Biofuels and bioproducts.

Palm oil, like other vegetable oils, can be used to create biodiesel for internal combustion engines. Biodiesel has been promoted as a form of biomass that can be used as a renewable energy source to reduce net emissions of carbon dioxide into the atmosphere. Therefore, biodiesel is seen as a way to decrease the impact of the greenhouse effect and as a way of diversifying energy supplies to assist national energy security plans. Scientists have found that biodiesel made from palm oil grown on sustainable non-forest land and from established plantations can effectively reduce greenhouse gas emissions.

However, NGOs such as Greenpeace have concluded that the current "first generation" biodiesel extracted from new palm oil plantations may not be a genuine counter to global warming. If forests are cleared for palm plantations, and the wood is not used for bioenergy but burned, it may take decades before biodiesel from palm oil reduces as much carbon dioxide as the pristine forests originally sequestered in the form of carbon. However, if the wood is used for the production of bioenergy, the palm plantations as well as the biodiesel from palm oil starts to sequester and reduce greenhouse gas emissions from the first year onwards.

Although palm oil has a comparatively high yield, the problems that organisations such as Greenpeace have linked to palm cultivation on newly-cleared plantations have encouraged research into alternative vegetable fuel oil sources with less potential for environmental damage, such as jatropha. Although palm requires less manual labor to harvest a given amount of oil than jatropha, the latter grows well in more marginal areas and requires less water.

Other scientists and companies are going beyond merely using the oil from oil palm trees, and are proposing to convert the entire biomass harvested from a palm plantation into renewable electricity, cellulosic ethanol, biogas, biohydrogen and bioplastic. Thus, by using both the biomass from the plantation as well as the processing residues from palm oil production (fibers, kernel shells, palm oil mill effluent), bioenergy from palm plantations can have an effect on reducing greenhouse gas emissions. Examples of these production techniques have been registered as projects under the Kyoto Protocol's Clean Development Mechanism.

By using all the biomass residues from palm oil processing for renewable energy, fuels and biodegradable products, both the energy balance and the greenhouse gas emissions balance for biodiesel from palm oil is improved. For each tonne of crude palm oil (CPO) produced from fresh fruit bunches, the following residues, which can all be used for the manufacture of biofuels, bioenergy and bioproducts, become available: around 6 tonnes of waste palm fronds, 1 ton of palm trunks, 5 tons of empty fruit bunches (EFB), 1 ton of press fiber (from the mesocarp of the fruit), half a ton of palm kernel endocarp, 250kg of palm kernel press cake, and 100 tonnes of palm oil mill effluent (POME). In short, a palm plantation has the potential to yield a very large amount of biomass that can be used for the production of renewable products.

However, regardless of these new innovations, first generation biodiesel production from palm oil is still in demand globally and will continue to increase. Palm oil is also a primary substitute for rapeseed oil in Europe, which too is experiencing high levels of demand for biodiesel purposes. Palm oil producers are investing heavily in the refineries needed for biodiesel. In Malaysia companies have been merging, buying others out and forming alliances in order to obtain the economies of scale needed to handle the high costs caused by increased feedstock prices. New refineries are being built across Asia and Europe.

Regional production.

Malaysia.

In 2004, Malaysia produced 14 million tons of palm oil from more than 38,000 square kilometres of land, making it the largest exporter of palm oil in the world. The majority of its crops goes towards its traditional markets for personal hygiene and food use. The Malaysian Sime Darby conglomerate is its largest plantation operator, with 524,626 hectares of oil palms, mainly across Peninsular Malaysia, Sarawak and Sabah in Malaysia. It also operates plantations in Sumatera, Kalimantan and Sulawesi in Indonesia, as well as production plants and refineries.

The IEA predicts that biofuels use in Asian countries will remain modest. But as a major producer of palm oil, the Malaysian government is encouraging the production of biofuel feedstock and the building of biodiesel plants that use palm oil. Domestically, Malaysia is preparing to change from diesel to bio-fuels by 2008, including drafting legislation that will make the switch mandatory. From 2007, all diesel sold in Malaysia must contain 5% palm oil. Malaysia is emerging as one of the leading biofuel producers with 91 plants approved and a handful now in operation, all based on palm oil. Most are aimed at supplying regional demand, though exports to Europe are also planned, with China currently the main importer of Malaysian products for biodiesel.

On 16 December 2007, Malaysia opened its first biodiesel plant in the state of Pahang, which has an annual capacity of 100,000 tonnes and also produces by-products in the form of 4,000 tonnes of palm fatty acid distillate and 12,000 tonnes of pharmaceutical grade glycerine. Neste Oil of Finland plans to produce 800,000 tonnes of biodiesel per year from Malaysian palm oil in a new Singapore refinery from 2010, which will make it the largest biofuel plant in the world, and 170,000 tpa from its first second-generation plant in Finland from 2007-8, which can refine fuel from a variety of sources. Neste and the Finnish government are using this paraffinic fuel in some public buses in the Helsinki area as a small scale pilot.

Indonesia.

Growers in Indonesia are also increasing production of palm oil to meet the global demand spurred by biofuels, with the government looking for it to become the world's top producer of palm oil.

