Malaysia, Shanxi Construction sign deal on HVO, SAF

A consortium of Malaysian and Chinese stakeholders have agreed to collaborate on producing hydrotreated vegetable oil (HVO) and sustainable aviation fuel (SAF) in Johor, Malaysia.

China's state-owned Shanxi Construction Investment Group (SCIG) plans to invest in an HVO and SAF plant and associated storage facilities in Johor's Pengerang Maritime Industrial Park, which would be the first second-generation biofuel plant in Malaysia.

Malaysia's Palm Oil Board (MPOB), Pengerang Maritime Industries and the Chinese Academy of Sciences' Institute of Coal Chemistry joined SCIG in signing an agreement on 13 December to exchange technical expertise to plan and prepare the project.

The proposed plant will make use of Malaysia's ample palm oil resources, alongside waste oil feedstocks, according to statements from the MPOB and SCIG. Planned capacity and the expected project timeline were not revealed, but total foreign direct investment is expected to reach 3bn ringgit ($709mn).

HVO, SAF and green chemical by-products produced will target the EU and US markets, as well as supply Chinese and Malaysian demand, according to general manager of SCIG's overseas department Wang Chongjun.

Malaysian first-generation biodiesel sales to the EU are currently substantial but expected to decline sharply as Europe phases out the use of palm-based biofuels by 2030.

China lacks any comprehensive policy supporting domestic biodiesel or SAF use, while Malaysia has repeatedly postponed raising its nationwide on-road biodiesel blend mandate to 20pc because of feedstock concerns. But it is expected to announce further details of its decarbonisation strategy by the end of 2022, which may include plans to increase domestic on-road biofuels and promote SAF use.

By Lauren Moffitt