Malaysia plans phased expansion of palm oil biodiesel programme

The Malaysian government is considering a phased expansion of its national palm oil-based biodiesel programme, currently at a 20% blend (B20), amid rising global oil prices driven by geopolitical tensions and disruptions in energy logistics.

The transport sector currently operates under a mandatory B10 blend, while B20 has already been implemented in selected regions, including Labuan, Langkawi, and most of Sarawak. Authorities are evaluating a gradual increase to B20 and potentially B30.

Plantation and Commodities Minister Noraini Ahmad said the government remains committed to progressively increasing biodiesel blending levels. She noted that the current B10 mandate leaves significant room for further expansion of biofuel usage.

She added that surging crude oil prices have strengthened interest in alternative fuels, while top producer Indonesia has already implemented a mandatory B40 programme and is considering a move toward B50. This is also influencing global vegetable oil markets.

In 2025, Malaysia’s biodiesel production stood at around 975,000 tonnes, well below its total installed capacity of 2.36 million tonnes, highlighting underutilisation in the sector. Authorities acknowledge the need to upgrade blending and distribution infrastructure.

A five-year programme includes planned upgrades of blending depots in key regions such as Sandakan, Tawau, Sepanggar, and Bintulu to support a gradual shift toward higher biodiesel blends.

Tags: Malaysia, palm oil, biofuel