• 9 hours PDVSA Booted From Caribbean Terminal Over Unpaid Bills
  • 11 hours Russia Warns Ukraine Against Recovering Oil Off The Coast Of Crimea
  • 13 hours Syrian Rebels Relinquish Control Of Major Gas Field
  • 14 hours Schlumberger Warns Of Moderating Investment In North America
  • 15 hours Oil Prices Set For Weekly Loss As Profit Taking Trumps Mideast Tensions
  • 16 hours Energy Regulators Look To Guard Grid From Cyberattacks
  • 18 hours Mexico Says OPEC Has Not Approached It For Deal Extension
  • 19 hours New Video Game Targets Oil Infrastructure
  • 21 hours Shell Restarts Bonny Light Exports
  • 22 hours Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 1 day Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 1 day British Utility Companies Brace For Major Reforms
  • 2 days Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 2 days Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 2 days Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 2 days OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 2 days London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 2 days Rosneft Signs $400M Deal With Kurdistan
  • 2 days Kinder Morgan Warns About Trans Mountain Delays
  • 2 days India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 2 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 3 days Russia, Saudis Team Up To Boost Fracking Tech
  • 3 days Conflicting News Spurs Doubt On Aramco IPO
  • 3 days Exxon Starts Production At New Refinery In Texas
  • 3 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 4 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 4 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 4 days China To Take 5% Of Rosneft’s Output In New Deal
  • 4 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 4 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 4 days VW Fails To Secure Critical Commodity For EVs
  • 4 days Enbridge Pipeline Expansion Finally Approved
  • 4 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 4 days OPEC Oil Deal Compliance Falls To 86%
  • 5 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 5 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 5 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 5 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 5 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 5 days Aramco Says No Plans To Shelve IPO
Alt Text

New Tech Could Turn Seaweed Into Biofuel

Scientists discovered an unlikely abundant…

Alt Text

Is Cactus Gas The Future Of Biofuel?

A Mexican green energy startup,…

Alt Text

“Grassoline” The Jet Fuel Of The Future?

Researchers have developed a process…

Biofuels: Is Palm Oil a Blessing or a Curse

Biofuels: Is Palm Oil a Blessing or a Curse

People sometimes ask which biofuels are competitive head to head with crude oil. By competitive, I mean those that can actually compete favorably with oil prices on a level playing field (i.e., they don’t require big subsidies or mandates in order to compete). There are two that always come to mind: Ethanol from sugarcane (although less competitive currently due to high sugar prices) and fuel from palm oil (oil derived from the fruits of the African Oil Palm). In fact, in the first book chapter I wrote in 2007 (Renewable Diesel in Biofuels, Solar and Wind as Renewable Energy Systems: Benefits and Risks) I highlighted palm oil as a crop with great promise, but also great environmental risk:

By far the most productive lipid crop, palm oil is the preferred oil crop in tropical regions. The yields of up to five tons of palm oil per hectare can be ten times the per hectare yield of soybean oil. Palm oil is a major source of revenue in countries like Malaysia, where earnings from palm oil exports exceed earnings from petroleum products.

Palm oil presents an excellent case illustrating both the promise and the peril of biofuels. Driven by demand from the U.S. and the European Union (EU) due to mandated biofuel requirements, palm oil has provided a valuable cash crop for farmers in tropical regions like Malaysia, Indonesia, and Thailand. The high productivity of palm oil has led to a dramatic expansion in many tropical countries around the equator. This has the potential for alleviating poverty in these regions.

But in some locations, expansion of oil palm cultivation has resulted in serious environmental damage as rain forest has been cleared to make room for new palm oil plantations. Deforestation in some countries has been severe, which negatively impacts sustainability criteria, because these tropical forests absorb carbon dioxide.  Destruction of peat land in Indonesia for oil palm plantations has reportedly caused the country to become the world’s third highest emitter of greenhouse gases.

