Malaysia Mulls Perks For Palm Oil Millers To Be Green IPPs

The Malaysian government is carrying out a comprehensive study to help palm oil millers reduce their carbon footprint and at the same time become green independent power producers

The government may offer specific incentives for palm oil millers to recycle waste to generate renewable energy and contribute to the national power grid, said Plantation Industries and Commodities Minister Tan Sri Bernard Dompok.

“We’re carrying out a comprehensive study to help palm oil millers reduce their carbon footprint and at the same time become green independent power producers (GIPPs),” he told reporters after touring Bell Eco Power Sdn Bhd’s biogas power plant in Batu Pahat, Johor yesterday.

“This will be in line with the country’s overall policy to reduce dependence on fossil fuel. By 2020, we target annual usage of renewable energy to 2,000 megawatts (MW) from just 50MW now.”

Dompok said his ministry will work with two other ministries – the Energy, Green Technology & Water Ministry and the Rural & Regional Development Ministry – to streamline new incentives with existing efforts on electrification of rural areas.

According to the Malaysian Palm Oil Board, there are now 417 palm oil mills in the country, of which 117 are in Sabah.

Mills emit methane from retention ponds after oil extraction. Estate owners can trap methane from the mill sludge and re-use discarded empty fruit bunches to fuel up steam turbines and generate electricity, a renewable source of clean energy. Biomass and biogas technology is available now.

Currently, utility giant Tenaga Nasional Bhd via its “Small Renewable Energy Programme” is offering to buy renewable energy at only 21sen/KWh. Bell Group’s 60-tonne-per-hour palm oil mill is able to generate 2MW of electricity in a year. By selling electricity at 21 sen/KWh to Tenaga Nasional, GIPPs like Bell Group get to earn some RM3 million a year.

Not all palm oil millers can do the same as Bell Group because many are located far away from the national power grid and the cost to connect to the grid can be formidable.

The Ministry of Energy, Green Technology and Water is facilitating RM1.5 billion worth of cheap loans via local banks for the provision and usage of green technologies. While palm oil millers can gain access to this cheap loans, this fund is shared with property developers and home owners looking to build and buy buildings incorporating energy-efficient lightings and water saving toilets.

Palm oil millers have suggested that if the government fund hook-up cost to the national grid and raise power purchase price to 30sen/KWh, the initiative to convert greenhouse gas to electricity for the benefit of neighbouring rural communities can be realised more quickly.

Dompok commented that incentives to encourage palm oil millers to be GIPPs will reinforce the notion that oil palm planting is sustainable.

“It is important that we provide scientific evidence that palm oil is produced in a sustainable manner in view of the European Union’s Renewable Energy Directive that will impose a target to only accept biodiesel that can reduce carbon dioxide emissions by at least 35 per cent versus fossil fuel,” he said.

Currently, Europe considers palm oil produced by plantations that have not installed any greenhouse gas capture facility to save only 19 per cent carbon emissions versus that of fossil fuel.

If oil palm estates were to capture these dirty gas and convert them to energy, palm biodiesel shipped into Europe will definitely qualify for the technical qualifications specified under the EU Renewable Energy Directive.

“Also, since this carbon emission savings initiative can help in the electrification of rural areas like in Sabah and create jobs, it will be of national priority,” he added.

Source: Business Times by Ooi Tee Ching

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