Higher blending mandate to help offset EU’s lower palm oil demand, says biodiesel association

Malaysian Biodiesel Association deputy president Long Tian Ching said palm oil and palm biodiesel producers have to face the fact that exports to the EU would most likely be reduced at an accelerated pace. — AFP pic
Malaysian Biodiesel Association deputy president Long Tian Ching said palm oil and palm biodiesel producers have to face the fact that exports to the EU would most likely be reduced at an accelerated pace. — AFP pic

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KUALA LUMPUR, Jan 5 — A nimble push into higher biodiesel blends such as B40 — 40 per cent blend of palm oil-derived biodiesel — by Indonesia and B30 by Malaysia will help to mitigate the negative effects of the European Union’s (EU) lower palm oil demand for biofuel, the Malaysian Biodiesel Association said.

Deputy president Long Tian Ching said palm oil and palm biodiesel producers have to face the fact that exports to the EU would most likely be reduced at an accelerated pace, quicker than the EU Renewable Energy Directive (RED) II implementation.

RED II sets a new and binding renewable energy consumption target of at least 32 per cent for 2030 for the whole of the EU, instead of the previous 20 per cent by 2020 to be attained through individual national targets.

“To counteract these developments, local mandates will have to play a more critical role to sustain the palm oil industry,” he said at the virtual Malaysian Palm Oil Trade Fair and Seminar 2021 (POTS Digital 2021) today.

He said the association expects the actual exports of palm oil to be used in biofuel would start at a much lower level because member states could set a lower limit.

Besides that, he said, there is a high possibility that member states would phase out high indirect land-use change (ILUC) palm biodiesel even before 2030.

According to RED II (Article 26), a member state’s share of high ILUC-risk biofuels shall not exceed the level of consumption of such fuels in that member state in 2019.

“In aggregate, we estimate total palm biofuel use to be 6.2 million tonnes for the entire EU in 2019. Starting from 2024 till the end of 2030, high ILUC palm biodiesel shall gradually decrease to zero tonne,” he said.

He said some of the EU states have started earlier phase-outs with France’s legislation removing palm oil from a list of permitted biofuels from January 2020 and eliminating related tax advantages.

Long said the country’s law specified that palm oil cannot be considered a biofuel unless producers can guarantee it has been produced under conditions that prevented an indirect increase of greenhouse gas emissions while tax exemptions for other biofuels remain in place.

Meanwhile, he said in October last year, Denmark’s governing parties put forward a law to ban biofuels based on palm oil from being included in the fulfilment of the blending requirement.

Themed “Malaysian Palm Oil — Forging Ahead in the New Norm”, the four-day POTS Digital 2021 which started today is organised by the Malaysian Palm Oil Council (MPOC). — Bernama

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