Godrej International Ltd director Dorab Mistry says 'we must view biodiesel as a safety net which will prevent palm oil prices from falling too much'.
At its height, biodiesel was the industry to be in when crude oil prices hit the roof at over US$100 per barrel in February 2008.
At the time, vegetable oils-based biodiesel including palm oil was the world's next best choice over that of expensive crude oil to power up their engines and every body scrambled to join the bandwagon to build biodiesel plants.
But suddenly all that seems to have come to a halt. What's going on? Is biodiesel still relevant?
London-based Godrej International Ltd director Dorab Mistry said the biodiesel sector is quiet because vegetable oil prices are too high and crude oil has softened a bit to US$80 a barrel at present, compared to the high of 2008.
"In Europe, rapeseed oil price is so high that the cost of rapeseed-based biodiesel is prohibitive. It is better for petroleum companies to pay the penalty rather than buy expensive rape oil-based biodiesel for blending.
"The same is the case with palm-based biodiesel but to a lesser extent," Mistry told Business Times in an email reply.
He said during the second half of 2011, there will be a shortfall in availability of rape oil in Europe and if palm oil production picks up, there will be an opportunity for palm biodiesel to find its way into Europe.
"We must view biodiesel as a safety net which will prevent palm oil prices from falling too much. At times when prices are very high, biodiesel becomes uncompetitive," said Mistry.
Frost & Sullivan Asian director Chris de Lavigne said the outlook for biodiesel this year has been waning since early 2008 due to the high price of the feedstock, with little activities worldwide.
"Not much is going on due to high price of crude palm oil and many export markets, especially the European Union, are not so keen on palm as a feedstock."
However, he added that biodiesel is here to stay as numerous research and development activities were going on to make the renewable energy source attractive again in the future.
Kulim Plantations (M) Bhd director Datuk Haron Siraj, however, is not so optimistic because the fact that the oil is also used as energy source instead of as a food ingredient is frowned upon by certain quarters, especially the United Nations.
"Edible oil is more important as food instead of being turned into biodiesel. Edible oil sources should not be disturbed," Haron added.
But there are other options available to make biodiesel such as converting oil palm's second generation waste like empty fruit bunches.
For all its worth, the government has reverted to the original plan of implementing the B5 mandate by the middle of this year. It had initially set January 1 as the deadline to sell B5 biodiesel, a mixture of 5 per cent palm oil and 95 per cent diesel, at all petrol stations nationwide.
Biodiesel producers, who have invested hundreds of millions of ringgit to cater to captured demand for the renewable fuel, had lamented that the country was at the forefront of palm biodiesel technology but had yet to implement any mandate.
According to the Malaysian Palm Oil Board, biodiesel producers are capable of producing two million tonnes of the eco-friendly fuel a year.
Implementation of the B5 mandate will lead to less use of depleting fossil fuel and help the transport sector reduce carbon dioxide emission.
Plantation Industries and Commodities Minister Tan Sri Bernard Dompok said the Cabinet still needs to decide if consumers would have to pay extra for B5.
The fuel costs an additional 4 to 5 sen a litre, which is mainly the cost to transport and blend the mixture.
The government hopes to stick to the B5 blend as the production of biodiesel will take up about 500,000 tonnes of palm oil, which is good given the current high palm oil stock level.
Source: Business Times, 22 Feb 2011
At its height, biodiesel was the industry to be in when crude oil prices hit the roof at over US$100 per barrel in February 2008.
At the time, vegetable oils-based biodiesel including palm oil was the world's next best choice over that of expensive crude oil to power up their engines and every body scrambled to join the bandwagon to build biodiesel plants.
But suddenly all that seems to have come to a halt. What's going on? Is biodiesel still relevant?
London-based Godrej International Ltd director Dorab Mistry said the biodiesel sector is quiet because vegetable oil prices are too high and crude oil has softened a bit to US$80 a barrel at present, compared to the high of 2008.
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"The same is the case with palm-based biodiesel but to a lesser extent," Mistry told Business Times in an email reply.
He said during the second half of 2011, there will be a shortfall in availability of rape oil in Europe and if palm oil production picks up, there will be an opportunity for palm biodiesel to find its way into Europe.
"We must view biodiesel as a safety net which will prevent palm oil prices from falling too much. At times when prices are very high, biodiesel becomes uncompetitive," said Mistry.
Frost & Sullivan Asian director Chris de Lavigne said the outlook for biodiesel this year has been waning since early 2008 due to the high price of the feedstock, with little activities worldwide.
"Not much is going on due to high price of crude palm oil and many export markets, especially the European Union, are not so keen on palm as a feedstock."
However, he added that biodiesel is here to stay as numerous research and development activities were going on to make the renewable energy source attractive again in the future.
Kulim Plantations (M) Bhd director Datuk Haron Siraj, however, is not so optimistic because the fact that the oil is also used as energy source instead of as a food ingredient is frowned upon by certain quarters, especially the United Nations.
"Edible oil is more important as food instead of being turned into biodiesel. Edible oil sources should not be disturbed," Haron added.
But there are other options available to make biodiesel such as converting oil palm's second generation waste like empty fruit bunches.
For all its worth, the government has reverted to the original plan of implementing the B5 mandate by the middle of this year. It had initially set January 1 as the deadline to sell B5 biodiesel, a mixture of 5 per cent palm oil and 95 per cent diesel, at all petrol stations nationwide.
Biodiesel producers, who have invested hundreds of millions of ringgit to cater to captured demand for the renewable fuel, had lamented that the country was at the forefront of palm biodiesel technology but had yet to implement any mandate.
According to the Malaysian Palm Oil Board, biodiesel producers are capable of producing two million tonnes of the eco-friendly fuel a year.
Implementation of the B5 mandate will lead to less use of depleting fossil fuel and help the transport sector reduce carbon dioxide emission.
Plantation Industries and Commodities Minister Tan Sri Bernard Dompok said the Cabinet still needs to decide if consumers would have to pay extra for B5.
The fuel costs an additional 4 to 5 sen a litre, which is mainly the cost to transport and blend the mixture.
The government hopes to stick to the B5 blend as the production of biodiesel will take up about 500,000 tonnes of palm oil, which is good given the current high palm oil stock level.
Source: Business Times, 22 Feb 2011
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