MALAYSIA’S palm oil industry players must continue to aggressively engage the European Union to prevent the biofuel from being sidelined on the basis that it indirectly emits greenhouse gases during planting and cultivation.

Primary Industries Minister Teresa Kok said the government was left encouraged by the EU’s postponement of the ban on vegetable oil products in biofuels from 2021 to 2030 under the Renewable Energy Directive II (EU RED II), which meant that palm oil-based biofuel would continue to be counted as part of  renewable energy targets. 

“However, we must focus our efforts to ensure that palm oil will not be sidelined by the EU as having a high Indirect Land Use Change (ILUC) since this indicator will be used as a measure to phase out food-based biodiesel in their EU RED II,” she said in a speech read by Deputy Primary Industries Minister Shamsul Iskandar at the launch of a palm oil economic review and outlook seminar organised by the Malaysian Palm Oil Board in Putrajaya today. 

Present was MPOB chairman Mohd Bakke Salleh.

ILUC refers to the unintended consequence of releasing more carbon emissions due to land-use changes caused by the expansion of croplands for biodiesel production.

“We must continuously engage our EU’s stakeholders to ensure that Malaysian palm oil access to this market is not affected,” Kok said, calling on industry players to “aggressively” promote themselve to emerging markets. 

“Hence, I urge members of the palm oil industry to adopt sustainable production, enhance productivity and reduce greenhouse gas emissions throughout the supply chain of the industry.

“The commitment and cooperation from members of the industry will provide the bullet to tackle the challenges faced by the industry internationally.”

Kok also said that the government is planning to increase the blending ratio of palm biofuel in diesel to 20% in 2020.

Petrol stations will required to have a blending ratio of 10% by next month while the industry sector will be required to have a 7% blending ratio by July, she said.

Both requirements are expected to create additional demand of 386,993 tonnes per year from the current 373,512 tonnes.

Kok said the palm oil industry recorded a 3.6% growth in the export of palm oil products last year but crude palm oil (CPO) prices declined to an average of RM2,232 a tonne, down from RM2,783 the same period in 2017, Kok said.

Kok said the decline in CPO price was influenced by the weaker price of soybeans, its main competitor, and a high stockpile of domestic palm oil. Prices led to a revenue decline of 12.3% to RM62.68 million.

CPO production this year is expected to be more than 20 million tonnes compared to 19.5 last year, with prices forecast to recover to more than RM2,500 per tonne as compared to the “bleak situation in 2018”, said MPOB chairman Mohd Bakke Salleh.

“In the United States, we are happy that palm oil products have garnered a positive reputation as a trans fat-free alternative for the food industry,” he said.

He added that the share of Malaysia palm oil imported into Pakistan has improved from 20% to 25% as more palm oil is being used as frying oil. – January 17, 2019.