Malaysian palm oil industry plays crucial role in achieving net zero targets
The Malaysian palm oil industry has long practised zero waste principles by turning agricultural waste into useful resources, which also prevents carbon emissions from decomposition of waste.
Whether it is solid waste — comprising empty fruit bunches (EFB), fibre and shells — or liquid waste, which is the palm oil mill effluent (POME) generated from the processing of fresh fruit bunches to crude palm oil, all parts of the oil palm are turned into fertiliser, fuel and other products.
This is a crucial step towards achieving a true circular economy, where nothing is wasted, and it aligns with three of the United Nations’ Sustainable Development Goals (SDG): SDG 7 (affordable and clean energy), SDG 12 (responsible consumption and production) and SDG 13 (climate action).
These efforts by the palm oil industry also support Malaysia’s goal to achieve net zero emissions by 2050, which is outlined by policy documents like the National Energy Transition Roadmap and New Industrial Master Plan 2030.
The major palm oil industry players in the country have set their own net zero targets, alongside various sustainability goals that are aligned with the national targets and global demands.
To further support the industry, the Malaysian Palm Oil Council (MPOC) published a study in November 2024 to drive the Malaysian palm oil industry towards carbon neutrality and net zero emissions.
The study, done in collaboration with Swinburne University of Technology (Sarawak campus), outlines a roadmap for the industry to reach net zero and strengthen its role as a global leader in climate-smart agriculture.
It also showcases the industry’s ability to achieve net zero emissions above the global average through compliance with the Malaysian Sustainable Palm Oil (MSPO) certification.
The MPOC’s study reviews current systems in place and introduces emerging technologies. It also provides an overview of challenges faced by the industry in implementing these solutions, and provides recommendations for consideration.
Some of the current practices that have achieved significant outcomes are the use of combined heat and power systems and biogas capture from POME. The MSPO certification requirements coupled with industry best practices have resulted in 68.8% of the industry’s greenhouse gas (GHG) emissions reduction by replacing fossil fuels and avoiding methane emissions.
POME is a highly acidic but nutrient-rich wastewater, which emits methane gas that can be harnessed to generate energy. The energy is used to either power operations in remote mills or sold to the grid.
Other organic waste from plantations like fronds, palm tree trunks and EFB are used as mulch and fertiliser for healthier soil. Waste from palm oil mills like palm mesocarp fibre, palm kernel cake and palm kernel shells are burned in controlled facilities to generate energy, thus reducing the use of fossil fuels.
Many of the emerging technologies introduced in the study involve more effective use of EFB. The current industry practice is to return EFB to plantations as mulching materials, or to convert them into biofertiliser or animal feed. Some advanced power plants might be able to use EFB as feedstock.
An emerging solution identified in the report is to convert EFB into briquettes or pellets, which can be used to generate renewable energy. Another is to convert EFB into biochar via pyrolysis, which is where organic matter is heated in a stable environment without oxygen. The resulting product is a black solid called biochar that can be used for soil aeration as well as water retention in soil, improving its quality and also enhancing carbon storage in soil, contributing to long-term sequestration.
Moreover, EFB can be used in gasification technologies to produce synthetic gas, which in turn is used for green power generation. Gasification is a process where feedstock, EFB in this case, is exposed to high temperatures without actual fire, with minimal oxygen and steam. EFB can also be fermented to obtain bioethanol, which has many uses across industries.
For more of these emerging technologies to be implemented at a large scale, more research and development (R&D) is required. Collaborative efforts between industry players, researchers and government agencies are also needed.
Additionally, to reduce the cost of the technological solutions, the local manufacturing of equipment has to be expanded. For instance, biomass power generation requires high-pressure steam generators, of which local manufacturers are unable to produce. Besides, some anaerobic digestion components used in the biogas production pipeline are also imported from Germany, according to MPOC’s study.
On the other hand, more efficient collection, transport and storage of biomass materials is needed, and the yield and quality of the materials used must remain consistent.
