THE country needs to introduce a national policy on biomass to make the sector more attractive, an industry player said.
Such a policy must spell out ways to curb rampant biomass exports and control their prices, among others.
Biomass producer Zara Development Resources chairman Zaharah Taib said the policy is crucial now as the environment friendly waste product is a cheaper alternative to generate power compared to gas and coal.
"The government can also encourage banks to distribute more loans, give more incentives to local and foreign investors to come in and set up operations here on converting biomass into power and its by products," Zaharah told Business Times in an interview in Kuala Lumpur recently.
Biomass is agriculture waste such as oil palm tree's empty fruit bunches, fronds and tree trunks or cut grass from municipal councils. It is among renewable energy sources which include wind, solar and hydro.
In Malaysia, there are some 80 million tonnes of biomass being discarded annually by some of Malaysia's plantation companies with little effort done to add value or burn it into power.
Zaharah, who is also Zara group managing director and chief executive officer, said buyers from China and South Korea know the value of biomass due to scarce and more expensive fossil fuels such as gas and coal.
As a result, they come to Malaysia to set up operations to process and export local biomass called brackets which can fetch a price as high as US$100 (RM319) a tonne.
"This is a waste for Malaysia and the government because foreigners are taking away our biomass when we can actually use it for our internal use to generate power," said Zaharah.
Also as a result, local players cannot find enough biomass supply to generate some of the country's 10 biomass-powered plants.
Under the government's Small and Renewable Energy Programme, Malaysia has some 10 biomass-based power plants generating some 100 megawatts of power connected to the national grid.
However, their survival hangs in the balance as the government only pays 31 sen per kilowatt per hour, which is not feasible due to high operating cost.
"Local biomass players find it difficult to get funding as local banks impose conditions such as a secured biomass supply for five years before they can approve the loan," Zaharah said.
She said government and its agencies must act accordingly to ensure the success of biomass as its long-term benefits far outweigh the short-term ones.
"The government must regulate a strong policy on biomass such as export quota."
She added that other countries such as those in Europe are already taking steps to cut cost and prevent shortage of available local resources by turning to sustainable energy such as wind, solar and hydro.