We need to embrace change and move towards a new economy that is driven by sustainability and innovation. This new economy will have to overcome a myriad of challenges including population pressure and dwindling resources by producing food, materials and goods using renewable biological resources. We need to instill innovation and therefore we need to utilize bio-based technology to add value to our bio-resources. This necessitates that we make profound and innovative changes in order to transit to a stronger bio-based economy.

The endeavor requires a stable and sustainable supply of biomass, and Malaysia has one of the highest figures in the world for biocapacity, in terms of the annual production of biomass per person. Given the abundance of biomass resources, the country is well positioned to be a forerunner in the development of bio-based materials and products. This is further supported by industries long history of finding ways to derive novel products which will minimize environmental pollution.

The palm oil industry for instance generates a fair amount of lignocellulosic biomass with an estimated 100 million metric tonnes on an annual basis, with most of it are left in the field as fertilizer. The readily available surplus of oil palm biomass does not take land away from food production, therefore eliminating the food versus fuel/ feed debate. Biomass coming from the palm oil industry, such as oil palm fronds and leaves, oil palm trunks, empty fruit bunches, shells, mesocarp fiber and palm oil mill effluent (POME) could be put to better use – for example serving as precursor to chemical intermediates for the production of bio-based chemicals.

One thing we can all agree on is that being more efficient and productive with existing resources is a good idea. Second generation conversion technologies and treatment methods set sights on converting from most non-food feedstock, including oil palm biomass, into lignocellulosic-derived sugars, which are precursors to renewable fuels, fine chemicals and polymers. Technological uncertainty does still remain around the step of breaking down the biomass into individual sugars in a manner similar to first generation approaches, which can subsequently be fermented into bio-based chemicals. We need to further optimise the process to better suit oil palm biomass in order to produce value-added chemicals at high selectivity and yields at economical cost.

Having said that, we have yet to develop full-scale commercial biorefineries that utilises oil palm biomass and this remains a big challenge for us. To fully capitalise on the biomass opportunity in the country, we need stakeholders support and efforts that are deployed towards higher value downstream components. It is critical that we set priorities towards having more bio-based products of higher value such as bio-fuels and bio-based chemicals, apart from producing wood products, bioenergy and pellets. From the economic stand point, the potential benefits of turning biomass into bio-based chemicals for instance, far outweigh any of its current usage.

I came across a report from Pike research, while measuring the market value by region, highlighted that Asia Pacific is set to capture the largest market share in the bio-based chemicals sector by 2020. Recognising the underlying potentials within the bio-based chemicals industry, countries around the world including the European Union, United States, China, India, and Brazil are investing heavily in bio-based chemicals. The global renewable chemicals market in 2012 is estimated at USD 57.5 billion and is expected to grow to USD 83.4 billion by 2018 with a compound annual growth rate (CAGR) of 5.5%. New technologies, consumer preference, regulatory and economic factors are among the driving force for the bio-based chemicals sector.

I also read that the United States senate has recently introduced legislation that aims to provide tax credits for the production of renewable chemicals and investments in renewable chemical production facilities. The Renewable Chemicals Act of 2015, defines renewable chemicals as those made from renewable biomass and used for the production of chemical products, polymers, plastics, and formulated products. To spur industry growth, the bill provides a 15 cent-per-pound production tax credit for eligible renewable chemicals manufactured from biomass feedstock. Alternatively, the bill also allow producers to elect to take a 30 percent investment tax credit for qualified investments for new renewable chemical production facilities in lieu of the production tax credit. This strategy of having dedicated incentives in tax policy is effort on part of the U.S. government to help drive industrial biotech companies to continue to innovate and develop new products in the chemical space. Incentives that support renewable chemicals are provided to promote innovation in the chemical industry, allowing U.S. companies to better compete in a rapidly growing global bio-based chemicals market.

