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Living in Malaysia, one can’t help but be aware of our golden oil crop, palm oil. It is literally everywhere, which got me thinking about whether we could use its residue to support our national efforts around energy and food security. The results were surprisingly positive. Sounds too good to be true? Here’s the story.
Palm oil is extracted from the flesh or outer part of the fruit. From the palm fruit seed or kernel, palm kernel oil is extracted. Both are useful materials, with palm oil traditionally used for edible purposes such as cooking and frying, whereas palm kernel oil is for non-edible purposes such as the formulation of soap, cosmetics and detergent. The residue that remains — tonnes of it — is known as palm kernel cake (PKC). It is estimated that Southeast Asia produces close to nine million tonnes per year, with 90% being exported as low-cost waste for cattle fodder in far-off markets including New Zealand, South Korea and Europe.
Now, new fermentation technology, using patented industrial biotechnology, can break down the fibers in PKC to produce ethanol that can be used as a blend in normal fuel or as a raw material for aviation fuel. Since PKC is a processing residue and a non-food source, it could well become a suitable feedstock for sustainable aviation fuel, commonly known as SAF. The global market for SAF is estimated to be close to US$1 billion (RM4.7 billion) in 2024, and rising to US$33 billion by 2032 as airlines are mandated to use a more sustainable fuel.
Currently, SAF producers rely on waste cooking oil as their raw material. That’s right, the stuff you throw down the drain. If collected at scale, waste oil can be processed into aviation fuel, and since it is produced from waste, then it is considered sustainable. Similarly, the waste oil from palm effluent is increasingly being aggregated for SAF, hence, preventing it from ending up in our rivers. This is hugely positive for Malaysia but may not by itself be sufficient to satisfy future SAF demand.
Malaysia would be better positioned to become a regional SAF production hub if it could supplement its waste oil feedstock with residue like PKC. Once the production hubs are built, we could move on to next-generation biomass (cellulosic) feedstock that is abundant, resulting perhaps in cost leadership for SAF. The National Biomass Action Plan 2023 already describes the setting up of biomass aggregation hubs. Having said that, a Boeing sponsored study looking into suitable feedstock in Southeast Asia for SAF, doesn’t even have PKC on its radar screen, so the opportunity may well pass us by.
It now gets even more interesting because a co-product from turning PKC into SAF is a protein-rich material that can be used as poultry (chicken) feed to replace imported corn and soybean. Malaysia is one of the most dependent countries in Southeast Asia on imported animal feed. In 2022, we imported more than five million tonnes of corn and soybean products from countries like Brazil and Argentina for poultry and other livestock.
The demand elsewhere in Southeast Asia is also very high, with more than 20 million tonnes per year of soybean and other protein meals being imported. Population growth and increasing consumption per capita, associated with higher incomes, will push up demand by 20% within the next 10 years.
Imports are likely to be compounded by trade complexity, with currency depreciation and delays due to wars spiking prices overnight. It is expected to be further exacerbated due to climate change-induced challenges to food security, with drought, wildfires and extreme weather events affecting some of the world’s biggest crop-producing countries. If we don’t act to lower import costs, the day will come that chicken will be a luxury product!
Furthermore, an early start in large-scale biotechnologies will build the expertise and talent in the nascent industry. If we take a lead, Malaysia could be a base for other bio-based products, creating multiple spillover effects and attracting other industrial biotechnology industries to set up in the country using our raw materials and expertise. We already have good examples of creating these ecosystems with the electronics industry in Penang and petrochemical industries.
So, what’s the barrier?
It’s not technology. The technology is well known and is already being used to convert other crops such as corn, wheat, rice and even tapioca into ethanol. The technology is promising, and our own Ministry of Science Technology and Innovation (Mosti) has examined and verified that the technology can have a positive benefit for the country.
Why then, have we not built PKC biorefineries in Malaysia? Even positive change comes with risk, and creating something new needs supporters and the right environment to succeed. The bigger the scale, the bigger the benefits for Malaysia, but also the bigger the cost. A small processing factory will cost around US$20 million, and a large factory can cost up to US$100 million to process 250,000 tonnes of PKC per year. Climate-related and impact funds can play an important role by offering lower cost financing to jump-start the industry. But investors with deep pockets also need to step up to take the risks that come with launching a new industry.
Our neighbor, Indonesia, is in the process of launching its first plant. It has shown the appetite to take on the risks and is well placed to harvest the rewards. Unfortunately, in Malaysia, similar players seem to priorities segments that they already know well.
Malaysia stands a chance to manage volatile chicken and egg costs by reducing its dependence on imported feed, while becoming the world’s epicenter of SAF. Not only can it be an affordable and secure source of protein for the country’s growing population, but the green fuel could be a huge financial and environmental advantage for our airline companies, not to mention our airports (stop in Kuala Lumpur to fill up!). More stops in KL will trigger more tourism, giving the country yet another boost.
Malaysia badly needs a “win” and my guess is this is it.
Having taken a break from running a media company, Premesh Chandran is looking at how Malaysia can better prepare for the decades ahead. He can be reached via LinkedIn.
Source: theedgemalaysia.com