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Sabah Biomass industrial development plan

SABAH BIOMASS INDUSTRIAL DEVELOPMENT PLAN

TIMOTHY ONG SENIOR VICE PRESIDENT, STRATEGIC IMPACT PROJECTS HEAD OF NATIONAL BIOMASS STRATEGY DELIVERY UNITY (1MBAS) AGENSI INOVASI MALAYSIA (AIM), MALAYSIA’S NATIONAL INNOVATION AGENCY

KOTA KINABALU, 7TH SEPTEMBER 2015

THE GREEN AGENDA:

INVESTMENT IN BIOMASS BASED INDUSTRIES

Sabah Biomass industrial development plan

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Agensi Inovasi Malaysia (AIM), Malaysia’s National Innovation Agency under Prime Minister’s Department is a statutory

body created to jump start wealth creation through knowledge, technology and innovation to stimulate and develop the

innovation eco-system in Malaysia. We lay down the foundation of innovation that inspire and produce a new generation of

innovative entrepreneurs.

ABOUT AGENSI INOVASI MALAYSIA (AIM)

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AIM’S REPORTING STRUCTURE – GOVERNANCE COUNCIL

Under the Agensi Inovasi Malaysia Act 2010, AIM is administered by a Governance Council (GC) that

gives inputs and go-ahead for AIM’s direction, policies and initiatives.

There are 17 members in the GC, led by the Malaysia’s Prime Minister as Chairman. Members of the

Council are appointed by the Prime Minister, with each member serving the Council for a term not

exceeding three years. The reappointment of a member is limited to three consecutive terms.

THE GOVERNANCE COUNCIL OTHER KEY MINISTERS AND GOVT REPRESENTATIVE

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NATIONAL BIOMASS STRATEGY 2020 LAUNCHED IN 2011:

A NATIONAL STRATEGY ON BIOMASS UTILISATION

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OBJECTIVE OF THE NBS2020

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Create a national strategy on how to use biomass for portfolio

of high-value downstream activities (e.g., bioenergy, biofuel,

biochemical)

Primary objective: maximize sustainable GNI impact from

biomass in the 2020 time frame

Other considerations

▪ Downstream value creation

▪ High value job creation

▪ “Indigenous technology” creation within Malaysia (direct

and indirect value creation)

▪ Sustainability impact and emissions impact

▪ Using Biomass as leverage to form smart partnerships

with downstream companies and not selling it as

commodity so that biomass owners can start getting into

higher-value downstream industries

Strategy Design principles

▪ Private Sector Led

▪ Portfolio Approach for Downstream Activities and

Objective industry facilitation

▪ No Specific Technology Recommendations

Malaysia’s Opportunity to Capture

RM30 billion additional GNI

impact

~66,000 new jobs

RM25 billion investment

opportunities

~12% CO2e abatement

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ADDITIONAL 20% BIOMASS SHIFT TOWARDS PORTFOLIO OF

HIGHER VALUE USES BY 2020 (INCLUSIVENESS)

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THE NATIONAL BIOMASS STRATEGY LOOKED INTO 4 KEY ASPECTS OF

MALAYSIA’S POTENTIAL TO DEVELOP A SUSTAINABLE BIOMASS INDUSTRY

i Availability, Cost, Location of Biomass in

Malaysia

ii Technology Available to Process Biomass

(Maturity)

iii Portfolio of Uses for Biomass

iv Malaysia’s Biomass Opportunities 2011:

Oil Palm Biomass

2013:

Expanded Scope to

Cover Forestry and

Dedicated Crops As

Source of Biomass

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MALAYSIA’S OIL PALM TOTAL PLANTED AREA (END 2014)

Planted palm oil area as of Dec 2014

Million hectares

SOURCE: As of end December 2014 ; MPOB; Poyry

>50% of total planted area in of

Sabah and Sarawak

2.8 million hectares combined

0.01

Perlis

Penang

0.0

0.05

Kedah

Malacca

0.08

Selangor 0.14

Kelantan 0.14

Terengganu 0.17

Negeri Sembilan 0.17

Perak 0.39

Pahang 0.71

Johor 0.73

Sarawak 1.26

Sabah 1.51

Mature Immature

Total Planted Area in Malaysia:

5.39 million hectares

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SOURCE: MPOB; Interviews

1 Based on end 2014 records, 5.39m ha total planted areas in Malaysia, 4% replanted area per year and company specific information

MALAYSIA GENERATES SUFFICIENT AMOUNTS OF DRY PALM BIOMASS PER

YEAR AND AVAILABILITY SUBJECTED TO MOBILISATION COST

Solid

(dry weight)

