Palm oil biodiesel needs to meet new EU GHG reductions - sellers

29 December 2009 02:40  [Source: ICIS news]

SINGAPORE (ICIS news)--Palm oil biodiesel producers in southeast Asia will need to meet the European Union (EU) Green House Gas (GHG) reductions of at least 35% from next year in order to continue to export material there, regional sellers said on Tuesday.

The GHG reduction target was expected to increase to 60% by 2018, they added.

The new directive to be implemented early next year was likely to impact producers in Malaysia and Indonesia who need to upgrade their processing methods in order to meet the EU requirement, sellers said.

The EU is the biggest export market for biodiesel producers in southeast Asia. A failure to meet the GHG reductions will mean that the sellers will not be able to do business with the EU, they said.

Current preliminary findings from the EU studies on GHG emissions, however, showed that the use of palm oil-based biodiesel achieved only a 19% reduction in greenhouse gas emissions using existing production technologies, with the bulk of methane gas released into the atmosphere when palm oil fruits are crushed into palm oil, according to European Commission's official website on energy.

Under the EU’s renewable energy directives, the use of renewable sources by 2020 will account for at least 10% of the energy consumed in the transport industry. This target could create demand for around 23m tonnes of biodiesel annually, based on industry estimates. This figure is half of the annual global palm oil output of 42.7m tonnes, and exceeds Malaysia’s annual palm oil production of around 17m tonnes.

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By: Serena Seng

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