Current Status
- Mandates in Place
Malaysia enforces a nationwide B10 biodiesel mandate to reduce fossil fuel reliance. Meanwhile, B20 applies only in Labuan, Langkawi, and parts of Sarawak, excluding Bintulu. Additionally, B20 trials continue at KLIA and selected ports to evaluate broader adoption. - Production & Capacity
Currently, Malaysia operates 22 biodiesel plants nationwide. However, only 19 plants remain fully operational due to market and technical constraints. Combined, these facilities produce about 906,000 tonnes annually — well below their 2.76 million-tonne capacity. - Exports vs. Domestic Consumption
In 2024, Malaysia produced roughly 1.58 billion liters of biodiesel, matching its 2023 output. Notably, biodiesel exports climbed to 810 million liters, mainly shipped to the EU, Singapore, the US, and China. Meanwhile, domestic consumption reached 995 million liters — just slightly lower than last year’s total.
Main Challenges
- Infrastructure & Funding Hurdles
Expanding B20 nationwide demands RM 643 million in infrastructure investments. Nevertheless, both government and private stakeholders remain reluctant to commit large-scale funding. - Feedstock Price Volatility
Biodiesel relies heavily on palm oil, linking its cost to volatile global CPO prices. In turn, weather patterns, labor availability, and global policy shifts affect price stability. - Lagging Policy Roll-Out
Malaysia’s shift from B7 to B10 and B20 faces frequent delays. Consequently, technical limitations and warranty concerns continue to slow implementation timelines. - Vehicle Compatibility & Stakeholder Resistance
Automakers remain cautious about higher blends without verified engine warranties. Moreover, transport operators argue that weak incentives and uncertain benefits hinder adoption. - Quality Control & Traceability Issues
Malaysia enforces stricter rules for UCO and SPO to meet EU sustainability standards. At the same time, enhanced traceability ensures both confidence and compliance in global biodiesel markets. - Environmental Scrutiny
Environmental groups continue to criticize the role of palm oil in deforestation and emissions. Consequently, certifications like RSPO and MSPO remain essential for accessing environmentally sensitive regions, such as the EU.
Outlook & Opportunities
- B20 Pilots in Strategic Locations
Currently, ongoing trials at KLIA and major ports may pave the way for wider industrial adoption if they succeed. - Export Growth Continues
With 2024 exports at a five-year high, Malaysia strengthens its reputation as a major biodiesel exporter. - Certification Focus
Increasing RSPO and MSPO adoption enhances trust and facilitates access to sustainability-conscious importers. - Strategic Government Support Needed
Stronger mandates, incentives, and infrastructure investments can help scale domestic use and local production.
Summary Table
| Aspect | Status & Insight |
| Blending mandate | B10 nationally; B20 limited/piloted |
| Operational capacity | 19 of 22 plants active; sizable idle capacity |
| Production & export | ~1.58 billion L produced; exports ~810 million L |
| Key constraints | Funding, CPO prices, policy delays, vehicle concerns |
| Strengths | Rich feedstock, export growth, certification momentum |
What’s Needed for Progress
To overcome bottlenecks and unlock Malaysia’s biodiesel potential, several strategies are essential:
- Capitalize B20/B30 Roll-Out Infrastructure
Public-private cost sharing is crucial to upgrade blending facilities nationwide. - Design Vehicle-Friendly Mandates
Include automaker input and field-test data to support blend compatibility and engine warranties. - Boost Financial Support
Offer tax relief, low-interest loans, or subsidies for biodiesel producers, blenders, and fleet operators. - Strengthen Feedstock Traceability
Enhance standards for UCO and SPO and mandate sustainable certification to ensure market compliance.
