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ST article:From DIY Biodiesel to Slick New Venture

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MonsoonMaiden

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Well, we still have some way to go before biofuels are used in Singapore. But at least this is a beginning.

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The Straits Times

Oct 9, 2006

From DIY biodiesel to slick new venture

By Leong Chan Teik

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IF ALL cars in Singapore ran on diesel, some motorists here might discover a new hobby: making their own fuel. Mr Kom Mam Sun, 32, hit on the idea two years ago and it turned his life around. A former insolvency practitioner who used to deal with bankrupt companies, he started out making enough biodiesel to keep his Nissan truck running. That led him to start a small production outfit and sell to contractors. He is now working on plans for a plant elsewhere in the region.

Singapore's first biodiesel plant is being built on petrochemicals hub Jurong Island at a cost of around US$20 million (S$31 million), and will start operating in six months or so. The Economic Development Board says there are other projects in the pipeline, but it is not able to say more just yet.

Biodiesel has been gaining attention, not only because it is environmentally safe and low-polluting, but also because it can be made from such renewable raw materials as animal fats or vegetable oils, and even used cooking oil. It is usually mixed with petroleum-based diesel for use in vehicles.

With many Internet websites showing how, do-it-yourself biodiesel has become a mini-craze with some motorists in the United States, among other countries. All it takes is a stock of used cooking oil, chemicals and equipment available from hardware stores. It's not rocket science.

Large-scale commercial production looks likely to take off in and around Singapore, given the easy access to the region's abundant supply of palm oil. Some Singapore companies are planning biodiesel ventures in Malaysia and Indonesia, which together produce 80 per cent of the world's supply of palm oil.

Biodiesel is largely unfamiliar to people here, but it is not a recent discovery. Thailand's King Bhumibol Adulyadej, for one, began experimenting with biodiesel more than 20 years ago and has a car that runs on it. More recently, it has gained attention and popularity as an alternative fuel source, not least because of the skyrocketing price of crude oil, from which diesel and petrol are derived.

Prices soared from around US$20 a barrel in the late 1990s to as high as US$78 in July this year, but have settled at around US$60.

For DIY biodiesel maker Mr Kom, high fossil oil prices provided a push to bigger things, and a career switch to being an entrepreneur. He raised $600,000 from investors, including government agency Spring Singapore, to build a plant in Tuas. Completed in June this year, it can produce up to 1,500 tonnes of biodiesel a month. Its raw material: used cooking oil collected from restaurants.

Mr Kom sold his biodiesel to contractors in the construction industry, and began making a small profit. He has stopped production temporarily to focus on planning a plant for a potential client in a neighbouring country.

A big step up from his modest operation is the multimillion-dollar plant coming up on Jurong Island. It is a joint venture between Peter Cremer of Germany, a global trader of commodities, and Malaysia's Kulim Berhad, which runs oil palm plantations.

The plant will be able to deliver 200,000 tonnes of biodiesel a year and its palm oil feedstock will arrive either by truck or by ship, said Mr Luke Ng, a spokesman for the project. Its output will be exported mainly to the US and Europe.

In Europe, one in two new cars runs on diesel. It is partly this demand that has encouraged investors to put their money into biodiesel.

Investors are planning at least two more plants in Singapore. MAE Engineering, a Singapore company, says it is keen to build a plant on Jurong Island but does not yet have a start date for the construction. Australian company Natural Fuel has ambitions to build a biodiesel plant with a capacity of 400,000 tonnes a year. Its website says the proposed location of its plant is Jurong Island.

Being close to a source of palm oil is something on which Singapore engineering company Advanced Holdings is banking. It recently secured a licence to start a 100,000 tonnes a year plant in Pahang - a project which joins more than 50 others that Malaysia has approved in the last 18 months.

Singapore-listed company Wilmar picked Riau, in Indonesia, for a massive plant with an annual production capacity of 1.05 million tonnes. When it is completed next year, Wilmar will be the largest biodiesel producer in the region, if not the world, reckons research house Credit Suisse.

These plants, along with those planned on Jurong Island, will export biodiesel to Europe and the US.

So far, there is nothing planned for Singapore vehicles. Clearly, there is no incentive for vehicle owners to switch yet. ComfortDelGro, which operates a fleet of almost 16,000 diesel taxis, says biodiesel is not viable as it will cost more than petroleum-based diesel.

Ms Elsie Sim, general manager of Shell's sales and operations, says the potential demand in Singapore is negligible. There are 128,000 diesel-run vehicles out of a vehicle population of 600,000. But biodiesel, if used, would make up only 10 per cent of a mixture of biodiesel and fossil diesel. The 10per cent limit is the norm around the world to meet current warranties for vehicles.

Mr Eric Holthusen, Shell's fuels manager (Asia-Pacific), said biodiesel costs 40 to 60 per cent more to produce than fossil diesel.

In Europe, tax incentives and legislation have helped drive up demand for biodiesel. Biofuels - a generic term for fuels made from biological sources - have to make up 5 per cent of European Union member countries' transport fuels by 2009, up from 2.75 per cent now.

It is such European demand that is spurring the biodiesel industry in this region, said Mr Holthusen.

Although Malaysia has approved dozens of new plants, he pointed out that there was no commercial use for biodiesel there either and that its planned output was headed for Europe too.

For now, it looks like the cleaner, renewable diesel option may be made here, but will be used elsewhere.

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