Oil palm biomass: From waste to business
OIL palm biomass has been called one of Malaysia’s great opportunities for decades.
If potential alone paid dividends, we might already have a thriving biomass industry.
Walk through a plantation or palm oil mill and the raw material is everywhere: fronds cut during harvesting, empty fruit bunches (EFB) after processing, mesocarp fibre, palm kernel shells, palm oil mill effluent (Pome) and, eventually, trunks from replanting.
Put them together on a presentation slide and Malaysia appears to be sitting on a biological treasure chest.
Perhaps we are. But biomass on paper is not the same as biomass in a dependable business.
Over the years, initiatives have explored power generation, pellets, biogas, biochar, compost, fibre products, biofuels and increasingly sophisticated biomaterials.
Many technologies are impressive and the possibilities appear almost endless. Yet before asking what biomass can become, a more basic question comes first: how much can actually be secured and delivered – reliably, sustainably and at a price that makes business sense?
That is where commercialisation begins. Abundance does not necessarily mean availability; availability does not guarantee reliability; and reliability alone does not create bankability.
My discernment here is at the national level: How Malaysia can move oil palm biomass commercialisation from scattered opportunities and individual projects towards a coherent, scalable industry.
Malaysia has the biomass resources, technical capability and policy foundation. The harder task is turning biomass potential into a biomass business.
From abundance to bankability
Some biomass already has a job. Mesocarp fibre is routinely used as mill boiler fuel, palm kernel shells have established markets, while EFB and fronds may return to the field for nutrient recycling, moisture conservation and organic matter.
Pome may already be treated or channelled into biogas.
A recent industry roundtable offered a useful reality check. Malaysia’s oil-palm biomass generation was put at about 94.7 million tonnes annually, yet much is already utilised.
Palm kernel shells and mesocarp fibre are largely spoken for, while only part of the EFB stream may be readily accessible because significant quantities return to plantations.
The proportions may vary, but the lesson is clear: gross biomass generation is not commercially available feedstock. Even where biomass appears available, somebody owns it.
Once someone pays for what was previously called waste, it develops a price.
Feedstock owners incur handling and transport costs and deserve fair value. The difficulty comes when an investor builds around an assumed long-term price, only to find later that everyone wants the same material. Then the spreadsheet begins perspiring.
Biomass also has personality. Unlike solar panels, it can rot, ferment, absorb moisture, clog conveyors and require a steady procession of lorries.
EFB is wet and bulky; fronds and trunks are dispersed across fields; quality varies. Rain, storage, drying and machinery add further costs – all in a tropical climate that has never shown much respect for a consultant’s financial model.
A successful pilot is encouraging but not proof of commercial viability. The real test comes when feedstock must keep arriving, specifications are met, customers keep buying and maintenance bills appear with admirable punctuality.
Technology may work; the harder question is whether the whole operating system works commercially.
For investors and financiers, dependable feedstock is therefore the main gate. Will enough remain available five or 10 years later? Can suppliers divert it? How will prices respond to competing demand?
Bankable projects need multi-year supply arrangements, quality standards, transparent pricing and periodic review.
A mill should not be locked indefinitely into yesterday’s price, nor can an investor commit substantial capital amid uncertain supply and pricing.
Feedstock owners need fair value, investors reasonable certainty, and financiers confidence that the relationship will endure long after the ribbon-cutting photographs have faded.
Prove the chain, not just the technology
There is another distinction worth making: feasible is not necessarily executable.
A project can have feedstock, technology and an encouraging feasibility study, yet never become an operating business.
Commercialisation also requires land, approvals, infrastructure, investment decisions, committed suppliers, buyers and somebody empowered to hold the pieces together.
Malaysia already possesses considerable biomass knowledge. Research institutions, plantation companies, millers, technology providers, financiers and policymakers have spent years examining the opportunity.
Conferences, consultations, studies and technology showcases have all contributed useful knowledge.
The next stage, however, needs greater convergence.
If stakeholders are serious about moving biomass forward, leadership, empowerment and a common factual base must come together.
Rather than repeatedly beginning with what each technology can do, bring plantation owners, millers, smallholders, researchers, technology providers, logistics companies, financiers, utilities, downstream buyers and relevant agencies around the same table.
Then start with the resource itself: what is genuinely available, where is it, at what
delivered cost, and for how long? Establish those facts first. Then evaluate technologies,
products and markets. Otherwise, we risk becoming increasingly sophisticated at discussing
biomass without actually moving very much of it.
Perhaps the next serious initiative should therefore begin not with another technology
showcase, but with a defined geography.
Identify a commercially sensible cluster. Verify its biomass and existing uses. Establish what
can sustainably be removed. Identify willing suppliers. Calculate actual collection and
delivered costs. Find credible buyers. Then bring technology and financing around those
facts.
Build one complete commercial chain and test it under real conditions. Does the feedstock arrive as agreed? Does the technology perform? Does the product sell? Do suppliers receive fair value? Can investors earn an acceptable return? Does the plantation remain productive?
If the answer is yes, replicate what works. Successful industries are often built by repeating
commercially proven models, not by repeatedly projecting national potential.
This is also why biomass needs an ecosystem, not merely a factory. Feedstock connects to collection; collection to logistics; logistics to processing; technology to product specifications; products to buyers; buyers to revenue; and revenue ultimately to financing.
The planter may see residues, the engineer feedstock, the technologist molecules, the
environmentalist carbon, the banker risk and the investor return. The challenge is getting
everyone to look at the same tonne of biomass and agree on what happens next.
Which tonne, where and for what?
