Video #29: Malaysia Palm Oil Boom
Monday, June 05, 2006BACKGROUND INFORMATION
As oil and gasoline prices rise, there is increasing interest in finding alternative fuels. One of those alternatives is “biodiesel,” a clean-burning, lower-emission fuel which is created from mono-alkyl esters, a derivative of certain vegetable oils or animal fats after they go through a process called transesterification. Biodiesel is efficient, easily renewable, and in common supply.
One example of a common substance used in transesterification is palm oil. Although more well-known as a cooking oil, palm oil has been considered for use as a diesel fuel substitute since 1984. Not surprisingly, one of its main proponents is Malaysia, which produces 47% of the world’s palm oil. It also announced plans to construct three palm oil plants that would produce more than 120,000 tons of biodiesel in 2006, with their output rising to 500,000 tons in 2007.
These high amounts reflect a growing global trend to move toward palm oil as an alternative fuel source. All members of the European Union are now required to use a diesel mixture that is at least 2% biodiesel, and to increase it to 5.75% by 2010. Such “blends,” as they’re known, are much cleaner and lubricate better than normal diesel. Although the European Union has traditionally used rapeseed oil in its bio-diesel blends, palm oil is roughly half the price per ton. So as more palm oil becomes available, European blends are expected to switch to a higher palm oil content.
In the US, the government has taken several steps to encourage the growth of another type of biodiesel: soy oil obtained from American farmers. In the last six years (2000-2006) US domestic production of biodiesel has jumped from 2 million gallons annually to 150 million gallons. American venture-capital entrepreneur Vinod Khosla believes that conventional oil refiners will be able to take advantage of the coming trend, if they get on board in time. "Even though they won't acknowledge it today, oil companies are best equipped to build bio-refineries on a large scale," he stated in a keynote address for an Economic Policy Research forum at Stanford. "I believe at some point they will be investing. And that would be a wonderful thing."
SOURCES
“Biodiesel Basics” National Biodiesel Board.
June 4, 2006
http://www.biodiesel.org/resources/biodiesel_basics/default.shtm
“What is Biodiesel?” Biomass Energy Conversion Center.
February 17th, 2006. http://www.nytimes.com/2006/02/17/business/17auto.html?
ex=1297828800en=e573b9457b475a84ei=5088partner=rssnytemc=rss&pagewanted=print
“Malaysia to build palm oil biodiesel plants to counter high oil price”
Mongabay.com. September 26th 2005.
http://news.mongabay.com/2005/0926-malaysia.html
“Malaysia moves closer to biodiesel launch” The Financial Express. May 5th, 2006. http://www.financialexpress.com/fe_full_story.php?content_id=126005
“Palm oil” Wikipedia.com. June 4th, 2006.
http://en.wikipedia.org/wiki/Palm_Oil
“Palm and rapeseed oil contend in Biofuel Race” Reuters. February
24th, 2006 http://www.int.iol.co.za/index.php?set_id=1&click_id=143&art_
id=iol1140802698915B140%20
“Could loss of incentives put breaks on biodiesel expansion?”
Delta Farm Press. May 30th, 2001.
http://deltafarmpress.com/news/060530-biodiesel-expansion/
“Venture capitalist backs biofuel, says country can go down petroleum-free
path”
Stanford Report. May 10th, 2006.
http://news-service.stanford.edu/news/2006/may10/energy-051006.html
LESSON PLAN
GRADE LEVEL/SUBJECT:
10-12 grade Economics, International Relations, World History, Geography, International
Baccalaureate Programs (IB), Current Events.
PURPOSE:
To present activities to be used in a variety of classroom situations to enhance
student understanding of the economic potential of palm oil produced in Asia
and other biodiesel alternatives.
MATERIALS:
1. Background information provided.
2. Resources on Malaysia, biodiesel, and palm oil available in your school’s
Media Center and the Public Library System in your area.
3. Background information available through Internet “search engines.”
OBJECTIVES
Students will be able to:
1. Understand the potential economic impact of introducing biodiesel as an alternative
fuel source.
2. Be able to define the potential benefits and setbacks of attempting to introduce
an alternative fuel source to a global market.
3. Research which Asian countries stand to benefit most if demand for palm oil
rises.
ACTIVITIES:
May be assigned as group activities or as individual tasks. They may also be
designed as preparation for related presentations either by individuals or groups.
1. Have the students research and create a Venn diagram listing the benefits
of and disadvantages of having energy-consuming countries increase their use
of bio-diesel
and/or palm oil.
2. Have the students research the different types of bio-diesel and current
plans to put
them into use. They should find out which Asian countries are best-positioned
to
make use of this fuel (as either producers or consumers).
3. Split the students into two groups-- one representing the oil companies and
the other a bio-diesel firm-- and have them debate whether bio-diesel is the
“fuel of the future.”
EVALUATION:
Individual assignments should be graded by the teacher using established criteria.
Group activities, presentations and projects may be evaluated by teachers and
students using the following criteria and scale:
Content 1 = Superior (A)
Creativity 2 = Excellent (B)
Clarity 3 = Good (C)
4 = Fair (D)
5 = Poor (F)
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