I was especially curious to learn more about Malaysia’s palm oil industry during my recent visit there. Once a key ingredient in biodiesel supplied to the West, it later became shunned as details emerged that tropical rain forest was being decimated to make way for palm oil plantations. As a result, Greenpeace has carried out a major campaign to slow the development of the palm oil industry. So which is it? Is palm oil a blessing or a curse? It took a trip to Malaysia to crystallize my thoughts around palm oil, but the truth – as it generally is – is a bit more complex than the sound bites.

Signs of the palm oil industry were everywhere in Sarawak, which is the Malaysian state that I visited. There are African oil palms growing everywhere; in plantations, on the side of the road, outside people’s houses, etc. There are tankers running up and down the roads filled with palm oil. The port in Bintulu, Malaysia has a tank farm and facilities devoted to palm oil exports. It was apparent to me through talking to people there that the country is proud of this thriving business. But I wanted to better understand the nature of the palm oil industry in Malaysia, so I spent some time with a palm oil grower there.

We discussed yields (which he confirmed as around 5 tons per hectare) and cost of production (much cheaper than crude oil). I learned that palm oil is a heavy user of fertilizer (4 kg of nitrogen fertilizer per tree is the number I was quoted), is heavily dependent on manual labor (mostly from Indonesia; I was told that wages aren’t high enough to entice Malaysians to harvest oil palm fruits), and I did see signs of erosion where some plantations had been developed.

But I was mostly interested in the rain forest controversy. I asked about the grower’s thoughts on the campaign to reduce palm oil usage in the West, which it is hoped would slow or stop encroachment into the rain forests. I was told that even if the West refused to buy the palm oil, China would buy all they could make. So the message there was that the industry would continue to develop whether the West boycotts it or not. I also heard from several people that rain forest encroachment had certainly taken place (I kept hearing “it’s much worse in neighboring Indonesia”), but that the government was trying to address that. The Malaysian government has created conservation zones (I was told that these were mostly hilly areas that couldn’t be planted anyway) in order to preserve some of the habitat being lost. Finally, the grower explained that palm oil was a way for rural poor people to earn some money to be able to feed their families and send their kids to school. While Malaysia is quite developed (it was easy to forget I was in Asia; many areas have a very Western look), an estimated 8% of Malaysians live on less than $2 a day, and I suspect most of those are in rural areas.

The palm oil that is produced in Malaysia is mostly being used for food, but it can also be used for fuel. That is one of the risks going forward that countries that want fuel will outbid those who need food, setting up more food versus fuel issues. Palm oil may be converted to biodiesel, which is the mono-alkyl ester product derived from glycerides (long-chain fatty acids contained in lipids ) in vegetable oils or animal fats. Or it can also be converted to a true diesel replacement by hydrocracking. The hydrocracking reaction “cracks”, or fractures the palm oil molecules. The products of this reaction are a hydrocarbon distillate and a propane by-product. Synthetic hydrocarbon diesel produced from biomass in this way is often referred to as ‘green diesel.’

Neste Oil in Finland began developing their NExBTL hydrocracking technology in 2002, and in May 2007 inaugurated a plant with a capacity of 170,000 metric tons per year of renewable diesel fuel from a feedstock of vegetable oil and animal fat. In 2009 Neste inaugurated a second plant, and they have two more under construction. One of those plants is a $762 million plant in Singapore, and will provide a significant outlet for palm oil produced in the region.

Palm oil represents a difficult dilemma: How does the West address negative social or environmental implications from the development of a palm oil industry (or any industry) that is helping to lift rural people out of poverty by providing an income stream for farmers? Western objectives (saving the rain forests) may be viewed as conflicting with their basic needs (feeding their families and sending their kids to school) — which is of course why globally rain forest continues to disappear. If I look into my crystal ball, I see an industry that will continue to develop due to demand outside of the West, and an issue that governments in Malaysia and Indonesia must address themselves. Based on my observations and discussions, Western boycotts will be ultimately ineffective. For me this is a case of what I would like to see happen (preservation of the rain forests) with what I believe will ultimately happen unless the local governments address this problem themselves (destruction of the rain forests to make way for local economic opportunities).

By. Robert Rapier

Source: R Squared Energy Blog




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News