Malaysia, Indonesia to set aside palm oil for biodiesel

The world's top palm-oil producers, Malaysia and Indonesia, have decided to set aside nearly 40% of their crude palm oil output [six million tonnes annually] for biodiesel production. Industry analysts said the move could further boost edible-oil prices, making it expensive for both food and energy users to buy vegetable oils. Traders said companies setting up biodiesel plants had worked out the cost of palm oil at 1,500 to 1,600 ringgit a tonne to be viable for making biofuel.

As countries from Europe to Asia seek ways to cut dependence on imported oil, curb greenhouse gas emissions and boost local agriculture, biofuel plants are sprouting at a dizzying pace. Such is the demand for palm oil-based biofuel that Malaysia has stopped licensing new producers while industry works out how to divide the raw material between the food and energy sectors.

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