POME

Annual Availability

Site of

production

Per ha

(tonnes)

National total

(m dry tonnes)1 Description Biomass Type

Mill Liquid by-product from steriliza-

tion and milling process of FFB

Shells

(PKS)

Mill Remains after palm kernel oil

extraction

Mill Remains after oil extraction

from mesocarp

Mill Remains after removal of palm

fruits EFB

Fiber

(MF)

Fronds Plantation Leaves of oil palm tree

Trunks

12.2

0.8

1.4

1.4

9.6

3.0 Plantation

65.7

4.3

7.5

7.5

51.7

16.2 Tree trunk available at end of

plantation lifecycle

Liquid

(wet weight)

87.2

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SOURCE: MPOB; Interviews

1 Based on end 2014 records, 1.35m ha matured planted in Sabah, 4% replanted area per year and company specific information

SABAH GENERATES SUFFICIENT AMOUNTS OF DRY PALM BIOMASS PER YEAR

AND AVAILABILITY SUBJECTED TO MOBILISATION COST

Solid

(dry weight)

POME

Annual Availability

Site of

production

Per ha

(tonnes)

National total

(m dry tonnes)1 Description Biomass Type

Mill Liquid by-product from steriliza-

tion and milling process of FFB

Shells

(PKS)

Mill Remains after palm kernel oil

extraction

Mill Remains after oil extraction

from mesocarp

Mill Remains after removal of palm

fruits EFB

Fiber

(MF)

Fronds Plantation Leaves of oil palm tree

Trunks

12.2

0.8

1.4

1.4

9.6

3.0 Plantation

16.5

1.1

1.9

1.9

12.9

4.1 Tree trunk available at end of

plantation lifecycle

Liquid

(wet weight)

21.9

>25%

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BIOMASS UTILISATION CUTS ACCROSS SECTORS SO ITS IMPORTANT

TO HAVE CENTRAL AND OBJECTIVE FACILITATION

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THE SABAH BIOMASS INDUSTRY OFFERS SEVERAL DEVELOPMENT

OPPORTUNITIES OVER TIME, AND BECOMING A GLOBAL BIO-REFINERY HUB

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Sabah Biomass Strategy

Development could help Sabah capture:

~RM3.2 billion annual revenue

~25,384 new Green jobs

~RM13.5 billion in investment opportunities

by 2032

SABAH BIOMASS INDUSTRY DEVELOPMENT PLAN

A Biorefinery Hub

CLUSTERS BASED ON BIOMASS AVAILABILITY AND

EXISTING INFRASTRUCTURE

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Sabah Biomass industrial development plan

STEERING COMMITTEE FOR THE SABAH BIOMASS INDUSTRIAL

DEVELOPMENT PLAN

YBhg. Datuk Haji Hashim Paijan,

Permanent Secretary,

Ministry of Industrial Development

CHAIRMAN

YBhg. Datuk Pg. Hassanel

Bin Datuk Haji Mohd Tahir,

Permanent Secretary,

Ministry of Finance

YBhg. Datuk Michael Emban,

Permanent Secretary,

Ministry of Infrastructure

Development

YBhg. Tuan Ginun Yanggus,

Permanent Secretary,

Ministry of Tourism and

Environment

Mr. Mark Rozario,

Chief Executive Officer,

Agensi Inovasi Malaysia

YBhg. Datuk Sam Mannan,

Director,

Sabah Forestry Department

YBhg. Datuk Haji Osman

Bin Haji Jamal,

Director,

Unit Perancangan Ekonomi

Mr. Patrick Tan Su Teck,

Director,

Department of Industrial

Development and Research

YBhg. Datuk Pang Teck Wai,

Chief Executive Officer,

POIC Sabah

Sabah Biomass industrial development plan

AGENDA

Biomass Volumes

Processing Options and Strategy

Enablers

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Sabah Biomass industrial development plan

SABAH COULD HAVE THREE IMMEDIATE CLUSTERS OF BIOMASS

INDUSTRY WITH FUTURE POTENTIAL IDENTIFIED IN LABUK SUGUT

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2

3

1 Sandakan

Lahad Datu

Tawau

PRELIMINARY

BIOMASS SUPPLY ANALYSIS

Sabah Biomass industrial development plan

SANDAKAN IS A DEVELOPED PALM OIL BIOMASS CLUSTER WITH 5

BIOMASS POWER PLANTS AND 3 PALM OIL REFINERIES

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Sandakan biomass industry overview

