The Malaysian palm oil industry plays an important role in achieving the net zero target
The Malaysian palm oil industry has long implemented zero waste principles by converting agricultural waste into useful resources, which also prevents carbon emissions from waste decomposition.
Whether in the form of solid waste – in the form of empty fruit bunches (EFB), fiber and shells – or liquid waste in the form of liquid palm oil mill waste (POME) which is produced from processing fresh fruit bunches into crude palm oil, all parts of palm oil are converted into fertilizer, fuel and other products.
This is an important step towards achieving a truly circular economy, where nothing is wasted, and it is in line with the UN’s three Sustainable Development Goals (SDGs): SDG 7 (affordable and environmentally friendly energy), SDG 12 (responsible consumption and production), and SDG 13 (climate action).
These efforts by the palm oil industry also support Malaysia’s goal of achieving net zero emissions by 2050, which is outlined in policy documents such as the National Energy Transition Roadmap and the 2030 New Industries Master Plan.
The country’s major palm oil industry players have set their own net zero targets, alongside various sustainability goals that align with national targets and global demands.
To further support the industry, the Malaysian Palm Oil Council (MPOC) published a study in November 2024 to push the Malaysian palm oil industry towards carbon neutrality and net zero emissions.
The study, conducted in collaboration with Swinburne University of Technology (Sarawak campus), outlines a roadmap for the industry to reach net zero and strengthen its role as a global leader in climate-smart agriculture.
It also demonstrates the industry’s ability to achieve net zero emissions above the global average through compliance with the Malaysian Sustainable Palm Oil (MSPO) certification.
The MPOC study reviews current systems and introduces new technologies. The report also provides an overview of the challenges the industry faces in implementing these solutions, and provides recommendations for consideration.
Some practices that have currently achieved significant results are the use of combined heat and electricity generation systems and the capture of biogas from POME. MSPO certification requirements coupled with industry best practices have resulted in a 68.8% reduction in greenhouse gas (GHG) emissions by replacing fossil fuels and avoiding methane emissions.
POME is highly acidic but nutrient-rich wastewater, which emits methane gas which can be used to produce energy. The energy is used to power operations in remote factories or sold to the power grid.
Other organic waste from plantations such as palm leaves, palm tree trunks, and EFB is used as mulch and fertilizer to make the soil healthier. Waste from palm oil mills such as palm mesocarp fiber, palm kernel meal and palm kernel shells is burned in controlled facilities to produce energy, thereby reducing the use of fossil fuels.
Many of the new technologies introduced in this research involve more effective use of TKKS. Current industry practice is to return EFB to plantations as mulch, or convert it into biofertilizer or animal feed. Some advanced power plants may be able to use EFB as raw material.
The solution that appears in this report is to convert EFB into briquettes or pellets, which can be used to produce renewable energy. Another way is to convert EFB into biochar through pyrolysis, namely heating organic material in a stable environment without oxygen. The resulting product is a black solid called biochar which can be used for soil aeration as well as water retention in the soil, improving its quality and also increasing carbon storage in the soil, thereby contributing to long-term absorption.
In addition, EFB can be used in gasification technology to produce synthetic gas, which in turn is used for environmentally friendly electricity generation. Gasification is a process where raw materials, in this case EFB, are exposed to high temperatures without actual fire, with minimal oxygen and steam. EFB can also be fermented to produce bioethanol, which has many uses in various industries.
For more of these new technologies to be implemented on a large scale, more research and development (R&D) is needed. Collaborative efforts between industry players, researchers and government agencies are also needed.
In addition, to reduce the cost of technological solutions, local production of equipment should be expanded. For example, biomass power plants require high-pressure steam generators, which local producers cannot produce. Additionally, some anaerobic digestion components used in biogas production pipelines are also imported from Germany, according to MPOC research.
On the other hand, more efficient collection, transportation and storage of biomass materials is required, and the yield and quality of the materials used must remain consistent.
