Market Trends of South-East Asia Biodiesel Industry
This section covers the major market trends shaping the South-East Asia Biodiesel Market according to our research experts:
Transportation Segment Expected to Witness Significant Growth
- Biodiesel is a renewable, clean-burning diesel replacement used in existing diesel engines without modification. Biodiesel can be blended with fossil-based fuels used in transportation, the most common transport blends are B5 (blended with 5% biodiesel) and B20 (blended with 6-20% biodiesel). Many countries in the region have rolled out blending mandates for emission-free transportation.
- Malaysia witnessed a continuous increase in biodiesel consumption, reaching 863 million liters of consumption, as of 2021. The upscaled trend was predominantly due to the high utilization of fuel in the transportation sector. Industry experts predict that the trend will continue in the future too, due to government policies in the form of blend mandates and subsidies.
- As an example, in January 2022, the Malaysian government announced plans to roll out the 20% blending mandate of biodiesel by the end of 2022, as a part of the B20 palm oil biofuel program. The mandate was first planned in 2020 but faced delays due to coronavirus outbreaks.
- Furthermore, in Indonesia too, in December 2021, the country implemented the blending mandate of 30% palm-oil based biodiesel in the transport fuels. In 2022, the country also began the road tests for B40 fuel i.e 40% blend of palm-oil based biodiesel for vehicles.
- Such developments are expected to result into an augmented growth of biodiesel market in the transportation sector in the coming years.
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Indonesia Expected to Dominate the Market
- Indonesia is consistently growing in the biofuels market due to the high volume of biodiesel and bioethanol production. The country is positioned as the leader in palm oil production at the global level, the most essential ingredient for the manufacturing of biodiesel. The private companies showing interest in investing in the sector is also one of the sole reasons for the expansion of the biodiesel market in the country.
- The biodiesel production in the country reached record levels with around 9500 million liters of production, as of 2021. The transportation sector is the major contributor to the high demand for biodiesel, followed by the industrial sector, which exclusively includes the electricity generation sector.
- A classic example of the country's efforts to expand the use of the fuel as a transport fuel is the introduction of a 30% blend mandate of biodiesel in fossil-based diesel fuels in 2021. Indonesia also disclosed plans to do road tests for B40 biodiesel products with 40% blending of biodiesel.
- Furthermore, the fuel is also gaining momentum in the industrial sector. In January 2022, the South Korea-based company GS Caltex and POSCO International decided to develop the Indonesian biodiesel plant and a raw-material refining facility for the production of a biochemical product. They also announced plans to start the business for the next generation biofuels business.
- Owing to such developments, Indonesia is forecasted to dominate the market in the unfolding scene.
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