Within 150 km road

distance from POIC

Sandakan, there are

46 CPO mills, with

total FFB intake of

10 million t/a

5 biomass power

plants with total

capacity of 54 MW,

however only 4 are

operating

3 palm oil refineries

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BIOMASS SUPPLY ANALYSIS

Note: Biomass clusters are defined as regions within 150 km driving distance from

selected locations in close proximity to the Sandakan, Lahad Datu and Tawau ports

PRELIMINARY

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Sabah Biomass industrial development plan

LAHAD DATU IS A CLUSTER WITH MORE DIVERSIFIED BIOMASS INDUSTRY

INCLUDING POWER PLANT, PELLET PLANT AND PKS EXPORT

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Lahad Datu biomass industry overview

Within 150 km road

distance from POIC

Lahad Datu, there are

83 CPO mills, with

total FFB intake of

17.9 million t/a

2 biomass power

plants with total

capacity of 23 MW

4 palm oil refineries

with only 3 currently

operating

2 pellet plants and 1

PKS export company

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BIOMASS SUPPLY ANALYSIS

Note: Biomass clusters are defined as regions within 150 km driving distance from

selected locations in close proximity to the Sandakan, Lahad Datu and Tawau ports

PRELIMINARY

Sabah Biomass industrial development plan

TAWAU IS A FORESTRY AND PALM OIL BIOMASS CLUSTER WITH FEWER

BIOMASS POWER PLANTS THAN OTHER REGIONS

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Tawau biomass industry overview

Within 150 km road

distance from TSH

Resources, there are

48 CPO mills, with

total FFB intake of

8.8 million t/a

2 biomass power

plants with total

capacity of 20 MW

2 palm oil refineries

in Kunak

1 pellet plant

20,000 ha of timber

plantations

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BIOMASS SUPPLY ANALYSIS

Note: Biomass clusters are defined as regions within 150 km driving distance from

selected locations in close proximity to the Sandakan, Lahad Datu and Tawau ports

PRELIMINARY

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Sabah Biomass industrial development plan

ANOTHER OPPORTUNITY IS IN LABUK SUGUT, WHERE BIOMASS HAS NOT

YET BEEN MOBILISED AND THERE IS POTENTIAL ROOM FOR EXPANSION

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Labuk Sugut biomass industry overview

Within 150 km road

distance from

EverYield CPO mill

there are 39 CPO

mills, with total FFB

intake of 7.6 million

t/a

BIOMASS SUPPLY ANALYSIS

PRELIMINARY

Sabah Biomass industrial development plan

THE BIOMASS COSTS…

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BIOMASS SUPPLY ANALYSIS

Biomass cluster Avg. Delivered Biomass cost

MYR/dry tonne

Biomass

Supply sources Current End Use

Lahad Datu

Tawau

Labuk Sugut

150km transport

distance for EFB

150km transport

distance for EFB

and woody biomass

150km transport

distance for EFB

2 power plants

1 pellet plant

1 palm oil refinery

PKS export

2 power plants

1 palm oil refinery

50 175

50 137

175

50 87

175

120

100

n/a

OPF EFB EFB + woody biomass

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Sabah Biomass industrial development plan

AGENDA

Biomass volumes

Processing options and strategy

Enablers

Sabah Biomass industrial development plan

5 INVESTMENTS WERE IDENTIFIED AS OPPORTUNITIES FOR SABAH WITHIN

10-YEAR TIME HORIZON

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Commercial-scale Teck Guan plant

using EFB and fronds as feedstock

Bio-energy in Labuk Sugut with

minimum infrastructure investment

Integrated MEG and ethanol plant in

Labuk Sugut with significant investment

on infrastructure (ports, roads, utilities)

Integrated xylitol and ethanol plant in

Lahad Datu using fronds as feedstock

Improvement of current pellet plants in

Lahad Datu and Tawau to reach

profitable commercial-scale industry

N-butanol plant in Tawau with remaining

EFB and woody biomass as feedstock

PRELIMINARY

SUMMARY OF BIOMASS STRATEGY AND ROADMAP

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Sabah Biomass industrial development plan

THE SABAH BIOMASS INDUSTRY OFFERS SEVERAL DEVELOPMENT

OPPORTUNITIES OVER TIME

SUMMARY OF BIOMASS STRATEGY AND ROADMAP

1 Improvement to existing pellet plants in Lahad Datu and Tawau, no Capex required

2 Revenue gained by the private investors

3 1.2 mn dry ton biomass released from biomass power plants

FiT expires3

3rd wave of bio-based

chemical plants

1st wave of bio-based

chemical plants

OPF mobilization Bioenergy, pellet

plants improvement1

Due diligence for first

chemical plants

2nd wave of bio-based

chemical plants

Large scale OPF

mobilization

3.6 mn dry tons Biomass mobilized 4.8 mn dry tons3 2.1 mn dry tons 4.5 mn dry tons

