AreaMalaysia

Commodity GroupBiofuels

CommodityBiodiesel

Date01/11/2018

Policy CategoryRenewable energy

Policy InstrumentBiofuel policy

DescriptionDecided to implement its long-standing plan to raise the country’s mandatory blending rate for biodiesel, with the objective of boosting domestic demand for the commodity and supporting palm oil prices. Mandatory blending of transport diesel with 10 percent rather than 7 percent of palm oil-based biodiesel became effective on 1 February 2019.

NotesAcknowledging the recent narrowing in the gap between palm oil and mineral oil prices, the Malaysian Government decided to implement its long-standing plan to raise the country’s mandatory blending rate for biodiesel (see also MPPU Aug.’18). Reportedly, the new policy – which would require transport diesel to be mixed with 10 rather than 7 percent of palm oil-based biodiesel – will be phased in from 1 December 2018, with mandatory blending taking effect on 1 February 2019. In addition to the compulsory 10 percent-blends in the transport sector, a 7 percent blending rate is set to become mandatory for the industrial sector from July of next year. The measures are expected to boost domestic demand for palm oil and support the oil’s price, which, due to large domestic inventories, has dropped to multi-year lows.