Malaysia, Indonesia Will Pump Out 40% More Palm Oil Biodiesel

Malaysia and Indonesia decided this week to convert surpluses of edible palm oil into biodiesel fuel.

Currently, the two southeast Asian countries grow about 85% of the world’s palm oil and control 88% of all palm oil exports. But amid stalled plans for more production plants and a slowing demand for palm oil, the countries are beginning to worry.

The proposal to turn so much food to fuel comes as an attempt to increase demand for palm biodiesel and drive up prices. In 2007, palm oil biodiesel prices made a dizzying 80% jump to over $944 per tonne. However, when prices hit  today’s price of $871 per tonne lags just below prices seven months ago.

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“We have palm oil stocks which are fetching unreasonably low price in the world market. So we want to increase its usage to produce biodiesel for the local market,” said Plantation Industries and Commodities Minister Datuk Peter Chin Fah Kui.

Although the new biodiesel will be produced from existing supplies of oil, this hike in palm oil biodiesel production is likely to draw fire from some environmental groups. Greenpeace, for instance, and the Center for Science in the Public Interest both oppose palm oil. They have expressed concern that palm oil plantations are responsible for large clearings of rainforest land, which threatens local species that are sensitive to habitat loss. Most notably, groups have embraced the orangutan as a flagship species threatened by palm oil production.

In response to these concerns, Finnish biodiesel company Neste Oil and the World Wildlife Fund have created a program to certify biodiesel that’s produced sustainably. The program is called the Roundtable of Sustainable Palm Oil, or RSPO.

In January, EcoWorldly took an in-depth look at Asia’s Biodiesel Dilemma, where we listed some of the ecological pros and cons of palm oil boidiesel.

Sources: Biofuels Digest (August 5, 2008), Biofuels Digest (January 22, 2008), Bernama.

More Reading About Asian Palm Oil Biodiesel

Samsung to Invest $1.63 Billion in Indonesian Biodiesel Project

International Biofuels Part II

Asia’s Biodiesel Dilemma

The challenge of sustainable palm oil

Photo source: cslor via Flickr, under a Creative Commons license.

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