In additional to servicing its traditional markets, it is looking to produce biodiesel. There are new mills and refineries being built by major local companies, such as PT. Asianagro (150,000 tpa biodiesel refinery), PT. Bakrie Group (a biodiesel factory and new plantations), Surya Dumai Group (biodiesel refinery) and global companies such as Cargill (sometimes operating through CTP Holdings of Singapore, building new refineries and mills in Malaysia and Indonesia, expanding its Rotterdam refinery to handle 300,000 tpa of palm oil, acquiring plantations in Sumatra, Kalimantan, Indonesian Peninsula and Papua New Guinea) and Robert Kuok's Wilmar International Limited (with plantations and 25 refineries across Indonesia, to supply feedstock to new biodiesel refineries in Singapore, Riau, Indonesia, and Rotterdam)

However, fresh land clearances, especially in Borneo, are contentious for their environmental impact. NGOs and many international bodies are now warning that, despite thousands of square kilometres of land standing unplanted in Indonesia, tropical hardwood forest are being cleared for palm oil plantations. Furthermore, as the remaining unprotected lowland forest dwindles, developers are looking to plant peat swamp land, using drainage that unlocks the carbon held in their trees and begins an oxidation process of the peat which can release 5,000 to 10,000 years worth of stored carbon. Drained peat is also at very high risk of forest fire, and there is a clear record of fire being used to clear vegetation for palm oil development in Indonesia. Drought and man-made clearances have led to massive uncontrolled forest fires over recent years, covering parts of Southeast Asia in haze and leading to an international crisis with Malaysia. These fires have been variously blamed on a government with little ability to enforce its own laws while impoverished small farmers and large plantation owners illegally burn and clear forests and peat lands in order to reap the developmental benefits of environmentally-valuable land.

Australia.

On 23 November 2006 Australia's first palm oil based biodiesel plant opened in Darwin, using Lurgi AG's biofuel refinery technology. The plant has a capacity to produce 122,500 t of biodiesel, and 12,250 t of glycerine annually. The same company is also building a 600,000/60,000 tpa biodiesel/glycerine facility with cogeneration in Singapore, scheduled to come into full production in mid-2008.

Benin.

Palm is native to the wetlands of Western Africa and south Benin already hosts many palm plantations. Its government's 'Agricultural Revival Programme' has identified many thousands of hectares of land as suitable for new oil palm plantations to be grown as an export crop. In spite of the economic benefits, NGOs such as Nature Tropicale claim this policy is flawed as biofuels will be competing with domestic food production in some existing prime agricultural sites. Other areas comprise peat land, whose drainage would have a deleterious environmental impact. They are also concerned that genetically-modified plants will be introduced for the first time into the region, jeopardizing the current premium paid for their non-GM crops.

Kenya.

Kenya's domestic production of edible oils covers about a third of its annual demand, estimated at around 380,000 metric tonnes. The rest is imported at a cost of around US $140 million a year, making edible oil the country's second most important import after petroleum. Since 1993 a new hybrid variety of cold-tolerant, high-yielding oil palm has been promoted by the Food and Agriculture Organization of the United Nations in western Kenya. As well as alleviating the country's deficit of edible oils while providing an important cash crop, it is claimed to have environmental benefits in the region, as it does not compete against food crops or native vegetation and it provides stabilisation for the soil.

Colombia.

In the 1960s about 18,000 hecatares were planted with palm. Colombia has now become the largest palm oil producer in the Americas, and 35% of its product is exported as biofuel. In 2006 the Colombian plantation owners' association, Fedepalma, reported that oil palm cultivation was expanding to a million hectares. This expansion is being part-funded by the United States Agency for International Development in order to resettle disarmed paramilitary members on cultivatable land, and by the Colombian government which proposes to expand land use for exportable cash crops to 7m hectares by 2020, including oil palms. However, while Fedepalma states that its members are following sustainable guidelines, there have been claims that some of these new plantations have been appropriated on land owned by Afro-Colombians driven away through poverty and civil war, while armed guards intimidate the remaining people to depopulate the land, while coca production and trafficking follows in their wake.

Health.

Palm oil is a very common cooking ingredient in the regions where it is produced.

Its heavy use in the commercial food industry elsewhere can be explained by its comparatively low price, being one of the cheaper vegetable or cooking oils on the market, and by new markets in the USA, stimulated by a search for alternatives to trans fats after the Food and Drug Administration required food labels to list the amount of trans fat per serving. Identifying the exact source of an oil can be complicated by labelling, as palm oil is often described on food labels simply as "vegetable oil".

Red palm oil is known to be healthier than refined (discolored) palm oil. This is a result of several mitigating substances found in the red palm oil. These compounds are:

betacarotenes (present in higher amounts than in regular palm oil)

co-enzyme Q10 (ubiquinone)

squalene

Vitamin A

Vitamin E

Palm oil is applied to wounds, just like iodine tincture, to aid the healing process. This is not just done for its oily qualities; like coconut oil, unrefined palm oil is supposed to have additional antimicrobial effects, but research does not clearly confirm this.