Review of Literature

Energy Policy Codes

Since 1949, Malaysias energy policies have been well-established throughout the years

till now. While the initial energy policy was introduced by the Central Electricity Board, however

the first government-related policy in energy was proposed in 1974 under Petroleum Development

Act; which discussed petroleum-related issues, such as gas and oil management, offshore reserves

and distribution of the resources in the country. Since then, the government saw that it is imperative

to establish energy policies in managing other energy resources not limited to just petroleum,

which can be applicable nationwide, thus prompted the National Energy Policy in 1979. There

are three main objectives in National Energy Policy; (1) The first objective is aimed at ensuring

an adequate, secure and cost-effective energy supply based on the maximum use of indigenous

resources. (2) The second objective is the utilization objective that calls for the promotion of

efficiency and conservation of energy to eliminate wasteful and non-productive patterns of energy

consumption. (3) The final objective is the environment objective which is in achieving the supply

and utilization objectives, environmental concerns will not be neglected.[1]

Along the years, Malaysia has refined its national policy such as Four-Fuel Diversification

Policy in 1981 to introduce varieties of energy in the Malaysia energy mix in avoidance of overly-

reliance on oil as the main energy source. Nevertheless, when the policy makers revised its initial

goals in 1979, they believed that it was necessary to include renewable energy (RE) into their

previous policy to achieve their third main objectives, as stated in the National Energy Policy.

Therefore, by introducing RE as the fifth energy source in Five-Fuel Diversification Policy in 2001

under the 8th Malaysia Plan (2001-2005), thus Malaysia would be equipped with a sustainable

model of energy development while limiting further environmental damages. However, during the
implementation of the policy, only 12MW of electricity was delivered from two projects under the

Small Renewable Energy Power Programme (SREP) which is still quite far from reaching the

target of 500MW of electricity from renewable sources. Thus, it indicates that there are barriers to

the effective transition from conventional to a sustainable energy development. Due to the failure

in reaching the target, the government eventually proposed, a more enhanced policy, such as Fifth-

Fuel Policy to continue the previous policy in the 9th Malaysia Plan (2006-2010), thus propelling

the development of sustainable energy sector in the country.

Biomass

Malaysia has been one of the largest producers and exporters of palm oil for the last fifty

years. Recently, Malaysia has 5.74 million hectares of land under the palm oil plantation. [2].

Under the 5th fuel policy, the Malaysias government has recognized biomass as one of the

potential renewable energy to generate electricity. Furthermore, it is estimated that Malaysia would

be able to generate electricity power of roughly 2,400MW from the biomass energy. [1].

In 2001, Small Renewable Energy Programme (SREP) was launched and there were 14

projects under SREP approved which have a total capacity of 105MW [1]. Even though biomass

energy brings a lot of potential to generate power, there are still many challenges and major barriers

that need to be addressed and overcome such as fuel security, electricity sales price, renewable

energy power purchasing agreement, financing assistance, lack of promotion, conventional energy

verses renewable energy power plant and subsidy of conventional energy. [1]
Reasons for RE policy and Action Plan RE

During the 10 years in which the government was striving towards the development of

renewable energy in Malaysia, the government had faced many challenges and problems that led

the government to propose the RE policy. The reasons why the government proposed the RE policy

is to address the current market failure. In addressing the RE-specific market failures, RE policy

is needed to formulate the strategies to avoid prolonging the associated inefficiencies into the

future. Furthermore, it indicates that RE is important as a source of electricity to the country which

can positively impact the investment decisions by these firms. Other than that, RE policy exists to

provide long term sustainability because of the length of time needed for the technology to become

cost competitive. Next, RE policy is to recognize the importance of the environment as the

contributor for economic growth by encouraging innovation and RE take-up. Presently, the

progress of RE development is restrained, hence RE policy is to provide focus for a new growth

industry. Lastly, a drill of existing RE policies show that deficiency of consistency amongst the

various recent policies had been confirmed & to cause purposeless effect of mixed signals to the

market on the importance of RE. [3]

Utilization of Biomass

Until June 2010, there are 43 project that had been done and approved. Most of it is coming from

biomass and mini hydro. However, the projects only aim to generate capacity of 286.15MW which

did not achieve the objective to generate 500MW of the electricity to the national grid that stated

in the Five Fuel Diversification Policy. But then, till now there are only 10 projects that are still

operating with total capacity of 56.7MW. Hence, even though the projects are still ongoing, they

are still not achieving the target in RE policy. (Salman Zafar, 2015).

