Upgrading of Malaysian palm oil biofuel industry: Lessons learned from the USA and Germany’s policies

Abstract

As one of the leading global producers of palm oil, Malaysia has the potential to play a pivotal role in global palm oil diesel production. However, such potential will be difficult to exploit based on the industry’s current scenario. The new framework, known as “Strategic Dimensions and Implementation of the National Biofuel Policy in Malaysia”, is vague and the current level of implementation is limited. Thus, a comprehensive and well-structured policy framework for Malaysia’s palm oil biofuel industry is not only important in ensuring that its products, such as biodiesel, meet global standards but also to provide greater benefit to the industry as a whole. This paper presented a brief overview of German rapeseed biodiesel and US corn ethanol policies, aimed at providing a new perspective that can be adopted to reshuffle the existing policies governing the Malaysian palm oil biofuel industry. Throughout this paper, different strategies and policies designed to protect the biofuel industry in the US and Germany are discussed in this study. Such policies would be a good benchmark for the Malaysian government to emulate in an effort to improve its existing policies, strategies and blueprints relating to the palm oil biofuel industry development. This review also contributes to the oil palm industry, particularly in developing countries, by highlighting the importance of comprehensive policies and strategies in accelerating its development.