5.4 bn MYR Cumulative invest-

ment required 13.5 bn MYR ~200 mn MYR 8.5 bn MYR

Annual revenue

generated2 3.2 bn MYR 1.4 bn MYR 182 mn MYR 2.1 bn MYR

Phase IV (2027-2032)

Phase II (2017-2022)

Phase I (2016)

Phase III (2022-2027)

Jobs created 25,384 8,586 758 14,124

10 MW biomass power

plant /few small plants

3 pellet plants, 383k

tons/yr (capture

current capacity)

2 integrated MEG /

ethanol plants

1 integrated Xylitol /

ethanol plant

Next integrated MEG /

ethanol plant

First integrated

n-Butanol plant

Additional plants

Integrated MEG plant

Integrated Xylitol plant

Integrated n-Butanol

plant

Investments

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Sabah Biomass industrial development plan

SEVEN CHEMICALS PASSED THE FIRST SCREENING STEP

C1

Methanol

Formic acid

Methane

Syngas

C2

Ethylene

Ethylene oxide

Ethyl acetate

Ethanol

Glycolic acid

Ethylene glycol

Acetic acid

C3

Lactic acid

Acrylic acid

Glycerol

3-Hydroxy-propionic

acid

Propylene

Epichlorohydrin

C4

n-Butanol

1,4-Butadienol

Iso-butanol

Iso-butene

Methyl methacrylate

Succinic acid

C5

Furfural

Itaconic acid

Xylitol

Isoprene

Farnesene

Glutamic acid

Levulinic acid

C6

Sorbitol

Adipic acid

Lysine

FDCA

Isosorbide

Glucaric acid

Citric acid

Caprolactam

Cn

PHA

Para-xylene

Dicarboxylic acid

Fatty acid derivatives

40-50 chemical building blocks derived from biomass 7 chemicals

C3

1,3-Propadienol

Ethyl lactate

Isopropanol

n-Propanol

Propylene glycol

Ethylene

Ethylene oxide

Furfural

Ethylene glycol

Propylene

glycol

N-butanol

Xylitol

Source: IEA Bioenergy – Task 42 Biorefinery: Bio-based Chemicals,

Value Added Products from Biorefineries, 2013

Many of the high growth chemicals such as

lactic acid and succinic acid were screened out

because of the early stage of 2G technology.

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SUMMARY OF BIOMASS STRATEGY AND ROADMAP

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Sabah Biomass industrial development plan

CHEMICAL OVERVIEW: ETHYLENE GLYCOL

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Biomass input

470k dry tons EFB

Bio-ethanol

72 kt

Monopropylene

glycol (MPG)

32 kt

Monoethylene

glycol (MEG)

28 kt

3.6 bn PET bottles

End-use applications Main product

Chemical products Biomass input

PET bottles

Polyester

fibers

De-icing fluids

Electronic cigarettes

Tobacco products

Pharmaceuticals

Automotive fuel Hand sanitizer

SUMMARY OF BIOMASS STRATEGY AND ROADMAP

Lignin Plant’s energy consumption

Sabah Biomass industrial development plan

CHEMICAL OVERVIEW: N-BUTANOL

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Biomass input

460k dry tons EFB

40k dry tons woody

biomass

Acetone

14 kt

n-Butanol

94 kt

~1000 car/year at

15% blending

End-use applications Main product

Chemical products Biomass input

Automotive fuel

Pharmaceuticals Nail polish remover Paints and varnishes

Intermediate of other

chemical products

Brake fluid for

automotive Perfumes

Pharmaceuticals

Textile

SUMMARY OF BIOMASS STRATEGY AND ROADMAP

Lignin Plant’s energy consumption

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Sabah Biomass industrial development plan

CHEMICAL OVERVIEW: XYLITOL

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Biomass input

490k dry tons fronds Bio-ethanol

113 kt

Xylitol

15 kt

1.7 billion bottles

of chewing gum

End-use applications Main product

Chemical products Biomass input

Mint and chewing gum

Hand sanitizer

Chocolate

Toothpaste Sweetener

Automotive fuel

SUMMARY OF BIOMASS STRATEGY AND ROADMAP

Lignin Plant’s energy consumption

Sabah Biomass industrial development plan

AGENDA

Biomass volumes

Processing options and strategy

Enablers

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Sabah Biomass industrial development plan

