Malaysia to roll out 20pc biofuels mandate in 2022

Market: Agriculture, Biofuels
05/01/22

Malaysia will increase its on-road biodiesel blending mandate to 20pc (B20) in Sabah and peninsular Malaysia by the end of this year, delegates were told today at the annual Malaysian Palm Oil Council industry seminar.

Kuala Lumpur has already pushed back a nationwide rollout several times because of funding pressure from the Covid-19 pandemic and possibly as record-high crude palm oil (CPO) feedstock prices inflated the cost of subsidising the programme.

Bursa Malaysia-listed CPO futures dropped off towards the end of 2021 after the active third-month contract reached an all-time high of 5,081 ringgit/t ($1,210/t) on 20 October. But supply concerns among buyers following recent flooding across peninsular Malaysia drove an increase back over the 5,000 ringgit/t threshold by today's Singapore close.

The government is now working to upgrade infrastructure at 30-35 fuel depots before the B20 mandate can be launched, which will cost around 50mn ringgit in total.

Biodiesel blending for industrial applications remains at 7pc, with no date set yet for increasing the mandate to B10.

Malaysia has around 2mn-2.5mn t/yr of biodiesel capacity, with a full B20 mandate expected to consume roughly 1.1mn t/yr, leaving plenty of excess volumes for export. Malaysian palm methyl ester biodiesel exports dropped to 306,910t in 2021, the lowest volume in at least four years, according to cargo surveyor AmSpec.

By Lauren Moffitt

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