Biofuel Energy Generation May Double Post Cop30

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AS COP30 concluded in Belém, there was one message that stood out across negotiations—the need for the next phase of climate action to tackle the hard-to-abate sectors, especially the vast and often overlooked world of industrial heat.
For us, where manufacturing remains a major pillar of economic growth and exports, this carries significant implications for Malaysia.
Public discourse tends to emphasise solar energy, EV adoption, and grid modernisation. Yet in Malaysia, steam and thermal energy are quietly powering the bulk of industrial activities. Food processing, palm oil milling, paper production, rubber manufacturing, and chemical processing are all heavily reliant on boilers, fuelled by natural gas, diesel, or coal.
These processes represent a substantial share of industrial emissions but attract far less policy and financing attention than what the market is fixated on, i.e., electricity generation.
The overlooked emissions source in Malaysia’s economy
(Image: Shutterstock)Industrial heat may be invisible to most Malaysians, but it is central to economic output. Globally, heat accounts for half of industrial energy use. Malaysia’s heavy reliance on resource processing and export manufacturing suggests that the proportion is rather similarly large and significant here.
As global climate frameworks push countries to demonstrate tangible emissions reductions, Malaysian exporters will increasingly be scrutinised for how they decarbonise their heat systems, and not just their electricity mix.
This matters in a world where the EU’s Carbon Border Adjustment Mechanism (CBAM), supply-chain ESG audits, and Scope 3 reporting will influence market access and cost competitiveness.
From 2026 onwards, CBAM shifts from a reporting mechanism to a paid compliance phase, requiring importers to begin purchasing CBAM certificates, a change that directly affects Malaysian exporters.
A Malaysian strength hiding in plain sight
Malaysia has a natural strategic advantage, with the main source of renewable energy from agricultural biomass. Palm residues, such as empty fruit bunches (EFB), palm kernel shells (PKS), and fibres, offer a renewable, abundantly available, and more cost-efficient fuel source for steam generation.

According to Frost & Sullivan, Malaysia produces over 90 million tonnes of dried palm biomass annually, with total biomass availability estimated at 182.6 million tonnes per year, providing sustainable long-term supply stability for renewable heat solutions.
Industries that already operate biomass boilers, such as palm oil mills, demonstrate how renewable steam can reliably support operations, while reducing fossil fuel dependence.
Increasingly, other sectors, including the paper industry, food processing industry, and sugar refining industry, as well, are evaluating biomass-based thermal systems as part of their decarbonisation strategies.
Local engineering capability is quietly maturing
Pankaj KumarMalaysia’s engineering ecosystem has made significant progress in steam and thermal system development, supported by contributions from multiple domestic providers and other specialised engineering firms.
A wide range of biomass steam systems has been deployed across palm oil mills, paper mills and food-processing facilities, reflecting the sector’s growing adoption of renewable heat solutions.
These installations highlight a broader shift as Malaysian engineering teams are increasingly capable of designing, fabricating, and commissioning complete renewable heat systems, and not just merely servicing them.
While performance levels vary across technologies and providers, industry trends point toward systems engineered for stronger combustion performance, better fuel utilisation and reliable long-duration operations to support continuous industrial processes.
As manufacturers explore alternatives to fossil-fired boilers, several local engineering firms, including players such as Wasco Greenergy, have noted rising enquiries for renewable steam solutions. This trend signals a growing recognition that industrial decarbonisation requires addressing heat, not just electricity.
The economics are shifting
For many industrial users, the transition is becoming more financially viable. Biomass residues offer greater price stability than fossil fuels because they are locally sourced and less exposed to global market volatility and uncertainty in supplies.
Malaysia’s move towards carbon pricing and tighter reporting standards also means renewable heat provides a practical hedge against future compliance costs.

Meanwhile, banks are increasingly recognising industrial heat upgrades as part of sustainability-linked lending, improving not only access to financing but also at a lower funding cost.
Some energy system providers have started offering commercial models where they build, own, and operate biomass steam plants, supplying steam to manufacturers under long-term contracts.
This “energy-as-a-service” approach lowers upfront capital requirements, while aligning performance incentives with efficiency and reliability.
A growing regional and domestic market
(Image: The Edge Malaysia)Malaysia’s renewable heat market is also expanding in line with broader industrial trends. Frost & Sullivan projects the Malaysian biomass boiler market to grow at 9.0% annually between 2024 and 2029, supported by replacement demand from older mills built 10-15 years ago, as well as rising adoption across multiple industrial sectors. Indonesia, an increasingly important regional market, is expected to see even faster growth, with biomass boiler demand forecast to rise at a rate of 11.2% annually over the same period.
These trends suggest that Southeast Asia’s shift toward renewable industrial heat is not only environmentally driven but also economically grounded, which is a perfect win-win solution.
A window of opportunity
If Malaysia builds on the momentum from COP30, industrial heat could become one of the country’s fastest and most impactful pathways to lowering emissions, while strengthening export competitiveness in a carbon-constrained global marketplace.

Our biomass potential is substantial. Our engineering capability is strong and expanding. And the future competitiveness of Malaysia’s manufacturing sector depends increasingly on how quickly it can decarbonise production.
Malaysia does not need to wait for technological breakthroughs. The solutions exist and it is here, and many are already being designed and built at home. The challenge now is to scale them, and to do so with urgency. 
Pankaj Kumar is the managing director of Datametrics Research & Information Centre (DARE).
The views expressed are solely of the author and do not necessarily reflect those of  MMKtT.
- Focus Malaysia.

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