Shabery said Malaysia could transition from conventional diesel fuel to B100, a 100% palm oil-based biodiesel, because it produced 20 million tonnes of palm oil annually – with six million tonnes used for the food industry and the remainder exported.
“If we want to fully replace diesel with biodiesel, we would need around five to six million tonnes of palm oil per year, meaning the supply is more than sufficient,” he said, as reported by Utusan Malaysia.
“However, the country faces constraints in producing biodiesel on a large scale due to a lack of processing plants. Significant costs are required to construct more plants, and it also takes time.
“In the current situation, tax incentives are the easiest and most effective approach, compared to grants or contributions, for building plants to accelerate biodiesel adoption,” he said after a briefing on FGV Holdings Bhd’s B100 pilot project in Kuantan.
Shabery said the B100 pilot project could help strengthen the nation’s sustainability agenda through the use of clean fuel.
He said the initiative not only promises operational cost savings but also reduces dependence on imported fuel and drives domestic demand for crude palm oil.
Shabery said the B100 pilot project would first be implemented within Felda’s ecosystem, involving its vehicles, machinery, and equipment in Kuantan.
Last week, Shabery said B100 could provide a more competitive and sustainable alternative energy source compared to diesel, especially amid global fuel supply uncertainties due to the conflict in the Middle East.
The factory price of B100 is estimated at about RM4.50 per litre, depending on crude palm oil (CPO) prices.
In Malaysia, diesel pump prices rose from RM2.80 to RM6.72 within six weeks, before being reduced to RM5.97 today.
Malaysia has pledged to increase its biodiesel blend from 10% to 15% due to the Middle East conflict and the closure of the Strait of Hormuz, which has pushed energy prices higher.
Economy minister Akmal Nasrullah Nasir said yesterday that Malaysia could roll out higher biodiesel blends such as B15 at fuel pumps within as little as six weeks, as it did not require major infrastructure upgrades.
All retail diesel in Malaysia is already pre-blended upstream under the national B10 mandate for the transport sector.
Higher blends of B20 have already been implemented in Labuan, Langkawi and Sarawak, as well as in pilot projects at KLIA and selected ports, including Northport, Johor Port, Port of Tanjung Pelepas and Kuching Port.