Malaysia suspends issue of biodiesel licences

06 July 2006 04:31  [Source: ICIS news]

SINGAPORE (ICIS news)--Malaysia has suspended the issue of new biodiesel production licences pending the outcome of a comprehensive review, the Plantation Enterprises and Commodities Ministry said.

The move earlier this week followed its concerns over the supply of crude palm oil, the main ingredient for biodiesel. Demand from this sector could take capacity from the food and olechemicals sectors, said the ministry.

It was not confirmed when the review would be completed. The government is rethinking its policy as critics allege that it could deprive the food market, where the oil is widely used in cooking.

Malaysia has aggressively promoted the palm-based biofuel industry to feed demand for cleaner and cheaper energy sources, and reduce dependency on high-priced oil.

The country is the world’s largest producer of CPO, exporting mainly to the European Union, but stands to gain from rising consumption in China and India.

The government had received 87 applications by June. These, however, could eat into crude palm oil reserves that are meant for food and oleochemical industries, said Malaysian Palm Oil Council chief executive Yusof Basiron.

So far 32 biodiesel projects worth $738m, with a total capacity of 3m tonnes/year, have been approved. About 62% of the investment came from domestic firms, and the rest from Australia, India, Indonesia, Singapore, Canada, Japan, Italy and the US.

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Author: Matt Kovac
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