Malaysia has suspended giving new licenses for biodiesel production projects amid concerns that an excess of projects could deprive the food market of palm oil, widely used in cooking. The government received 87 applications since last year, raising concerns that it could eat into crude palm oil, or CPO, reserves meant for food and oleochemical industries. Rising crude oil prices have sparked keen interest in converting palm oil into methyl ester, a diesel substitute.
With an annual CPO production of 15 million tons, Malaysia is the world's biggest producer of crude palm oil, the main ingredient of biodiesel. Spurred by the interest in the fuel, the government has so far approved 32 biodiesel projects with a combined production capacity of about 3 million tons.