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Pacific Rim Panorama
author : Biodiesel Magazine Date :22 September 2009

Malaysia and the Philippines are building their exporting power as the market for biodiesel becomes increasingly global. China and Japan are investing heavily in feedstock development for their own biofuels industries. Other regions of Asia are also becoming hot spots, even though some suggest these developments may come at the expense of ancient, ecologically diverse landscapes.

By Nicholas Zeman


Malaysian biodiesel exporters are motivated to fill some of the gap created by the implementation of anti-dumping measures imposed on U.S. B99 going to the European Union, and recent deals signal market interest in the area’s products. While the quality and price of palm methyl esters (PME) are attractive to traders, there is growing opposition to the fuel in Europe mostly because of record-setting deforestation in Indonesia, which was preceded by destruction in Malaysia. These are practices that the notoriously conscientious European consumer does not want to be associated with. “They don’t want dirty palm oil,” says Rolf Skar of Greenpeace USA. “The marketplace is going to be more demanding than government regulations.” 

Now in the midst of its own indirect land use debate preceded by similar controversy in the United States, Europe is reassigning emissions values to varying types of methyl esters. On that note, palm has the highest oil yield per hectare of all vegetable oil feedstocks—seven times soybeans and three times rapeseed—but the practices behind its production are said to have destroyed countless millions of acres of the world’s most amazing real estate and contribute to global warming. “We are concerned about market sentiment in regard to palm biodiesel,” says Bryan See of Carotech Bhd, a palm oil and biodiesel producer located near Perak, Malaysia. “But the government of Malaysia does have regulations in place that serve to protect our forests.”


The EU and the European Biodiesel Board have also been involved in an aggressive campaign to ensure fair competition in the market. The EU gives preferential treatment to so-called developing countries in regard to tariffs, but including Asian PME under that umbrella seems strange to European producers. “It doesn’t make sense to consider Malaysia and Indonesia ‘developing countries’ when it comes to palm oil production,” says Rafaello Garofalo, secretary general of the European Biodiesel Board. “Their palm oil industries are the most developed in the world.” 

Recent developments indicate Europe’s market for PME is growing. Recently, South Korea's SK Chemicals has signed a $48 million contract with European trader Trafigura for palm oil-based biodiesel supplies. SK Chemicals will supply Trafigura, the third largest independent oil trader in the world, with a total of 60,000 metric tons (18 million gallons) of PME in 5,000-ton monthly shipments starting in January. SK Chemicals has completed the expansion of its Ulsan refinery, which tripled its biodiesel capacity to 2,450 barrels (102,900 gallons) per day, with plans for future expansion. 

Trafigura has two blending terminals in South Korea and another in Singapore. Asia's installed biodiesel capacity currently stands at around 4 million tons per year and will continue to grow, the Foreign Agriculture Service reports. It estimates Asia-Pacific biodiesel exports around 500,000 tons per year. In Malaysia specifically, 12 biodiesel plants, with a combined capacity of about 1.5 million tons, are in operation, and the Pasir Gudang port in Johor, Malaysia, is the largest vegetable oil handling terminal in the world today, FAS reports. 

The Roundtable on Sustainable Palm Oil is a certifying body that provides certain palm oil products with a “green stamp” of best production practices, although it does not make very strong demands of its members. “Their tools on the ground are not very reliable for verifying that palm oil is produced in a sustainable way,” Skar tells Biodiesel Magazine. “Also, several of their members really have no interest in changing their businesses, but want to profit off the green stamp of belonging to the roundtable.” 

In late 2008, Carotech also inked a $57 million contract with Trafigura to supply between 60,000 and 84,000 tons of biodiesel a year to Europe. “This contract will account for 60 percent of our biodiesel capacity,” says See. “This very significant contribution to the world market gives us a platform for consistent production in these difficult times.” 

The uncertainty of crude oil and palm oil prices is causing difficulties in Malaysia, along with fears that the EU could restrict or even prohibit PME from entering its ports because of sustainability criteria. “Palm oil biodiesel makes up less than 5 percent of the entire European market,” Garofalo says. “So it has very niche sales.” 
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