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Malaysia should not reduce or stop biodiesel mandate, says association

27/04/2022 09:58 AM

KUALA LUMPUR, April 26 (Bernama) -- The Malaysian Biodiesel Association (MBA) is against a move to reduce or retract the biodiesel mandate in Malaysia.

In a statement today, MBA has urged the Malaysian Palm Oil Board (MPOB) to engage the biodiesel industry before taking any precipitative action.

“The palm oil industry as a whole; both upstream and downstream biodiesel would suffer from any such action; as it would result in CPO price crashing to a very low level.

“This, in turn, would affect the over three million smallholders globally,” it said. 

In reference to Reuters’ report yesterday (April 25), MBA explained that it was important to note that the global supply and demand of vegetable oils are controlled by a number of factors.

“Without doubt, the current Russia-Ukraine war further worsened the global vegetable oil supply chain constraints, since Ukraine is the world’s largest producer of sunflower oil.

“The Indonesian government’s decision to ban palm oil export is aimed at protecting its domestic cooking oil market. They, however, did not retract its biodiesel mandate which is currently at B30,” it said. 

In addition, MBA said that similarly, other countries like the United States, Argentina and Brazil, as well as the European Union (EU) have not come up with any recommendations to retract their biofuel programmes.

According to the MBA, the situation for Malaysia is completely different as the country is mainly an export-oriented market with a small domestic market.

“As such, Malaysia should not reduce or stop its biodiesel mandate as the biodiesel industry hardly consumes one million tonnes of palm oil annually; against over 40 million tonnes used globally,” it said. 

The association said drawing up a balanced global fuel versus food policy is a complex and strategic matter.

“Every country needs to balance its own energy security, foreign exchange, commodity prices, consumer demand for both food and fuel, as well as its political situation.

“Any knee jerk reaction to ban biofuels derived from vegetable oils would cause havoc in the global vegetable oil market. Every country would need to prioritise its own needs,” MBA noted. 


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