THE FOLLOWING ENABLERS ARE THE PRIMARY PRIORITIES AND SHOULD

BE IMPLEMENTED FIRST

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Immediate

Long

term

Enablers Priority

• Establish continuous monitoring of biomass balance and

demand

• Provide access to funding for first chemical plants

• Develop multiple decentralized JV Clusters

• Develop timber plantation regime producing biomass as

co-product (as alternative feedstock to palm oil biomass)

• Develop an overall land-use Masterplan (agriculture,

forestry and infrastructure) for the Pitas / Labuk Sugut area

• Conduct research to understand CPO yield impact from

removal of EFB and fronds at the plantation

• Enable direct export shipment or trans-shipment in Sabah

(instead of via Port Klang)

• Establish biomass pre-treatment and densification hubs to

reduce cost of transportation

• Scale up fronds mobilization set-up and cost

Next 12

months

Next 1 to 2

years

Next 5 years

Note: Potential investments can be evaluated prior to establishing enablers.

Efforts can occur in parallel to implementing enablers.

ENABLERS

A

B

C

D

E

• Focused effort to attract right technology players/investors F

Sabah Biomass industrial development plan

MONITORING OF BIOMASS BALANCE WILL BE LED BY A STEERING

COMMITTEE AND CARRIED OUT BY A NEW SABAH BIOMASS UNIT

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A

Roles & Responsibilities Team Composition

• To oversee and set direction for

the biomass taskforce and decide

on supporting policies

• To approve projects that fit into

State strategy

• To monitor biomass demand /

supply

• To analyse feasibility and

recommend projects for approval

• To provide support (e.g. access to

funding, government etc)

• Permanent Secretary (MID)

• Director (UPEN)

• Director (DIDR)

• Permanent Secretary (KEPKAS)

• Permanent Secretary (Min. of Finance)

• CEO (AIM)

• CEO (POIC Lahad Datu)

• CEO (POIC Sandakan)

• 1 biomass expert (team lead)

• 1 financial analyst

• 1 database / reporting manager

Sabah Biomass

Council

Sabah Biomass

Taskforce

MPOB

SFD

SESB

SEDA

1 MBAS

JKR

Others?

Project 1

Project 2

Project 3

Project 4

Project 5

Approval Data flow

Organisation Structure

ENABLERS

• Supporting departments (e.g.

MPOB, SFD) to provide relevant

information to the TaskForce

• Supporting departments to

provide input into project feasibility

and evaluation

Included in biomass

monitoring/ project

approval

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Sabah Biomass industrial development plan

CONTINUOUS MONITORING OF BIOMASS BALANCE AND COMPETITION

SHOULD COVER SIX MAIN TASKS

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ENABLERS

Stock-take of biomass produced and its supply

chain e.g. through mandatory reporting from

CPO mills and Forestry/Wood Product mills

Stock-take of current and upcoming biomass

investments in each cluster

Include biomass supply study as a pre-

requisite for new investments

Oversee overall biomass industry in Sabah

and provide advice in long-term industry

planning

Pre-define future investment locations to avoid

tight biomass supply competition

Evaluate financial feasibility of projects and

provide support needed to secure funding

Roles of the Sabah Biomass Monitoring Unit Capabilities required

1

2

3

4

5

6

Thorough understanding of the biomass

industry, including supply (palm oil & forestry),

demand (different end-uses of biomass) and

logistics

Analytical skill to estimate biomass volume,

current and future balance

Geospatial analytical capability to map current

and future biomass supply-demand and

infrastructure network (road, electricity grid,

jetties, ports)

Capability to collect information from different

biomass suppliers, end-users, logistic

companies and supporting government

agencies

Capability to develop and review financial

analysis of business plans

A

Sabah Biomass industrial development plan

WHY SABAH

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• BIOMASS AVAILABILITY AND OPPORTUNITIES

• STATE GOVT WITH THE VISION AND A SOLID LOCALISED PLAN

• FULL GOVERNMENT SUPPORT FOR THE INDUSTRY

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• Government and Industry should move parallel (Government should not

just think like industry but also move like one) – no limitation on scope

of involvement – cause when it comes to Industry there is none

• Clarity on Objective, Action Plan and constantly Review and Relook into

progress through a proper Governance Structure

• Eco-system Approach and Sustainable (economic included)

development of Green industry

• Sustainable Feedstock supply and Mobilisation (Cost

Effectiveness)

• Technology Deployment and Adoption Roadmap (Agnostic)

• Biomass Project Funding and Access to these Funds

• Off-take Market Development (Policy and Recommendations, G2G

and etc.)

• Drive the Biomass Industry with Passion and Urgency

Sabah Biomass industrial development plan

THANK YOU

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