B10 reactivation

THE country’s stalled B10 biodiesel mandate will finally be reactivated.

This follows the government’s recent Budget 2019 announcement on the implementation of the B10 (from a mix of 10% palm methyl ester and 90% diesel) programme for the transportation sector by next year. On a positive note, the B10 biodiesel will help to clear the current high crude palm oil (CPO) stockpile, which has led to the poor CPO price performance.

It is also envisaged that the B10 programme will be able to absorb about 500,000-600,000 tonnes of CPO per year. This is an additional 150,000-200,000 tonnes from the take-up rate of about 400,000 tonnes under the current B7 biodiesel mandate. Eventhough the B10 programme is expected to lift CPO consumption minimally, which is said to be less than 1% compared with local CPO production about 20 million tonnes, but nonetheless it is still encouraging. Palmbased biodiesel is also seen a long-term CPO price driver mechanism.

It was also reported that a white paper on the switch to B10 will be put forward by the government towards end of this year.

On the flip side, recall how the B10 programme was deferred many times due to concerns by automobile makers that the higher blends could potentially damage the vehicle engines, which may not fall under the manufacturers’ warranty, although this was strongly disputed by biodiesel producers.

However, this time round Malaysia is expected to look at the experience in Indonesia, where higher biodiesel blends have been successful in reducing fuel imports as well as supporting the smallholder farmers. Indonesia is now planning to further accelerate the use of higher-blend B30 biodiesel next year.

For Malaysia, a vibrant biodiesel industry could help spur the growth of other auxiliary industries and create more employment domestically.