has developed a technology to produce normal-grade palm biodiesel from palm oil and its derivatives (Figure 2). It can be used directly as fuel in unmodified diesel engines. However, this palm biodiesel has a pour point of 150C and this has confined its utilization to tropical countries only.



Figure 2: Palm Biodiesel

MPOB has also developed another technology to produce a winter-grade palm biodiesel (pour point of -18 to -20 degree C) to overcome the pour point problem of normal palm biodiesel. The winter-grade palm biodiesel can be used in temperate countries. Both normal and low pour point palm biodiesel produced using MPOB developed technologies exhibit quality that meets the European Biodiesel Standard (EN 14214) and the United States Biodiesel Standard (ASTM D6751) (Table 8).

Table 8: Product Specifications of Palm Biodiesel (Normal and Winter Grade

There has been a lot of interest from Malaysian companies, foreign companies and joint ventures in setting up biodiesel plants in the country. In an effort to kick-start the biodiesel industry in Malaysia in order to stay ahead in the development of this new industry, MPOB itself is building three commercial palm biodiesel plants (each comprising of normal and low-pour point palm biodiesel plants) based on its own technology and lease to three private companies upon completion. Two plants have been successfully commissioned in July 2006 and April 2007. The third plant has been successfully commissioned in February 2008. Products obtained from the three plants meet EN14214 and ASTM 6751 specifications.

Plants based on various other technologies are also being constructed in the country. To date, 91 biodiesel manufacturing licence have been approved with a total annual planned capacity of 10.2 million tonnes. As of end August 2008, 15 biodiesel plants have been established with a total annual approved production capacity of 1.65 million tonnes. Commercial production of palm biodiesel commenced in August 2006 and most of the palm biodiesel produced so far are exported.

Table 9 shows the biodiesel plant with installed capacity in Malaysia .

Table 9 : Biodiesel plant in Malaysia

It is estimated that a total of 10 million tonnes of palm oil will be consumed annually should all the approved projects start operations. Feedstock for the approved biodiesel projects is mainly from processed palm oil with about 6 million tonnes estimated to be consumed per year. The other raw materials are crude palm oil and palm fatty acid distillate.

Malaysia has great potential to be one of the major players in the global biodiesel demand. Currently, the demand is from overseas, especially EU and USA. In the foreseeable future, the market potential is huge and the main markets for biodiesel are still in EU and USA. In EU, biodiesel continues to be the preferred and leading alternative to conventional fuels, although bio-ethanol is starting to make in-roads. The 'Biofuel Directive' basically requires member states to increase the use of biofuels to a minimum of 2% of total liquid fuel consumption by 2005, and progressively increase it further to 5.75% by 2010. By 2010, EU needs 10.2 millions tones of biodiesel. These targets are non-mandatory, but require all EU member states to annually report their progress on implementation with close monitoring by the EU authorities on the level of achievement in the targets. These targets serve as a strong political signal and indicate the determination and commitment of the EU member states to the use of biofuels.

The other potential big market is US. Currently US produced 75 million gallons of biodiesel which represents a mere 0.12% of total US diesel demand. A B5 blend will require about 3 billion gallons of biodiesel. To produce 3 billion gallons of biodiesel requires about 10.2 million tones of oils and fats as raw materials.

The potential market for biodiesel in Malaysia is not very certain at present. The Government has yet to make decision on the implementation of biodiesel blended with diesel for local use. Total diesel consumption in Malaysia is about 10 million tonnes a year. If a mandatory 5% blend is implemented, then this will take up 500,000 tonnes of biodiesel. If this blend is increased to 10% then it will be 1 million tonnes per year; and if 20%, then 2 million tonnes per year.

Besides this mandatory blending, industrial users may voluntarily use higher percentage of biodiesel or even 100% if the price is right. Currently, the biodiesel price is still higher than the unsubsidized petroleum diesel price.

Table 10. : Annual consumption of diesel in Malaysia and biodiesel requirement

The world cannot produce enough vegetable oil for biodiesel to replace petroleum diesel. Therefore, in principle, all vegetable oils will have a role to play in the global biodiesel industry. The key factor will be availability at competitive price and supply. In this respect, palm oil has significant advantages over other vegetable oils.

Malaysia produces an excess of palm oil for its own needs. Currently about 90% of the palm oil produced is exported, with the major markets being China, EU, Pakistan, India, Egypt, USA, Bangladesh and Japan. Currently the national stock level stands at 1.3 million tonnes. There is therefore assured availability of palm oil for biofuel use at present.

In terms of price competitiveness, historically palm oil was traded at a large discount against most other vegetable oils especially rapeseed and soybean oils. Rapeseed and soybean oils are the two main raw materials for the production of biodiesel in the world. However, this discount has vanished in recent months

(Figure 4).

Malaysia has good facilities for the development of a biodiesel industry because it has a highly developed palm oil refining and oleochemical industries. Furthermore, Malaysia also produces methanol which is an important ingredient in the production of biodiesel from its natural gas.

Oil palm is the most productive oil bearing plant species known, and it is less prone to the vagaries of the weather unlike other vegetable oils such as soybean and rapeseed. Being a perennial tree crop, it produces oil the whole year round and is not deleterious to the environment like the annual crops. This is an added advantage as a constant supply of raw material for the biodiesel industry can be ensured. Oil palm is regarded as the most cost-effective vegetable oil crop as it has the highest yield and most economical oil. The yield of palm oil is 3.8 tonnes of palm oil per hectare per year (Table 11)

Table 11: Oil Yield