I’ll tell you a funny story,” said Bas Melssen, Agensi Inovasi Malaysia’s (AIM) executive vice-president and head of strategic innovation projects.
“Years ago, (the palm oil millers) made the boilers in their mills deliberately inefficient so that they could burn as much biomass as possible. That’s how much biomass there was in our oil palm plantations. Even the plantation and mill owners didn’t know what to do with it.”
Biomass is defined as “biological material derived from living or recently living organisms”. In agriculture, it is simply the organic waste left behind. Some prefer the name “by-product”, because the so-called waste is not wasted at all but has potential use, and even potential profits to be gained.
In an oil palm plantation, the biomass consists of every other part of the palm tree that is not used in producing palm oil. That includes the empty fruit bunches (EFB), mesocarp fibres, palm kernel shells, and also the fronds and trunks. The fronds are cut during harvesting of fruit bunches and pruning of the trees.
EFBs remain after removal of the fruits at the mill, while mesocarp fibres and palm kernel shells are left over from the extraction of crude palm oil and palm kernel oil. Also, effluent accumulates at the mill as liquid biomass. Some of these by-products are usually burnt for steam energy or left in the plantation to replenish the soil. Still, there are lots of biomass left behind.
Upcycling
Indeed, the oil palm industry generates the largest amount of biomass: 83 million tonnes in 2012. And it is expected to grow to more than 100 million tonnes by 2020.
So what can we do with this astronomical amount of by-products? The fact that the government engaged AIM to formulate the National Biomass Strategy in 2011 shows that there’s serious consideration about the potential wealth in biomass. According to AIM, there’s RM30bil in gross national income to be made from biomass in the country.
And the best part of it is, it all involves green technology and green downstream applications. It is about utilising the by-products of industries, said Melssen. It is also about replacing fossil fuels and petrochemicals, and reusing what we produce.
“People are now talking about ‘biomass-based industries’,” said Melssen. He said Malaysia could develop a portfolio of new industries just from biomass. He outlined some of them: you can compost it; make long, dry fibres for mattresses and cushions; make renewable energy pellets; generate electricity and feed it into the grid; make animal feed; ferment biomass into biofuels such as ethanol and butanol; and in the near future there will also be bio-based chemicals.
In Malaysia, there are already companies using biomass to produce pellets as well as dry long fibres and composite construction materials. In Thailand and Brazil, what is called “first generation” bioethanol and bio-based chemicals are already being produced from food-based biomass such as that of sugarcane. The next step is to explore the “second generation” technologies which use non-food-based biomass.
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The oil palm industry generates the largest amount of biomass: 83 million tonnes in 2012. And it is expected to grow to more than 100 million tonnes by 2020
“Agricultural biomass consists of lignocellulose, and cellulose is basically sugars,” said Melssen. “It has got lignin, which is the woody part which you can burn for electricity, for example. And it has hemicellulose and cellulose, two different types of sugars that you can basically use to produce ethanol and butanol, and biochemicals.”
The basal portion of the oil palm frond contains the cellulose and sugar needed for the production of biofuels and biochemicals.
“It’s the same process as what they’re doing today from sugars and starch,” Melssen explained. “The only difference is, you have to identify and separate them from the biomass. And that process is not commercial-scale ready. It’s only for ethanol that we’ve seen a commercial-scale plant in Italy.”
With such an abundance of biomass, it is time to mobilise it for higher-value downstream applications, and this is where the National Biomass Strategy comes in. The first edition was published in 2011, and the second, last year.
Hurdles to cross
But the road to biomass success is strewn with all kinds of obstacles, as Melssen and his team at AIM discovered.
“People used to think the bigger your company is, the higher the potential for you to do something with your biomass,” said Melssen. “Then we realised that all the palm oil mills were scattered all over the country and belonged to different companies. Some companies have a lot of mills, but they’re scattered all over the country or over different states. So if you want high volumes of biomass, it is very much location-bound.”
It became a matter of logistics, because if biomass is transported further than 100km, the cost becomes too high. Thus, areas within a 100km radius and all the mills there needed to be identified.
“So, if we are going to mobilise biomass in large quantities, we are going to have to get the owners to work together,” said Melssen. “There is no other way.”
The initial idea was to have big clusters of biomass owners who can then formulate a portfolio for their biomass which would result in diverse revenue streams with different risk profiles.
“But if you own one company, even if you have five mills in one location, you cannot do that,” said Melssen. “You have to team up with other companies. And this was how we came up with the JV (joint-venture) cluster concept.”
The area with the highest density of mills is Lahad Datu, Sabah. Eastern Sabah has 40 per cent of the biomass that can be mobilised – the four areas of Sandakan, Lahad Datu, Kudat and Tawau have the biggest volume of biomass in total. Bintulu, Sarawak is another high-potential hub. In Peninsular Malaysia, the areas with the highest densities are Kuantan in Pahang, Pasir Gudang in Johor, Butterworth in Penang, and Klang in Selangor.
Meeting with 25 mill owners in Lahad Datu, Melssen and his team found, within a 120km radius, there are 90 mills belonging to 60 companies. It has the highest number of mills in one area in the whole country.
“If the owners have one or two mills, the biomass they have is of such a small volume that all they can do is use it as fertiliser or burn it for steam or as animal feed,” said Melssen.
“If you even want to make renewable energy pellets, say for Japan or South Korea, you basically need at least five to seven mills’ worth of biomass which nobody has in one area.”