However, with a more conducive RE policy and action plan, improvements in existing combustion

efficiency in palm oil mills (that can extract more energy from the monocarp fibers and shells as

well as from the EFB) can be expected the amount for mulching would be reduced to a more

optimal level and open incineration would be abolished; the estimate could be revised. In 2008,

the MPOB unveiled The Roadmap for Palm Oil Industry and Latest Advances in the Industry

which will have a direct impact on the use of palm oil EFB as a biomass fuel for RE sources. This

is because MPOB seeks to increase industry productivity, empower technology, expand

investment, modernize infrastructure and ensure sustainability and advance the industry towards

increased yield and oil extraction rate (OER), reduced wastes (reduced POME and zero discharge),

increased conversion of wastes into non-energy products. Taking into consideration these factors

for purposes of target setting, a potential of 1,340 MW connected to grid from palm oil biomass

by 2030 is therefore considered realistic and achievable. This is a very conservative estimate as it

is expected the palm oil industry is forecasted to continue growing and increasing in output despite

decreasing rate of new acreage being converted to palm oil plantations. The reliance on EFB and

other agriculture waste as fuel for biomass plants means that the size of the land used for palm oil

plantations and agriculture is limited. The acreage of palm oil plantations is expected not to exceed
4,000 hectares. Therefore, the inherent limitations of biomass mean that a reliable maximum

capacity that can be made available is 1,340 MW by 2030.

Economic feasibility of Biomass

Hydrogen can be one of the possible commercial product from oil palm. This is because

hydrogen can be produced using various type of technologies. Among all available production

processes of hydrogen, supercritical water gasification of biomass is by far the most economical

and cost efficient technology as shown in fig.8[5]. Supercritical water gasification of biomass

allows hydrogen to be produced at lower cost since it can be directly deal with biomass with high

moisture level content that have very low commercial value. In addition, minimum production of

impurities such as organic compounds and solid residue can further reduce the manufacturing and

production cost of hydrogen, since purification process and reactor maintenance can be abstained

and reduced [5]. Furthermore, the main reason for the low cost of hydrogen produced from biomass

is because of the cheap feedstock, since feedstock usually contributes a significant percentage to

total production cost as compared to delivery and dispensing cost. Also, it was stated that oil palm

biomass currently can be obtained at very low cost of RM10 or USD $2.80 per tannest for EFB

[6]. Hence, the possible commercial product from oil palm biomass that is hydrogen is the most

economical and cost efficient technology by far.

Fig.8 Comparison of average hydrogen production cost for various conversion technologies [5]

Sustainability of the Biomass

To bring the potential of the biomass to the maximum, several plans are being executed to

promote the sustainable utilization of the biomass. In November 2011, Malaysian Innovation

Agency proposed a National Biomass Strategy which focuses solely on oil palm biomass as a

starting point.

According to the National Strategy, 100 million dry tones of solid palm oil biomass is

expected to be generated by Malaysias palm oil industry in 2020. One of the output components

from the palm oil biomass is palm oil mill effluent (POME). Converting the POME into biogas for

either powering the mills or selling power into the national grid would potentially allow for an

increase of power capacity of 410 MW by 2030. This would reduce the Malaysias carbon dioxide

(CO2) emissions by 12%.

Regarding the logistics and competitive costs related to mobilization of biomass will be a

critical success factor to guarantee globally competitive costs. This is why the strategy depends on
the creation of the cooperative structures to allow smaller plantations and small holders to join the

global biomass market. Thus, Entry Points Projects (EPP) are foreseen to achieve this. For

palletization capacity and the launch of an industry consortium, two EPPs have already been

established to catalyze development of conversion technologies. Conclusively, a set of

governments policies are in progress of being finalized to reduce the menace to the private sector

related with accelerating this opportunity.

References

[1] L. Chin Haw, S. Elias, and J. Philip, RE Policy and Initiatives in Msia.pdf, Alam Cipta,

Inti. J. on Sustainable Tropical Design Research & Practice, vol. 1, no. 1. pp. 3239,

2006.

[2] Malaysian Palm Oil Board, Oil Palm Estates, January December 2016, vol. 2016, no.

December, p. 2016, 2016.

[3] KeTTHA, National Renewable Energy Policy and Action Plan - Malaysia, Natl. Renew.

energy Policy, no. November, p. 90, 2008.

[4] Salman Zafar, Renewable Energy in Malaysia, September, 2015.

https://www.cleantechloops.com/renewable-energy-in-malaysia/
[5] Kelly-Yong TL, Lee KT, Mohamed AR, Bhatia S. Potential of hydrogen from oil palm biomass as a

source of renewable energy worldwide. Energy Pol 2007; 35:5692701.

[6] Junker H. Coffering of 500 MW coal-fired power plant with 10% EFB bales or 5% shells and as a 2015

scenario 10% coffering of POFF. See also: http://cdm.unfccc.int/Projects/DB/DNV-

CUK1174646628.13/ReviewInitialComments/L098VJ5PJ700XB67UXNM4BFJMQEG2W; 2005.