The use of biomass as an alternative to fossil fuels has seen a growth spurt in recent years as more environmentally minded nations are increasingly embracing alternative energy sources while moving away from fossil fuels. As one of the world’s largest producers and exporters of palm oil as well as other agricultural commodities within the region, Malaysia is well positioned among ASEAN countries to promote the use of biomass as a renewable energy source.
The country produces at least 168 million tonnes of biomass annually in which palm oil waste accounts for 94% of biomass feedstock. Meanwhile, the remaining comprises agricultural and forestry by-products including timber, rice husks, coconut trunk fibres, municipal waste and sugar cane waste. Forest residue as well as oil palm biomass have the highest energy value and are considered the main renewable energy options in Malaysia.
The total oil palm planted area in Malaysia has increased significantly in recent years. According to the Malaysian Palm Oil Council (MPOC), Malaysia currently accounts for 39% of global palm oil production. The palm oil industry generates an abundant amount of by-products, especially through its processing mills. In 2010, it was recorded that the industry yielded around 80 million dry tonnes of biomass from over 400 mills located throughout Malaysia.
There are approximately 4 million hectares of land in both Peninsular and East Malaysia used for oil palm plantation. Out of that amount, 70% are located in Johor, Pahang, Sabah and Sarawak – each with more than 500,000 hectares of land under cultivation. However, the states of Sabah and Sarawak have the largest combined ratio of planted oil palm area amounting to about 1,200,000 hectares of plantation land, which equals to 30% of the total size of oil palm plantation area in Malaysia.
Laying the Foundations
Against the backdrop of an abundance of biomass deposits and resources coming on stream, Then Prime Minister Datuk Seri Najib Tun Razak launched the National Biomass Strategy 2020 (NBS2020) in 2011 which focuses initially on oil palm biomass with plans to expand and include biomass from other sources as well.
Developed by the Malaysian Innovation Agency (AIM), a statutory body created by the government, the aim of the NBS2020 is to “jump start” wealth creation by maximising the potential of the country’s biomass resources through a balanced portfolio of downstream industries ranging from bioenergy, advanced biofuels, biochemical and eventually its end products such as bioplastics, among others.
Additionally, the strategy also outlines the action plan and opportunities in the biomass value chain that could bring in an additional RM30 billion to Malaysia’s Gross National Income (GNI), 66,000 high-value jobs, a 12% reduction in carbon emissions as well as RM25 billion worth of investment into the nation.
Realising that the success of the initiative and action plans lie ultimately with the various state governments, the states of Sabah and Sarawak are seen at the forefront, spearheading the NBS2020 initiative in order to accelerate its execution.
Exploring Biomass Potentials
The biomass industry has been recognised by the Malaysian government as one of the strategic and potential economic drivers for the country. It is projected to contribute to the nation’s GNI through the sustainable utilisation of biomass created by the higher added-value downstream activities within the palm oil industry. Malaysia is anticipated to produce between 80 and 100 million dry tonnes of biomass yearly from 2011 until 2020.
The investment outlook for the biomass industry in Malaysia looks promising. In 2014, the Malaysian Investment Development Authority (MIDA) approved a total of 12 biomass projects with investments amounting to RM82.9 million compared to 11 projects with investments of RM54.6 million just the year before. Domestic investments amounted to RM71.1 million while foreign investments totalled RM11.8 million.
Biomass projects involve value-adding on oil palm empty fruit bunches (EFB) and palm oil mill effluent (POME) to produce organic fertiliser, oil palm pellet, peeled palm lumber and fibre. Considerable opportunities exist in the downstream activities, which generate higher value-added products in the palm biomass sub-sector. Other promoted growth areas within the palm oil sector include oleochemical-based products, nutritional foods and ingredients as well as R&D activities which involve high levels of technology.
Sabah and Sarawak Biomass Industry Development Plans
In February 2016 the Malaysian government initiated the Biomass Industry Development Plans (SBIDP) in Sabah and Sarawak. Transposing the NBS2020, the SBIDP takes the lead through its feasible biomass industry securing its position as a leader in advanced biomass processes in Southeast Asia. Under this plan, more than 50% of Malaysia’s biomass properties will be produced in Sabah and Sarawak.
Launched by Datuk Seri Najib, the blueprint is set to place Sabah and Sarawak at the forefront of the high-value biomass industry and drive the strategy to position Malaysia as the premier biomass processing hub within the region. According to Mark Rozario, former Chief Executive Officer of AIM, the palm oil sector in Sabah and Sarawak has more than 50% of the country’s biomass resources combined.
Furthermore, the biomass industry has been acknowledged as one of the key economic areas for new wealth creation for the country beyond 2020. As part of the NBS2020 initiative, AIM engaged both the Ministry of Industrial Development Sabah (MIDS) and the Sarawak State Planning Unit (SPU) to customise a plan that is unique for both states as far as biomass is concerned – hence the formation of the SBIDP.
Based on the SBIDP, Sabah is projected to generate up to RM3.2 billion in additional revenue per year, 25,000 new jobs and RM13.5 billion in investments by leveraging on 4.8 million dry tonnes of biomass feedstock from its oil palm sector. The identified biomass development would be focused in three main clusters namely Lahad Datu, Sandakan and Tawau.
For Sarawak, the potential lies in becoming a multi-feedstock biomass hub. The state’s proposed commercial-scale biomass plantation on marginal land, existing forestry activities and growing palm oil plantation can provide up to 6 million dry tonnes of biomass that can support multiple biofuels, biochemical and bioenergy plants. The key biomass clusters identified are Bintulu, Miri, Tanjung Manis and Kuching. “This could help Sarawak capture RM4.8 billion additional revenue per year, 35,000 new green jobs and RM18 billion in investments,” said Rozario.
Becoming Key Players
Since the launch of the plan, both states, working alongside AIM, have been able to capture significant interest, especially from foreign investors. In line with the SBIDP, South Korea’s second-largest oil refinery – jointly owned by GS Caltex (GSC) and American oil giant Chevron – had signed a Memorandum of Understanding with Malaysia-based Biomass Green Technology (BGT) in October 2016 to explore the prospects of establishing a RM1.2 billion biobutanol plant between both states.
Biobutanol is a four-carbon alcohol produced by the fermentation of biomass. A renewable version of butanol, it can be blended with petrol and tests by the US Environmental Protection Agency (EPA) show that biobutanol reduces hydrocarbon, carbon monoxide and nitrogen oxide emissions. In addition, it also has potential as an industrial solvent and chemical feedstock.
GSC is preparing for future biobutanol production in anticipation of increased biofuel and biochemical demand in the Republic of Korea as well as around the world. Both Sarawak and Sabah are potential production sites with multiple feedstock possibilities as well as strong support from the governments. The collaboration will
not only see to the development of 2G biobutanol plants within the two states but also marks the progress toward clean and renewable energy resources in Malaysia.
Given that the government has put all the necessary plans, infrastructure, enablers and support system to accelerate this industry, combined with the vast amount of biomass availability within the two states, Sabah and Sarawak seem to be well on its way to become premier biomass processing hubs within the region thus cementing the future growth of the biomass industry in Malaysia
