Malaysia to switch to biofuel

From Straits Times Interactive:

MALAYSIA, the world’s second-largest palm oil producer, will make it mandatory for all vehicles to use biofuel from next year, the government announced on Wednesday.

Malaysia’s plans to shift to biofuel – a mixture of diesel with five per cent processed palm oil – have been delayed over the past few years due to price fluctuations. The plan will now be implemented in stages in several central states from June 2011, the Plantation Industries and Commodities Ministry said in a statement, adding that the extra cost will be borne by petroleum companies.

The policy ‘will benefit the country as biofuel is environmentally friendly and it will reduce our dependence on petroleum diesel,’ the ministry said. ‘It will also strengthen the palm oil prices and enable the planters, especially smallholders, to benefit from the stronger palm oil price.’

The ministry said it will discuss the implementation mechanism with petroleum companies, while the government will set up six petroleum depots with blending facilities. The government has said the switch to biofuel will help reduce the cost of fuel in Malaysia, where petrol is subsidised, but conservationists have criticised oil palm plantations for destroying wildlife habitats.