Malaysia could potentially tap on palm oil waste as a renewable source of energy to replace coal, which will gradually be phased out of the country’s energy system over the next decade, said plantation and commodities minister Johari Abdul Ghani.
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The country currently produces 19 million metric tonnes of crude palm oil alongside about 76 million metric tonnes of waste, which Johari estimates could generate roughly 3,300 megawatts (MW) of power when used as biomass feedstock. This could make the palm oil industry “a significant producer of renewable energy additions” to replace lost power capacity from shutting down Malaysia’s remaining coal-fired power plants by 2044, he said at the Singapore Dialogue on Sustainable World Resources last Wednesday.
In 2024, coal made up 43 per cent of Malaysia’s power generation share, while bioenergy – which refers to power produced from organic material – contributed 0.74 per cent.
Climate advocates, however, are warning that the full lifecycle emissions of biomass could exceed that of coal.
“Producing biomass feedstocks from waste offers a promising route to replace coal, but it must be approached with caution due to potentially high emissions throughout its supply chain,” said Dinita Setyawati, senior electricity policy analyst for Southeast Asia at Ember Energy.
The Drax wood-burning power station in the United Kingdom, for instance, generated more emissions than fossil fuels burned across the country, according to the think tank. Just this week, campaigners called for the Drax, which is the world’s largest biomass power plant, to disclose full details of its tree sourcing as the government reviews the billions in renewables subsidies it receives.
This follows moves by South Korea to end subsidies for new biomass projects, especially those using imported wood pellets, last December. Last week, Indonesia’s plans to introduce more biomass into its power mix also came under scrutiny from environmental non-profit Centre for Research on Energy and Clean Air (CREA).
Katherine Hasan, an analyst at CREA, told Eco-Business that while palm oil waste can potentially be used to push up the share of renewables in its power mix, solar remains the most abundant source of clean energy for Malaysia. Bioenergy projects in the country are also presently limited by their inability to secure sufficient feedstock to support larger plants, inconsistent feedstock prices and quality, poor access to grid connections, as well as the utilisation of less efficient technologies.
Pivot to bioenergy amid palm oil export woes
Environmentalists have blamed palm oil for fuelling the destruction of rainforests in Malaysia and Indonesia – which jointly produce 85 per cent of global output – in the past decade.
However, Johari said that eliminating palm oil “would do far more damage to the world than good”, given that it requires the least land area to produce, compared to other edible oils.
Replacing the 80 million tonnes of palm oil produced annually with soybean oil, for instance, would require an additional 160 million hectares of land, while rapeseed oil or sunflower oil would need 100 million more hectares of land, said the minister.
“In light of the world’s growing concern regarding climate change and deforestation, palm oil stands to be in the best position to meet global edible oil demand, if we are able to manage how we handle our waste,” said Johari.
Each tonne of edible cooking oil produced generates about four tonnes of waste, such as palm kernel shells, palm oil mill effluent and used cooking oil, which can be used, respectively, as feedstock for biomass, biogas and sustainable aviation fuel (SAF), he said.
With green jet fuel uptake projected to rise in the coming years as SAF mandates get rolled out worldwide, including in neighbouring Singapore, Malaysian companies like FatHopes Energy and Petronas have been actively collecting used cooking oil for conversion into biofuels.
Strong demand in the EU and China pushed prices of Asian used cooking oil to an over two-year high of US$1,010 per tonne earlier this year.
The world’s second-largest producer of palm oil has faced challenges in exporting the commodity to its top three markets in recent years. Malaysian palm oil exports to the European Union – its third largest market – is expected to fall as the region’s anti-deforestation law kicks in this December.
The EU currently classifies agri-commodities imported from Malaysia, alongside Brazil and Indonesia, as having a “standard risk” of fuelling deforestation. While these countries would still be subjected to due diligence requirements, compliance checks would be less stringent compared to “high risk” countries, like Belarus, Myanmar, North Korea and Russia.
Johari disputed Malaysia’s designated risk rating at the event, citing outdated United Nations Food and Agriculture Organisation data from 2020.
He argued that Malaysia has stepped up its sustainability commitments in the last five years to comply with international requirements by enforcing a no-deforestation policy and developing its own certification scheme to ensure increased traceability, particularly for smallholders.
“The only way forward is to increase yield without planned expansion,” said Johari. “Malaysia is ready to comply with EUDR and other international certification requirements.”