With a consistent and high-quality feedstock, coupled with good infrastructure — such as reliable electricity grid access and transport networks — the palm oil industry can lead in producing green energy for the nation from agricultural waste.
Of course, for that to happen, substantial capital injection would have to be available, so more can be done for companies to access financing, grants and incentives to alleviate the financial burden of adopting emerging technologies.
The MSPO certification is mandatory for the palm oil industry and its plantations in Malaysia, and it is a national initiative to make palm oil production more responsible, ethical and competitive.
The certification standards are routinely reviewed to ensure they are up to date and can help Malaysian planters meet global demands, while assisting smaller planters who might require more resources to transition to sustainable practices.
For example, an independent plantation smallholder with less than 46ha would not be audited under the same guidelines as a plantation with more than 500ha.
The MSPO standards were last updated in 2022, and implemented earlier this year. The revised standards were strengthened with more stringent sustainability requirements, including a “No Deforestation” cut-off date of Dec 31, 2019, and high conservation value (HCV) assessments. They also focus on social responsibility, transparency and ethical conduct, as well as improved traceability systems.
The MSPO standards are also facilitating the Malaysian palm oil industry to achieve their net zero commitments and mitigate climate change. On the environmental front, companies are now required to identify sources of GHG emissions, and monitor and plan for emissions reductions.
To assist companies along this journey, MSPO developed a GHG calculator, which will be released later this year for public use.
Recognising the global pressure on oil palm companies to adopt sustainability, many Malaysian companies have already been investing in these efforts and pushing the boundaries of innovation in sustainability.
Generating energy using POME in mills is quite commonly done by the plantation companies, as is the use of solid waste from oil palm as fertiliser. But the companies are not stopping there, and continue to invest in R&D to innovate new solutions.
SD Guthrie Bhd, for instance, recently launched a project in Carey Island, its innovation hub, where all machinery and previously diesel-powered vehicles have transitioned to B30 biodiesel, which is a blend of 30% palm oil and 70% diesel. According to the company, it achieved up to 23% reduction in GHG emissions from this initiative.
Meanwhile, IOI Group replaced diesel-powered agricultural machines used on its plantations with electric-powered ones. In remote estates, it is using solar farms to generate renewable energy.
The company has also established IOI Palm Wood Sdn Bhd to convert unused oil palm trunks into high-performance palm wood panels for furniture and the building industry, and partnered with Nextgreen Global Bhd to develop a zero-waste paper pulp plant from EFB.
Kuala Lumpur Kepong Bhd started installing the filter belt-press (FBP) system, which reduces methane formation and turns POME into fertiliser. Water, which is a by-product from the process, is recycled for cleaning purposes. According to the company, 35 FBPs have been installed.
United Plantations Bhd, which received the world’s first Roundtable on Sustainable Palm Oil certificate in 2008, has been tracing its emissions using life cycle assessments (LCA), completing the first LCA on palm oil in 2008.
The latest LCA report from February 2025 found that the company has shown a 60% reduction in GHG emissions per kg of palm oil produced from 2004 to 2024, when including indirect land use change and nature conservation, as well as Scope 1, 2 and 3 emissions.
On the other hand, FGV Holdings Bhd invested in a waste-to-wealth initiative that generates energy from POME, and exports palm kernel shells to Japan as biofuel. More recently, FGV invested in spent silica valorisation and glycerine pitch valorisation processes.
Spent silica, which is a by-product from the biodiesel pre-treatment plant, is repurposed to absorb 90% of phosphorus and 60% of free fatty acids in crude palm oil. Meanwhile, glycerine with impurities, which comes from the glycerine refinery plant, is repurposed as a catalyst for solid biofuel production.
Clearly, there is a lot of developments and innovations in the palm oil industry to head towards zero waste and net zero emissions. As the industry players continue to invest in R&D to implement more innovative solutions, the path forward for sustainable Malaysian palm oil is clear and achievable.
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