For thousands of years, biomass has underpinned human survival. The discovery of fire first led to the burning of wood and organic matter for heat, light and cooking. Technological advancements later enabled a diverse range of modern biomass uses spanning chemicals, textiles, to even fuels, forming a comprehensive ecosystem now known as the bioeconomy.
As the world continues to grapple with climate change, bioenergy has emerged as the most important bioeconomy subsector for many countries seeking to decarbonise. By integrating advances in clean technologies with circular economy principles, bioenergy goes beyond reducing emissions to also drive economic growth and societal well-being.
Malaysia, with its thriving palm oil industry, is well placed to leverage its abundant biomass resources to develop a robust bioenergy sector. Through investments in the necessary infrastructure and a collaborative effort across stakeholders, the nation can unlock the full potential of biomass as a cornerstone of a clean energy future.
Why bioenergy matters for Malaysia
Bioenergy refers to any form of energy generated from products derived from biomass and their wastes, including residues of agricultural crops like palm oil, corn and timber. Biomass can be converted to solid, liquid or gaseous fuels which can then be used to produce heat and electricity or be used as transport fuels.
Today, modern bioenergy is the world’s largest renewable energy source, accounting for almost 55% of renewable energy consumption and over 6% of global energy supply . As countries race to meet their net-zero targets, demand for bioenergy is projected to rise to 100 exajoules (EJ) by 2050, up from about 60 EJ today .
What’s more, new bioenergy demand is concentrated in sectors that are either hard to electrify or require a low-cost dispatchable source of renewable energy. Bioenergy is set to expand the most in the industrial sector, followed by transport and building, given it is less expensive than other renewable alternatives like hydrogen and e-fuels.
The palm oil industry has been proven to produce an especially vast supply of by-products that can be readily converted into renewable bioenergy sources. In fact, each tonne of crude palm oil produced generates approximately 4 tonnes of dry palm biomass like fruit bunches and empty kernel shells, as well as 3.5 tonnes of liquid palm oil mill effluent (POME).
As the world’s second largest producer of palm oil, Malaysia holds immense potential for harnessing bioenergy, although this remains largely untapped. Palm biomass from the nation’s 450 palm oil mills is expected to generate between 2,000-3000 megawatts (MW) of renewable power in total, all without requiring major public spending.
Beyond accelerating the nation’s clean energy transition, bioenergy will be a necessary catalyst for new and high value-added green industries. Harnessing bioenergy from palm oil waste also presents significant opportunities for foreign direct investment (FDI), positioning Malaysia as an attractive hub for sustainable and low-carbon energy solutions.
Integrating palm biomass into the energy transition
Acknowledging the latent potential of Malaysia’s biomass resources, the Ministry of Plantation and Commodities launched the National Biomass Action Plan 2023-2030 (NBAP) which sets the stage for accelerated market expansion, value creation and inclusive development in Malaysia’s biomass sector.
The Plan identifies bioenergy as one of the four key areas where biomass-based business models hold high-value proposition, widespread application and high commercial viability. Indeed, Malaysia has already experienced success with the export of solid biofuels like palm kernel shells and wood pellets to key markets like Japan and Korea.
Going forward, grid-connected biomass power plants and biomass fuels offer promising avenues to unlock new growth opportunities
Going forward, grid-connected biomass power plants and biomass fuels offer promising avenues to unlock new growth opportunities. Minister of Plantation and Commodities, Datuk Seri Johari Abdul Ghani noted that many investors have already expressed interest in the nation’s energy sector projects related to palm waste.
Nonetheless, while international trends show steady growth in demand, this is still insufficient to spur more domestic bioenergy producers if sizeable local demand is not established in the near term. Malaysia’s total biomass installed capacity to-date stands at 441MW, equivalent to only 1.2% of the nation’s total electricity generation.
The limited utilisation of bioenergy for power generation mainly stems from the ‘chicken and egg’ problem of supply and demand. Biomass producers lack the confidence to produce biomass fuel pellets without a large demand in place, and independent power producers do not embark on building biomass power plants without securing long-term fuel contracts.
Recognising these challenges, the National Energy Transition Roadmap (NETR) introduces both demand-side and supply-side interventions to scale bioenergy use in Malaysia’s energy system. These efforts are targeted to increase biomass power generation to 1.4GW as well as to increase biofuels production to 3.5 billion litres by 2050.
Scaling up Malaysia’s bioenergy potential
The NETR’s flagship initiative, “Biomass Demand Creation” outlines key efforts to achieve greater local demand for bioenergy. This includes co-firing biomass in existing coal power plants, which is a faster and more cost-effective method of harnessing bioenergy compared to building a dedicated biomass power plant.
For instance, the Tanjung Bin Power Plant in Johor entered a trial phase last year with a co-firing rate equivalent to 105MW of bioenergy, making it 10 times larger than the current dedicated biomass power plants in operation. This creates huge local demand for about 900 tonnes of biomass pellets daily, sourced from palm oil and other agricultural industries.
The overall logistics of biomass collection, storage, and transportation also add another layer of complexity and cost to harnessing bioenergy. In this regard, the NETR entails measures like biomass clustering to aggregate feedstock from multiple neighbouring mills, which can improve economies of scale while securing larger, more reliable feedstock.
Ultimately, broader grid connection is pivotal for realising these projects, enabling millers to invest and benefit from the use of biomass for renewable energy generation. To this end, the Ministry of Plantation and Commodities is working alongside the Energy Commission and Tenaga Nasional Berhad to ensure seamless integration of biomass power into the grid.
TNB and the Energy Commission will identify and evaluate mills ready for grid integration, with a view to transitioning all palm oil mills to renewable energy within the next decade. This move will support the government’s plans to phase out coal-fired power plants with renewable sources by 2044 and thereby achieve net-zero emissions by 2050.
Meanwhile, the Sustainable Energy Development Authority (SEDA) plays a pivotal role through administering the Feed‑in Tariff (FiT) system and promoting mechanisms like Net Energy Metering (NEM), which are essential for enabling palm biomass initiatives to sell surplus energy back to the grid under workable commercial terms.
Powering progress from plantation to grid
Palm oil biomass is one of Malaysia’s most underutilised climate assets, with the capacity to generate clean energy, cut waste and revitalise rural livelihoods. Aligning national policies with private sector capabilities and technology can unlock powerful synergies between agriculture and energy.
Instead of serving solely as commodity processors, palm oil mills can evolve into clean energy producers that power homes, industries and new economic opportunities. With this transformation, Malaysia can position itself at the forefront of the region, proving how agricultural abundance can be reshaped into a sustainable engine of growth.