Biofuel Debate (2nd Part)

I am definitely not qualified to debate on biofuel as im not an economist, an industry player, an activist and definitely not a politician thus my views are going to be very personal and general. From what I have been observing lately, on the global and local trend on biofuel, there seems to be groups that believe in this golden oil and critics who oppose this technology. In my previous post, I uploaded a link in which Sillicon Valley billionaire, Vinod Khosla presented passionately on the potential of biofuel which can reduce the dependence on black gold (petroleum) drastically. His vision was instantaneously criticized by biofuel critics. It is difficult to deny the importance of critics, as they serve to keep technology in a check and balance manner, but unfortunately, those opposing new technology often does it beyond logic and without scientific relevance. Some of which we can see in cases where GM Food is often said to be dangerous even when there has not been a single food safety issue since the technology was commercialized more than 10 years ago.

I am not going to discuss on the benefits raised by Khosla or the issues brought up by the critics, but I am going to discuss some of the main issues plaguing bifuel players in Malaysia. When biofuel or biodiesel is mentioned, the first thing that comes to our mind is fuel from palm oil. Biodiesel is not all about palm oil. Biodiesel is actually fatty acid or known as ethyl esters. These are byproduct of the reaction between vegetable oil and ethanol. Any vegetable oil can be transformed into biodiesel, even used cooking oil can be filtered and processed to be used as biodiesel.

Producing biodiesel from palm oil has its advantages. Recently I came across an article published in The New York Times, which claims that we are converting forests into palm oil farms so rapidly that Malaysia is running out of uncultivated land. This statement was clearly made without the understanding that oil palm trees are the most productive oil producer compared to other oil crops. It simply means, to produce one ton of palm oil requires far less land than other crops such as canola or rapeseed. At an average production rate, 600 to 700 gallons of biodiesel can be produced per acre. Malaysia is blessed with the right environment and climate which propelled us to be one the largest palm oil producer supplying nearly half of the world demands. But despite this advantage, producing biodiesel from palm oil may not be the best strategy.

So far 91 manufacturing licenses for biodiesel plants have been approved but only five is in operation. Few years back the government had to stop giving out licenses due to too many applications but now they are requesting those who are not interested to return the license. This clearly shows that there are some pertinent issues on the reluctant shown by the industry players to start producing biodiesel. One of the main reasons for this is the fluctuating Crude Palm Oil (CPO) price in the market. This causes unpredictability for the industry players to determine a standard price as well as to forecast profit. Adding more uncertainty to this equation is the price of crude petroleum prices that is not stable. Palm biodiesel will only interest the industry if the petroleum prices are high and CPO prices are low. Not only this is a rare case as the CPO at most times tag along with petroleum, but even if this ideal state can be attained, it doesn’t stay in that way for a long time. This is one of the main reasons on why palm biodiesel did not live up to the hype that was created years ago.

Besides the trade and pricing issue, converting too much palm oil to biodiesel may reduce the supply of oil used for food production which then will affect the prices of food. European environmentalists are already bringing up unsubstantiated claims that Malaysia and Indonesia are clearing up forest to meet the demand for biodiesel. Thus we can’t simply increase our production by planting more oil palm trees but we have to find alternative ways to increase yield maybe through the use of biotechnology to produce better variety. Until then mass production of biodiesel from palm oil has to be put on hold. On my third and final discussion, I will discuss on other alternative ways to produce sustainable biofuel.

By Joel William