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SCOTT JAGOW: One of the other themes we’ll hear in tonight’s speech: America’s dependence on foreign oil. No doubt the President will mention the need for alternatives like biodiesel. It’s touted as cleaner and more efficient than unleaded gasoline. Malaysia is one country that hopes biofuel catches on. Malaysia produces 80 percent of the world’s palm oil. It’s used to make everything from biscuits to lipstick. And yes, biofuels. Miranda Kennedy sent us this report:
MIRANDA KENNEDY: The Golden Hope plantation outside Kuala Lumpur is 120,000 acres of lush palm oil trees. The trunks of these old palms are wide and the leaves are expansive, but the prized part is the tiny fruit that grows in bunches way up top.
Estate manager Aftar Singh is showing me how the harvesters scale the trees to collect the fruit, which will later be used to make biofuel.
Malaysian companies are banking on selling to the U.S. and especially Europe, where countries have committed to using 5 percent renewable fuels in all their cars and trucks by 2010.
Faizal Parish runs the Global Environment Center in Kuala Lumpur.
FAIZAL PARISH: With the recent oil-price hike in the last year, then it’s become very serious. And this has resulted in large-scale investment. Not only by government, but also private sector, into biodiesel plants to produce biodiesel.
Making biodiesel is a lengthy and expensive process. So if the price of oil drops below, say $50, it won’t be a viable alternative — without heavy subsidies, that is.
Parish says governments are likely to help out because of its clean green image.
PARISH: This new market for biofuel is being driven by the concern of people in United States and in Europe to reduce the global emission of climate change.
Unfortunately, it’s not that simple.
PARISH: But in fact, if they are buying palm oil produced on peat soil, they are contributing to global climate change.
Parish believes that producing biodiesel can create up to four times more carbon dioxide than producing gas.
Many palm oil estates have destroyed the natural ecosystems which absorb greenhouse gases from the air. So they have a warming effect on the Earth.
That may mean the environmentally-friendly justification for biodiesel will evaporate in the near future. If so, Golden Hope will have to go back to using its palm oil for making shampoo and frying chicken.
In Kuala Lumpur, I’m Miranda Kennedy for Marketplace.