To The Moon

The Future of Biofuel

Singapore’s benchmark $Straits Times Index(STI.SI)$ was down 0.52% last week closing at 3095.59. Fear of a global recession sent major Asia-Pacific markets including China, Japan and South Korea shares tumbling.

Japan’s Tankan manufacturing index survey data came in at 9, down from its previous quarter of 14 and the second straight quarter of declines. This revives investor’s worries about economy health of the world’s third largest economy. The portion of the Tankan survey that measures the health of the manufacturing sector is considered particularly important as a gauge of overall Japanese economic growth.

Since early 2020, Indonesia has used a mandatory B30 as blending for biodiesel containing 30% of palm-based fuel. The country’s palm-based fuel programme will not stop at B30 and is currently running road test on a 40% pal-based biocontent. Malaysia intends to implement its nationwide adoption of the B20 palm oil biofuel programme by end of 2022.

What is Biodiesel?

Biodiesel is a renewable, biodegradable fuel manufactured domestically from vegetable oils, animal fats, or recycled restaurant grease. biodiesel is a renewable, clean-burning diesel replacement that can be used in existing diesel engines without modification.

The future of Biofuel

Biofuel is one of the largest renewable energy sources and plays a key role as a substitute of fossil fuel in sectors such as industrial, transport and buildings. This renewable energy source also makes a significant impact in decarbonising challenging sectors such as heavy freight transport and industrial sectors such as iron and steel, cement, aluminium and petrochemicals.

Source: IEA

Due to strong domestic policies, Asia biofuel production is predicted to surpass European’s production in the coming years. The increasing blending targets for biodiesel in Indonesia and Malaysia are responsible for most of this growth.

$GOLDEN AGRI-RESOURCES LTD(E5H.SI)$ operates two biofuels plants that produce over 600,000 tonnes of high-quality biofuel annually. Both plants are strategically located near their downstream operations and are also located near jetty to ensure easy distribution of biofuel to both the domestic and international markets. The Indonesia government has implemented the B30 biodiesel mandate (30 percent palm oil, 70 percent diesel) in 2020, spiking demand for palm oil domestically.

First Resources Limited, an investment holding company, engages in the palm oil production activities in Singapore, Indonesia, Europe, China, and internationally. The company operates in two segments, Plantations and Palm Oil Mills, and Refinery and Processing. The company engages in the rubber plantation activities. It manages 212,208 hectares of oil palm plantations; and 6,321 hectares of rubber plantations. The company was founded in 1992 and is based in Singapore.

Biodiesel producers such as $GOLDEN AGRI-RESOURCES LTD(E5H.SI)$ & $FIRST RESOURCES LIMITED(EB5.SI)$ could benefit if Indonesia and Malaysia raise their biodiesel mandate in the near future.