Malaysia plans to begin producing sustainable aviation fuel (SAF) by 2027, with an initial capacity of one million metric tons per year, said Datuk Seri Johari Abdul Ghani on Tuesday.
During the minister's question time at the Dewan Rakyat on Tuesday (Nov 26), the Plantation and Commodities Minister emphasised that Malaysia, as the world’s second-largest palm oil producer, is strategically positioned to become a leading global SAF producer.
Johari also noted that the government is considering various tax incentives to attract investors and establish Malaysia as an SAF development hub, and highlighted that SAF production would benefit smallholders and palm industry players, as palm waste holds greater value than crude palm oil itself.
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During the minister's question time at the Dewan Rakyat on Tuesday (Nov 26), the Plantation and Commodities Minister emphasised that Malaysia, as the world’s second-largest palm oil producer, is strategically positioned to become a leading global SAF producer.
Johari also noted that the government is considering various tax incentives to attract investors and establish Malaysia as an SAF development hub, and highlighted that SAF production would benefit smallholders and palm industry players, as palm waste holds greater value than crude palm oil itself.
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NewsTranscript
00:00Sustainable Aviation Fuel, or SAF, is a sustainable aviation fuel that is used in the aviation sector
00:13in accordance with the international standards of sustainability.
00:18The use of SAF is one of the initiatives introduced to achieve the goal of the International Civil
00:25Aviation Organization, or ICAO, to reduce carbon emissions in the aviation sector by 5% by 2030
00:37and will be mandatory starting in 2027.
00:42In addition to the country's commitment to achieve carbon emissions, or carbon emissions,
00:48by 2050, SAF also has great potential for the country's economy, especially in improving the economy of the aircraft industry.
01:01Malaysia, as the second largest oil producer in the world, is in a strategic position to be one of the world's leading SAF producers.
01:12One of the raw materials is feedstock, which can be used to produce SAF, including MT Fruit Bunch,
01:21Palm Oil, Milk Affluence, and cooking oil.
01:27Malaysia is the second largest oil producer in the world.
01:32There are several strategies that we have arranged.
01:36The first is the Malaysian Aviation Decarbonization Blueprint, or MDB,
01:41which was prepared by the Ministry of Transport in September 2004,
01:46followed by the Ministry of Rural Affairs and Communities,
01:49together with the Ministry of Trade and Industry, or MITI.
01:55Both ministries are trying to develop a National Strategy Document for Sustainable Aviation Fuel
02:02to support the development of the country's export and SAF industries.
02:07Secondly, we are also improving the program of awareness-raising of cooking oil,
02:17or Use Cooking Oil, throughout the country,
02:20where the Ministry of Rural Affairs and Communities will work together with organizations such as PETRONAS
02:27to promote the use of cooking oil.
02:33Thirdly, we are also encouraging investors to come to our country to build SAF factories.
02:42To date, one company has issued a license,
02:46Eco-Ceres Renewable Fuels, which will build 350,000 metric tons of SAF per year.
02:55PETRONAS is also conducting several studies,
03:02and PETRONAS is also one of the companies that will build SAF factories
03:09with a capacity of 650,000 metric tons.
03:14The next strategy is, we are also considering several tax incentives
03:20to encourage investors to come to Malaysia,
03:23using Malaysia as a hub to build SAF.
03:32Thank you, Mr. Prime Minister.
03:34We know that one of the main challenges of SAF is the lack of export and supply.
03:41It is an alternative to the existing jet fuel.
03:44It is known that in the blueprint determined by the Malaysian Aviation Industry,
03:52with the use of SAF, we will reduce 46% of the use of jet fuel.
03:56It is a good news for our net zero emission 2050.
04:01My question to you, Mr. Prime Minister, is,
04:03what do you think, to ensure that the SAF initiative
04:08can increase the value of the country's economy?
04:13Second, how can it increase the living standards of our farmers,
04:17small farmers, and also the entrepreneurs in our country?
04:25Thank you, Mr. Prime Minister.
04:27First, we need SAF-producing factories.
04:33When there are factories,
04:35as I mentioned earlier,
04:36first, Eco-Ceres, 350,000 m3,
04:41then Petronas, 650,000 m3.
04:45If there are two factories,
04:46it means that we can export SAF for 1 million m3.
04:52So what happens?
04:54In every flight,
04:56if the oil we use is jet fuel,
04:59it is not 100% bio,
05:02no.
05:03The mandate of some countries is 1% of the total jet fuel.
05:08If we use 24 million barrels of jet fuel,
05:12or 3.8 million m3 of jet fuel,
05:15we want 1%,
05:17if our mandate is 1%,
05:18it is 38,000.
05:20If the mandate is 28%,
05:22it is more or less 76,000,
05:24and so on.
05:25But in every flight,
05:27this aircraft can take up to 46% or 47% of the total jet fuel.
05:37But in our country,
05:39any surplus of this capacity,
05:41we will export to countries that do not have the capacity
05:45to make SAF,
05:48or SAF,
05:50Sustainable Aviation Fuel,
05:52for us to export.
05:53This is a potential economic value that we will get
05:57from exporting ingredients to sell SAF to countries
06:03that do not have the feedstock to develop SAF.
06:09The second question is,
06:11what benefits will be obtained by small farmers and industry players?
06:17Already determined, this palm oil is a commodity plant
06:23that is very valuable,
06:25because its waste also has a greater value than the CPO.
06:32Because the sale of aviation fuel is really high
06:36compared to the oil of the usual petrol brand.
06:42Based on the statement made by the DCL Group,
06:46DHL Express and Shell have signed a one-year cooperation contract
06:52to supply 25,000 metric tons of Sustainable Aviation Fuel
06:57as an effort to reduce around 80,000 metric tons of greenhouse gas emissions.
07:04My additional question is,
07:06is the form of public-private cooperation that is being planned by the Ministry
07:13aimed at creating a variety of alternatives
07:16for the production of sustainable fuel,
07:19especially for the use of air transportation and commercial maritime
07:24in line with the responsibility of the environment
07:26highlighted by the cooperation between the two world-class companies.
07:34Thank you, Mr. President.
07:35As we are well aware,
07:38our country has a commitment to achieve net zero carbon emission
07:45by 2050.
07:48So in the process of reaching net zero carbon emission by 2050,
07:53one of the strategies is how we can produce this fuel
07:59and supply it to all aviation industries around the world
08:04if they want to buy this fuel from us.
08:07So for now, we do not have a factory to process this fuel.
08:12So, of course, many companies like Shell and others
08:16will buy this fuel from countries that will produce this fuel
08:20because our feedstock is based on palm oil.
08:24There is also this fuel that can be built through animal fat,
08:29that is, any country that can use animal fat
08:34or any producing country that has this raw material
08:39can sell it to Malaysia.
08:41But as of today, we do not have a factory.
08:43In the process of building, two investors have come
08:47and the investment is expected to be around 7-8 billion ringgit.
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