With Low Fossil Fuel Prices, Is Biodiesel Still Viable?

Before Pakatan Harapan was removed from office, the Minister of Primary Industries managed to make it so that all commercially available diesel at fuel stations consisted of B10 biodiesel. This plan has been in the pipeline for years, and diesel at Malaysian pumps already consists of 7% palm oil derived methyl esters, B10 would move that up to 10%. Our neighbours in Indonesia have already advanced to B20 and even B30 blends. 

Here are some of the reasons why Indonesia was more proactive with this:

1. Indonesia is the no.1 palm oil producer in the world, ahead of Malaysia. Hence their research into the potential uses of palm oil has surpassed ours.
2. Using more locally ‘grown’ fuel and less imported fossil-derived fuel for domestic consumption has a more favourable impact on the economy.
3. Palm oil derived biodiesel results in less acid rain-causing sulphur emissions. It’s almost a 1:1 relationship, whereby 10% of palm derived biodiesel results in 10% fewer sulphur emissions.

The 2nd reason is perhaps the most important. When fossil fuel price are sky high and palm oil demand and prices are low, local plantations may have a steady stream of income from the transportation sector. However, a situations where fossil fuel prices are extremely low and crude palm oil prices are relatively high has not yet happened, until now.

Today, crude oil is at the lowest it has been in many, many years. This week, the government announced the following petrol and diesel prices:

Petrol

RON 95: RM1.44/L

RON 97: RM1.74/L

RON 100: RM2.25/L

Diesel

Euro 2M: RM1.75/L

Euro 5: RM1.85/L

Given that palm oil prices haven’t yet receeded, it’s unclear if the government is subsidising that part of the equation for palm oil producers. If you have some insight into this situation, please leave a comment below or email us at [email protected] or [email protected] 

We’ve covered the developments of palm derived biodiesel for years now. In 2017, we even covered the Malaysian Palm Oil Board’s 1000km drive across Borneo. If you’d like to learn more about why MPOB and Indonesian authorities believe palm-derived biodiesels are the future, check out the following links: