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Ready-to get biomass is in abundant supply
Oil palm is the most important agricultural crop of Malaysia where oil palm plantations are spread out across both Peninsular and East Malaysia, with the states of Sabah and Sarawak containing the largest proportion of planted area. The total acreage under cultivation grew from 3.38 million hectares in 2000 to 4.85 million hectares in 2010. Besides, today FFBs are harvested and collected in the plantations and subsequently transported to the mills for production of crude palm oil. As a result, EFBs, palm kernel shells and mesocarp fibre already accumulate at the mills and are thus readily available to be transported to aggregation hubs or downstream processing facilities.
Six types of oil palm biomass can be produced as by-products of the palm oil industry: oil palm fronds, oil palm trunks, empty fruit bunch, palm kernel shells, mesocarp fibre and palm oil mill effluent.
Huge existing market demand of biomass pellets
Converting biomass to pellets will allow plantation owners in Malaysia to immediately capitalise on available biomass. Pellets produced in Malaysia can be shipped to Europe as well as Japan or Korea to be burned for energy. There is an existing market demand for pellets from European energy utility companies that need to meet European renewable energy targets. Similarly, Japan is sourcing biomass for co-firing to ensure sufficient energy supply given its reduction in nuclear energy capacity. The current European market is about 10 million tonnes of pellets p.a., which at current growth rates could be as much as 90 million tonnes. p.a. by 2020. European utilities value assurance of supply and longer term contracts (i.e., 12–18 months), and Malaysian pellet companies that can meet these needs may be able to command a higher price.
The national strategy lays the foundations
The National Biomass Strategy 2020 lays the foundations for Malaysia to capitalise on its biomass by channeling it into higher value downstream uses. A conservative scenario of utilizing an additional 20 million tonnes of oil palm biomass by 2020 for higher-value uses has the potential to contribute significantly to the nation’s economy. In addition to a significant incremental contribution to GNI of RM 30 billion by 2020, this National Biomass Strategy 2020 offers Malaysia a way to meet its renewable energy target, reduce emissions and create about 66,000 incremental jobs.
Low investment, quick payback
A medium sized pellet plant of 100,000 tonnes capacity p.a. requires an investment of RM 30–40 million and has a payback period of 3–5 years. Because of the low capital costs, the biomass need not stay locked into this use and can be channelled to higher value uses once the technology and infrastructure is in place.