Corrects figure for capital expenditure forecast in paragraph 15
Regional biodiesel associations from Thailand, Indonesia and Malaysia called for stakeholder support to further decarbonisation goals during the 5th Palm Biodiesel Conference in Bangkok over 23-24 June.
Thai electrification shift competes with biodiesel industry
Thailand has been driving a shift toward electric vehicles (EVs) under the 30@30 policy, targeting at least 30pc of total motor vehicles produced annually by 2030 to be EVs, while support for biodiesel producers is waning, said Thai biodiesel producer association Chairman Sanin Triyanond.
Thailand will no longer subsidise the price of biofuels such as biodiesel under the oil fund act after 24 September 2026, said Supatchalee Sophonthammaphat, an official with the Thai department of alternative energy development and efficiency (DEDE).
Triyanond called for both the EV and biodiesel industries to coexist, citing a study that said an EV and biofuel energy mix was recommended for the country. A low biodiesel blend target in Thailand resulted in only 30pc of Thailand's 11.7mn l/d in installed biodiesel capacity being utilised, and high operating costs across its 14 registered companies, Triyanond said. When domestic crude palm oil (CPO) stocks fall below 200,000t, local prices also increase in comparison to the global price, he added. This raises the cost of production when biodiesel producers import CPO as it is subject to 143pc import tax and exempt from export duties in Thailand.
Thailand manages CPO supplies and prices by altering its volumetric blend target for biodiesel under the alternative energy development plan (AEDP). However, the biodiesel industry has been struggling with a low blending policy and feels that the stock management program needs to be redesigned to better support producers.
Indonesia needs more investment to hit B50 biodiesel blend goal
Indonesia is targeting 15.6mn kl of domestic biodiesel consumption in 2025 and has been conducting road tests for a higher B50 biodiesel blend with fossil diesel this year.
To meet higher biodiesel blend ratios in subsequent years, new investment from the private sector and policy support from the government on pricing, funding and legislation is needed to drive infrastructure upgrades and capacity expansions, said deputy of promotion and communication at the Indonesian biofuels producer association (APROBI) Ravi Farkhan Pratama.
For suppliers, complex logistics resulting in higher costs for transporting biodiesel to remote regions remain, said manager of biofuel and additive supply chain at PT Pertamina Patra Niaga Adi Rachman. A price disparity between public service obligation (PSO) and non-PSO (NPSO) biodiesel blends in the market poses a challenge in ensuring each fuel is supplied to the right customer group, he added.
The PSO sector includes state-owned firms that serve the public. Fuel suppliers in this sector receive subsidies from the oil plantation fund management agency (BPDPKS) to fund the difference between palm oil-based biodiesel and the indexed price of diesel, while non-PSO fuel suppliers do not.
Biodiesel plants in Indonesia have been running at an average 80pc of Indonesia's 20.9mn kl/yr installed capacity across 24 producers this year, said Pratama.
Indonesia consumed about 20pc of annual CPO production under the B35 blend mandate in 2024. This year's B40 biodiesel blend mandate could eat into exports and other avenues including food use, Pratama added.
Any further increase to blending mandates would exacerbate how palm supplies are distributed between food and fuel. There are also additional costs around infrastructure upgrades such as coating pipelines and storage tanks, said Rachman.
A move to a B50 blend mandate would likely happen in 2027 or later, said head of B40 road test and B40 commercial test team at LEMIGAS research and development center of oil & gas technology, ministry of energy and mineral resources Cahyo Setyo Wibowo at the event.
Malaysian biodiesel producers push for higher blending mandates
Malaysia's B20 biodiesel blend mandate set in January 2020 has been limited to Pulau Langkawi, Kedah, Labuan and Sarawak in the transport sector. A separate 7pc biodiesel blend is required in the industrial sector, first mandated in July 2019.
President of Malaysian biodiesel association Tee Lip Teng sought a nationwide B20 implementation for on-road fuels, and a B30 blend ratio by 2030. However, Tee said that a capital expenditure of more than 600mn ringgit ($142mn) would be required to achieve a full B30 nameplate biodiesel production capacity for the transport sector in Malaysia.
On the other hand, the country is set to introduce a carbon tax as early as next year, allowing palm oil methyl ester (PME) prices to be more competitive, he added. Lower palm oil prices in relation to gasoil amid oil market uncertainty and during the upcoming peak palm production season could also drive voluntary blending.
But fossil diesel continues to be subsidised for qualified businesses in the transportation and logistics sector, increasing the funding burden needed to subsidise PME in these sectors.
While PME production continues to face challenges, Tee cited the potential to expand waste-based biodiesel production in Malaysia. Biodiesel exports out of Malaysia rose up to 2019 before declining afterward due to the EU ban on palm-based biofuels, Tee said. Majority of the biodiesel exported now comprises used cooking oil methyl ester (Ucome) and palm oil mill effluent oil methyl ester (Pomeme) rather than PME, he added.
First generation biodiesel producers should be incentivised through government grants to retrofit their plants to use waste-based oils to complement their existing palm oil feedstock, Tee said. Other alternative feedstocks carrying a lower levelized cost of production such as palm fatty acid distillate (PFAD) should be considered as a feedstock of choice, said general manager for strategy and sustainability at Petronas Dagangan Berhad Ms. Harlina Pikri.
