Environmental Ramifications and Economic Viability of Bioethanol Production in Malaysia

Abstract

The economic and environmental impact to produce bioethanol from biomass is investigated in this paper. Accordingly, a partial equilibrium model is employed to study large scale bioethanol production on the Malaysian agricultural sector and gauge secondary effects on the agricultural markets. The model shows the palm oil mills can produce bioethanol competitively and blend with gasoline fuel because the mills utilize the waste biomass created onsite and thus avoid the hauling costs. Furthermore, a large bioethanol industry would help Malaysia reduce its GHG emissions as biomass recycles carbon from the atmosphere and would help Malaysia meet its commitments in the Paris Agreement. A large bioethanol industry also creates a little derived demand for waste biomass that expands the agricultural industry, reduces agricultural prices, raises agricultural employment, and leads to greater forestation as landowners clear rainforests to expand oil palm plantations.