So these companies need to work together as a single entity that they themselves own, and decide what they want to do with their biomass, Melssen added.
“We should make sure that we can leverage this resource by attracting industries to come to Malaysia and ensure participation of the biomass owners into the downstream value creation, and building new industries in Malaysia and keeping the value creation here,” he added.
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What we need to do is leverage that resource to make sure that those industries do not develop elsewhere but here, next to where the resource is. If it happens here, then it will really benefit Malaysia in the long term
Bas Melssen, Agensi Inovasi Malaysia’s executive vice-president
Lumber from palms
Companies such as Asia Bioenergy Technologies Bhd (AsiaBio) is already doing that. With its associate Nexfuel Ltd, it is in talks with plantation companies to build three fuel production plants costing US$70mil (RM231mil). AsiaBio also has a plant construction deal with US-based Cool Planet Energy Systems Inc, allowing it to use the latter’s technology, which converts biomass feedstock into gasoline and biochar.
“We are building a plant now that uses oil palm trunks,” said Looi Kem Loong, AsiaBio’s executive director.
“Currently they are felling the trees and letting them mulch and rot in the open. We are converting that into lumber in Johor. We expect operations to start very soon. For us, we are looking for long-term partners, not just buying biomass from them.”
AsiaBio’s executive director Steve Tan said: “Cool Planet’s technology allows biomass to become something valuable. The plantation owners are looking for value chains to bring their biomass to. They are trying to create more value from waste.”
Said Looi: “(The palm oil process) has numerous waste that is generated and in very large volumes. Cool Planet’s gasoline process uses EFB. Our green lumber converts the oil palm trunks into green lumber.”
Meanwhile, others such as Global Green Synergy Sdn Bhd (GGS) are taking the “made in Malaysia” approach. The company develops its own machines for processing dry, long fibres and transfers the technology to the palm oil mills.
“Their concern is who the end buyers would be,” said GGS founder Joseph Lim. “We were the first to introduce ‘buy back guarantee’ to the market. Whatever they produce, I would buy back 100 per cent. It would guarantee their payback.”
GGS exports 90 per cent of its products. Ninety-nine percent of its dry long fibres are exported to China for making mattresses and erosion control fibre maps. They are also used as construction material for fibre board.
“We saw that the industry has a very good future, especially in the green energy sector,” said Lim. “Previously we bought machines from China and Taiwan, but two years ago we started our own fabrication plant. We build our own machines, our pre-treatment systems and other things. So if a machine breaks down, we can have it repaired within 24 hours.”
GGS has fibre plants as well as pellet and briquette plants in Perak, and a machine fabrication factory in Seremban, Negri Sembilan.
But are the palm oil industry and biomass owners ready for this new potential?
Said Melssen: “For the industry, of course their focus is palm oil, which is their main business. And in the past, biomass was not even on their minds as an income generator. It was more of, how could we get rid of it? Whereas today, it’s starting to become valuable, and people have started to explore what they can do with it.”
Ngan Teng Ye, managing director of Ngan & Ngan Holdings Sdn Bhd, sees a huge potential in biomass in Malaysia.
“The palm oil industry produced 83 million tonnes of biomass in 2012 alone,” he said in an e-mail. “On top of that, the production of biomass in the industry is distributed across the whole year, making it cost-competitive to utilise palm oil biomass.”
Ngan & Ngan Holdings’ core investment focus is in oil palm plantations and palm oil milling. Its biomass is currently being used to produce dry long fibres and pellets.
Will there be some who will not take advantage of the biomass potential?
“Some companies say their philosophy is to put all their biomass back into the plantation,” said Melssen. “That’s fine. All we can do is inform them of the possibilities so that they can make well-informed business decisions.”
Kuala Lumpur Kepong Bhd (KLK), which has plantations in Malaysia and Indonesia, is of the opinion that “the potential of the biomass and the by-products of the palm oil industry is yet to be fully harnessed.”
However, said a KLK spokesperson: “The National Biomass Strategy is a viable one. Certain industries, like ethanol conversion and lignin recovery, will need to have sufficient supply of EFB raw material. This is only possible through a cluster of mills, due to the huge plant costs. However, such processes need to be proven to encourage the participation of the mills.”
Promoting interest
Said Melssen: “We want the industry to mobilise the biomass themselves. We don’t think forcing them is an option, neither do we think commoditisation is an option.”
Commoditisation basically means market forces determine whether one makes a profit or not. The commodity is exported without any values added. And wherever it is exported to, that is where the value is added.
“So here’s a new opportunity for a resource that’s not yet commoditised,” said Melssen. “What we need to do is leverage that resource to make sure that those industries do not develop elsewhere but here, next to where the resource is. If it happens here, then it will really benefit Malaysia in the long term.”
Melssen believes there can exist a thriving wood industry from biomass and also a very big renewable energy pellet industry initially driven by exports to North Asian countries but ultimately for local use to meet the Renewable Energy Policy And Action Plan’s target of 1,340MW by 2030 through biomass.
“There’s also enough to sustain an entire biofuels and biochemicals industry,” he said. “If 30 million tonnes are mobilised by 2020, the additional income for the country would be RM30bil every year, with 65,000 new jobs by 2020.”
But there would have to be a big mindset change among plantation owners. However, said Melssen: “We have heard from some optimistic plantation owners that if they are able to capitalise on this, who knows, one day palm oil may be a by-product. And biomass would become the main industry.”
