Studies of oil palm's life-cycle green house gas emissions mostly show that oil palm-based biofuel meets an initial European target for reduction of GHG emissions, but results vary widely and Malaysia will have to push for recognition of a consensus on the size of the reduction to qualify for European subsidies late next year, an industrial executive said Monday.

Later in the coming decade, the GHG reduction targets will rise, and local mills will have to upgrade their processing methods to meet them, said Yusof Basiron, chief executive of the Malaysian Palm Oil Council.

Life-cycle analysis assesses environmental consequences, including reductions in GHG emissions relative to use of fossil fuels, from the moment the oil palm crop is planted to its consumption as a biofuel.

Due to the various processing and analytical methods employed, life-cycle assessments carried out by researchers around the world have estimated GHG savings from as low as 19% to as high as 72%, making it difficult for international bodies drafting biofuel legislation and standards to find a consensus GHG value for palm oil and other oilseeds crops, Basiron said.

According to a proposed EU directive, biofuels must result in greenhouse gas reductions of at least 35% compared with fossil fuels by 2010. This will go up to 60% by 2018.

However, according to preliminary calculations from the EU, the use of palm oil-based biodiesel achieves only a 19% reduction in greenhouse gas emissions using existing production technologies.

One reason for the preliminary finding was that methane is emitted into the atmosphere when oil palm fruits are crushed into palm oil.

Basiron, speaking at an industry conference, said Malaysia could achieve better GHG reduction by upgrading its processing methods, as methane emission accounts for 51% of the oil palm's emissions, and 96% of the country's palm oil mills operate without capturing methane at the crushing stage.

However, Malaysia will need to push in the near term for recognition of a standard GHG savings value using current technologies and processes, so that its palm oil will be eligible for European subsidies a biofuel feedstock under the proposed EU directives, due to be in place by November of next year, he said.

Under the Renewable Energy Directives, the EU is targeting use of renewable sources by 2020 for at least 10% of the energy consumed in the transport industry.

The target could create demand for around 23 million tons of biofuels annually, based on industry estimates. That figure is half of the annual global palm oil output of 42.7 million tons, and exceeds Malaysia's annual palm oil production of around 17 million tons.

-By Shie-Lynn Lim, Dow Jones Newswires; +603 2026 1233; shie-lynn.lim@dowjones.com

(END) Dow Jones Newswires

October 19, 2009 04:35 ET (08:35 GMT)

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