In Malaysia as well, bio-based chemicals have gained traction as a sustainable alternative to petrochemicals. The government’s support and commitment in developing bio-based chemicals is palpable through the Economic Transformation Programme (ETP) and Bioeconomy Transformation Programme (BTP), both aimed at steering Malaysia’s downstream palm oil sector towards the production of high value oleo-derivative products and uncovering ways to economically utilise the various parts of the oil palm tree and fruit. Twelve projects under the BTP involves producing biochemical and biomaterials from renewable resources. The rest are using biomass as industrial upstream inputs. All these projects are expected to provide a total of 1,528 job opportunities and secure cumulative investments of RM1.9 billion by 2020.

One of the more significant investment secured in the bio-based chemical sector is Verdezyne’s commercial-scale renewable chemicals manufacturing facility in Bio-XCell. The manufacturing facility leverages on Verdezyne’s yeast fermentation technology with the abundant supplies of non-food, plant-based feedstocks in Malaysia to produce a variety of commercial diacids, including DDDA. These diacids are used to produce nylon or other polymers in a variety of applications including engineering resins, automotive parts, athletic apparel, carpeting and toothbrush bristles, all at lower cost than traditional, petroleum-derived nylons.

Sabah and Sarawak, having more than 50 percent of the total oil palm hectarage in the country, has tremendous potential in adding value to its economy through high-tech processing and utilisation of its huge oil palm biomass reserves. With much downstream opportunities to be explored, it is industry clusters such as the Palm Oil Industrial Clusters (POIC) that provide an important platform to bring together stakeholders; from oil palm companies, to estate owners, millers, technology providers and financial investors. It comes as no surprise that Sabah alone, the largest palm oil producing state, has two POIC, located in Lahad Datu and Sandakan. POIC in Lahad Datu is the first dedicated palm oil industrial cluster of its kind in Malaysia, an important part of the Sabah Development Corridor, targeting key biomass industry including palm oil refinery, oleochemicals, food, phyto-nutrients, biodiesel and other support services. The POIC in Sandakan is also being developed to capture higher value-added downstream processing of palm oil.

Specialised industry clusters such as POIC complements the larger industrialisation efforts and speed up the development of bio-based downstream activities. By focusing efforts and tools in clusters, we can better focus on areas where it impacts the competitiveness of an entire group of companies simultaneously. It is the best timing for Sabah and Sarawak, both states abundant with raw materials, to be the most strategic location to develop more bio-based clusters. Since its establishment, POIC Lahad Datu has attracted more than RM2 billion investments and created more than 2,000 job opportunities.

A high-impact project by Genting Plantations and Elevance Renewable Sciences based at POIC sets the direction through the setting of its integrated biorefinery to produce, from biomass and renewable oils – high performance olefins and specialty chemicals that can be used in multiple end-product applications, including lubricants, surfactants and detergents. Taking full advantage of investment opportunities in downstream activities, the biorefinery initiative signifies a win-win collaboration between the public and private sector in adding value to the palm oil industry, with the POIC participants benefitting from many economic advantages and supported by modern and complete infrastructures. Peripheral industries can also reap additional benefits from this collaboration.

BiotechCorp is working towards attracting more such industry players and investments into POIC, while we continue to engage strategic partners, to create ecosystems conducive to the growth of bio-based chemicals. The value proposition coming from POIC would be its close proximity to feedstock and plants, lower cost of transportation for biomass, and by leveraging on the surrounding industries built-up, centralised utility and infrastructure. Hence, enabling industry players to structurally mobilise biomass would be key to entice bio-based chemical companies to be in POIC.

Our bioeconomy agenda has set high expectations for the country to become one of the key bio-based chemicals and biomass hubs in the Asia Pacific region. The development of bio-based chemicals and other high-value utilisation of biomass is the needed solution to Malaysia’s dependency on petrochemicals derivatives and should be capitalised in such a manner to allow us to reap the benefits and to produce our own sustainable and renewable chemicals and materials. Eventually, the economic multipliers from bio-based chemicals and biomass development will contribute to national economic growth and propel the country into achieving the status of a highly developed and high-income status nation.