Location matters enormously because biomass does not like travelling. Moving wet, bulky
material over long distances is rather like transporting soggy pillows: possible, but rarely a
logistics manager’s first choice.
A study cited at a recent industry roundtable compared gathering EFB from 20 mills for a
centralised plant with upgrading an individual mill in place, and estimated a difference of
RM5 million to RM10 million annually in logistics costs.
The figure should not be treated as universal - geography differs - but the principle is clear:
moving biomass can consume its value remarkably quickly.
Where several estates and mills sit within a sensible radius, clusters may reduce transport
costs and enable shared infrastructure. But drawing a circle around five mills on a map does
not create a biomass hub. A functioning hub needs willing suppliers, dependable volumes,
workable pricing, logistics, technology, governance, financing and credible buyers.
Without these, it becomes an attractive roundabout: everyone enters, circles enthusiastically and eventually exits without committing.
There is unlikely to be one Malaysian model either. What works for a large integrated plantation group may not suit an independent mill or smallholders. Sabah and Sarawak have substantial possibilities, but distances, roads, ports and grid access create different economics.
Local conditions matter. So does the choice of what each biomass stream should become.
Potential pathways can broadly include energy and fuels, nutrients, biomaterials and
packaging, biochemicals and carbon-related products. Energy may make sense in one
location. Elsewhere, the same biomass may be worth more as nutrients, biomaterials or a
higher-value industrial input.
This argues against beginning with a favoured technology and then searching for enough
biomass to justify it.
Start instead with the resource - its location, existing use, agronomic importance, competing
demand and delivered cost - and ask which pathway creates the greatest sustainable value.
The question should therefore not merely be “Can we use it?” It should also be “Should we
use it this way?”
That question becomes more important as more industries discover biological residues.
Power generation wants them. Pellet manufacturers want them. Sustainable fuels are
creating new demand. Biochar producers want them. Pulp, fertiliser and biomaterials
developers want them.
Competition can stimulate innovation and raise value for feedstock owners. But what
happens when everybody’s business plan depends on the same tonne?
The issue is already becoming visible around waste oils for sustainable aviation fuel, or SAF.
Recent industry estimates put Malaysia’s annual POME oil and used cooking oil supply at
roughly 400,000 to 500,000 tonnes each, while major SAF projects could potentially absorb
substantial volumes.
Those estimates and projects will evolve, but they illustrate a wider point: a national
biomass number can look enormous while a commercially attractive individual feedstock
becomes scarce surprisingly quickly.
Ten industries can each produce impressive presentations claiming the same empty fruit
bunch. Unfortunately, the EFB cannot attend ten factories at once.
Future planning therefore needs to distinguish theoretical generation from commercially
and sustainably available feedstock after existing uses, logistics and competing demand
are accounted for. The resulting number may be smaller, but it will be considerably more
useful.
From potential to a second harvest
Malaysia is certainly not starting from zero. Biomass has long featured in national thinking on agri -commodities, renewable energy, circular economy and energy transition.
Government agencies, researchers and industry have invested considerably in technology,
incentives and demonstration projects.
That foundation matters. Government can continue providing an enabling environment
through coherent policy, research support, green financing, regulatory clarity and
infrastructure. But long-term commercial sustainability must ultimately rest on reliable
feedstock, proven technology, customers and sound economics.
Progress should therefore increasingly be measured by what moves beyond presentations:
biomass actually mobilised, projects reaching financial close, plants remaining commercially
viable, private capital attracted and products finding markets. This is not criticism of earlier efforts. Technologies evolve, markets change and some models inevitably require adjustment. That too is innovation.
Amid the commercial enthusiasm, however, one stakeholder rarely attends the meeting: the soil.
Oil palm residues are not merely industrial raw materials. Fronds, EFB and other organic materials contribute nutrients, organic matter and moisture conservation. Not every tonne
should leave simply because somebody has found a buyer. Circular economy must not
become circular extraction.
Science must guide what can safely be removed, where, in what quantity and with what
nutrient-replacement strategy. Technologies may offer opportunities to extract value while
returning stable carbon to soil, but they too should be assessed within the whole agronomic
and commercial system.
A tonne of biomass sold produces revenue today. Nutrients removed may create fertiliser
costs tomorrow, while soil impacts may emerge years later. The soil is a remarkably patient
shareholder, but eventually it sends its invoice.
I nevertheless remain optimistic. Malaysia has an established plantation industry,
hundreds of palm oil mills, experienced operators, researchers, technology providers and
financial institutions. Technology is improving, markets are emerging and policy support
exists.
But our biomass industry should no longer be judged mainly by theoretical tonnage. The
better measure is how much biomass we can sustainably mobilise, reliably deliver,
commercially convert and profitably sell.
That requires collaboration and leadership. Feedstock owners provide supply; technology
providers prove performance; researchers establish agronomic limits; logistics players move
the material; buyers create demand; investors provide capital; financiers test the numbers;
and government helps provide the enabling environment.
No single participant possesses the whole answer. The sensible path is neither biomass
euphoria nor excessive caution, but disciplined optimism: find the right biomass in the right
place, move it economically, use technology that works, build fair contracts, secure buyers
and finance it sensibly. And remember the soil from which the whole value chain began.
Then oil palm biomass may become more than another promising chapter in Malaysia’s
circular-economy story. It could become a genuine second harvest.
The question is ultimately simple: How much can we turn into a dependable business
without asking the plantation, investor or soil to carry an unreasonable burden?
Joseph Tek Choon Yee has over 30 years of experience in the plantation industry, with a strong background in oil palm research and development, C-suite leadership and industry advocacy. The views expressed here are the writer’s own.