The challenges and prospects of palm oil based biodiesel in Malaysia

Abstract

The NBP (National Biofuel Policy) of Malaysia was established in 2006 to promote the sustainable production and utilization of environmentally friendly biofuels. Despite numerous government incentives and subsidies, biodiesel exports have declined significantly over the years. This paper seeks to critically examine challenges afflicting the biodiesel industry in Malaysia by analysing the key policies, framework and institutions in the country. High feedstock prices, competition with food, engine compatibility, fuel subsidies and crude oil prices were identified as the challenges hindering biodiesel development in Malaysia. The authors propose that environmental, socioeconomic and technological reforms are required to address the challenges and improve the long term prospects of the Malaysian biodiesel industry. Furthermore, the utilization of biodiesel in the Real sector, biodiesel infrastructure investments and technological innovations will safeguard Malaysia's energy security, promote cleaner environment, improve living standards and stimulate stakeholder participation in the future development, diffusion and adoption of biodiesel in Malaysia.