With consistent, high-quality raw materials, coupled with good infrastructure – such as access to the electricity grid and a reliable transportation network – the palm oil industry can take the lead in producing environmentally friendly energy for the country from agricultural waste.
Of course, for this to happen, large capital injections must be available, so that companies can make more efforts to access financing, grants and incentives to ease the financial burden of adopting new technologies.
MSPO certification is mandatory for the palm oil industry and its plantations in Malaysia, and is a national initiative to make palm oil production more responsible, ethical and competitive.
These certification standards are reviewed regularly to ensure they are up to date and can help growers in Malaysia meet global demand, while also helping small growers who may need more resources to switch to sustainable practices.
For example, small independent plantations of less than 46ha will not be audited against the same guidelines as plantations of more than 500ha.
MSPO standards were last updated in 2022, and implemented earlier this year. These revised standards are strengthened with stricter sustainability requirements, including a “Zero Deforestation” deadline of December 31, 2019, and a high conservation value (HCV) assessment. They also focus on social responsibility, transparency and ethical behavior, as well as improving traceability systems.
MSPO standards also facilitate the Malaysian palm oil industry to achieve net zero commitments and mitigate climate change. In the environmental sector, companies are now required to identify sources of GHG emissions, as well as monitor and plan emission reductions.
To help companies on this journey, MSPO developed a GHG calculator, which will be released later this year for general use.
Recognizing the global pressure on palm oil companies to adopt sustainability, many Malaysian companies have invested in these efforts and are pushing the boundaries of innovation in sustainability.
Energy generation using POME in factories is commonly carried out by plantation companies, as is the use of palm oil solid waste as fertilizer. But these companies don’t stop there, and continue to invest in research and development to innovate new solutions.
SD Guthrie Bhd, for example, recently launched a project at Carey Island, SD Guthrie Bhd’s innovation hub, where all previously diesel-powered engines and vehicles have been switched to B30 biodiesel, which is a blend of 30% palm oil and 70% diesel. According to the company, GHG emissions reductions amount to up to 23% from this initiative.
Meanwhile, IOI Group replaced the diesel-powered agricultural machines used on its plantations with electric-powered machines. On remote plantations, they use solar power plants to produce renewable energy.
The company has also established IOI Palm Wood Sdn Bhd to convert unused palm oil trunks into high-performance palm wood panels for the furniture and building industries, and partnered with Nextgreen Global Bhd to develop a zero-waste paper pulp mill from EFB.
Kuala Lumpur Kepong Bhd began installing a belt-press (FBP) filter system, which reduces methane formation and converts POME into fertilizer. Water, which is a byproduct of the process, is recycled for cleaning purposes. According to the company, 35 FBPs have been installed.
United Plantations Bhd, which received the world’s first Roundtable on Sustainable Palm Oil certificate in 2008, has tracked its emissions using life cycle assessment (LCA), and completed the first LCA on palm oil in 2008.
The most recent LCA report in February 2025 found that the company had demonstrated a 60% reduction in GHG emissions per kg of palm oil produced from 2004 to 2024, when including indirect land use change and nature conservation, as well as Scope 1, 2 and 3 emissions.
On the other hand, FGV Holdings Bhd invests in waste-to-wealth initiatives that generate energy from POME, and exports palm kernel shells to Japan as biofuel. Recently, FGV invested in spent silica valorization and glycerin pitch valorization processes.
Spent silica, which is a by-product of biodiesel pre-processing plants, is reused to absorb 90% of the phosphorus and 60% of the free fatty acids in crude palm oil. Meanwhile, glycerin with impurities originating from the glycerin refining plant is reused as a catalyst for the production of solid biofuel.
Clearly, there is a lot of development and innovation in the palm oil industry to achieve zero waste and net zero emissions. As industry players continue to invest in research and development to implement more innovative solutions, the path to sustainable palm oil in Malaysia is clear and achievable.
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Source: The Edge Malaysia
