PHD RESEARCH PROPOSAL

DRAFT TITLE SUPPLY CHAIN MANAGEMENT FOR BIOFUELS IN MALAYSIA : A FEASIBILITY/DESIGN STUDY OF LOGISTICS OPTIMIZATION

Thesis Proposal Malaysia is one of the worlds largest producer and exporter of palm oil with production of 47% of the worlds supply. Among the main interest of the production of the global vegetable oils and fats from palm oil, another incessant increasing interest in palm oil is as a potential source of a sustainable and renewable energy, bio diesel. In Malaysia, the transition to bio diesel is a natural progression due to the abundant raw material source, environmental issues and energy supply security reasons. Developing bio-diesel industry in Malaysia is expected to contribute greatly to the development of the country. The Malaysian Biofuel Industry Bill 2006 was first gazetted in March 2007 providing legal framework to implement the National Biofuels Policy and in October 2008, the Malaysian Prime Minister announced the intention to implement 5% POME in Diesel in stages beginning February 2009 following a meeting of the Cabinet Committee on Competitiveness of Palm Oil. Developing bio-diesel industry in Malaysia is expected to contribute greatly to the development of the country. The following are the advantages of introducing bio-diesel industry in Malaysia and these advantages have been outlined in the National Biofuel Policy: a. mitigating the effects of petroleum price escalation, b. savings in foreign exchange by reducing the imports of petroleum diesel, c. environment friendly source of energy by reducing the emissions of greenhouse gases, d. creating new demand for palm oil, e. mutually beneficial effects on petroleum and palm oil sectors,

f. achieving socio-economic safety net, and g. efficient utilization of raw materials. National policies Malaysian national policies such as the Ninth Malaysian Plan (Rancangan Malaysia Ke-9) (RMK9) have stressed the development and utilization of renewable energy in the Plan period [59]. Efforts to promote the development of biofuel using palm oil as a renewable source of energy will be undertaken during the Plan period in line with the initiative to make the country a world leader and hub for palm oil. Designated pump stations, mainly in the Klang Valley, to supply diesel blended with 5.0% palm olein are expected to commence operation in 2006. For the initial phase, the blended diesel will be utilized by vehicles of selected Government agencies. Regulations for the blending of petroleum diesel and palm olein will be formulated. Efforts will also be undertaken to promote the export of palm-based diesel [59]. Furthermore RMK-9 has stressed the strengthening of agricultural and the agro-based industries. During the Ninth Plan period, the agriculture sector will be revitalized to become the third engine of growth in Malaysia. Hence oil palm cultivation and production will be exclusively important to successfully implement RMK-9. Sustainability Fuel diversity Increased number of rural manufacturing jobs Increased income taxes Increased investments in plant and equipment Agricultural development International competitiveness Reducing the dependency on imported petroleum Greenhouse gas reductions Reducing of air pollution Biodegradability Higher combustion efficiency Improved land and water use Carbon sequestration Domestic targets Supply reliability Reducing use of fossil fuels Ready availability Domestic distribution Renewability

Economic Impacts

Environmental impacts

Energy security

Table 1 Major benefits of Biofuels [10]

Currently, the biodiesel supply chain has yet to be established and tested. There are concerns on the capability and flexibility of the local POME supply chain to meet market requirements as, when and where needed. An understanding of the market dynamics of the POME industry and its relationship with the oil industry is also crucial to address the longer term viability of biodiesel. Malaysias government has taken the initial steps towards a phased implementation approach which will allow supply chain capability and security to be tested and any operational gaps to be addressed. Further understanding of the market dynamics is also a key element towards this implementation. This thesis is proposed to look into the management of the complex and end to end supply chain robustness and feasibility of the biodiesel supply chain in Malaysia.

Proposed Thesis Question The sample of fundamentals thesis questions and issues are as particularised;

1. What are the supply chain or logistics impact to the country? 2. What are the potential refinery locations and demand clusters? 3. What are the criteria for a suitable potential bio-refinery locations throughout the
state?

a.

Accessibility to water and transportation infrastructures

4. Palm oil planning production for raw material as feed stock 5. What are the potential system cost? This covers feedstock procument cost, refinery/terminal capital cost, production cost and transportation cost. The main proposed thesis area optimisation of end to end management of biofuels supply chain in Malaysia.

Proposed Research Methods Interviewing, consultation and potential empirical method with key stakeholders in both UK, EU and Malaysia; Oil and Gas Industry

Biodiesel Industry Government ministries such as Ministry of Transport, Ministry of Domestic Trade and Consumer Affairs and Ministry of Science and Technology Government agencies such as Malaysia Palm Oil Board and Department of Environment OEMs (Automotive, Industrial, IPPs, Fisheries etc)

Fig. 1 & 2 Sample of a supply chain modelling [11] Integrate computational modeling and optimization with geographic information system for systems analysis and integrated management of biofuel supply chains

The growth in the biofuels industry in Malaysia suggests that infrastructure development might be a major limitation, which most likely requires almost all new infrastructure concentrated in a different region. The transition requires not only advances in agricultural engineering and chemistry, but also in modelling and optimization. Combining the best logistic and production options for an economically viable supply chain while considering the geographic and transportation limitations requires new tools and fundamental new approaches [11]. Current approaches must significantly reduce data resolution to examine an entire supply chain, compromising the critical processes that drive each infrastructure component and ignoring realistic demand predictions and transportation architecture. Results from detailed models and studies will provide the inputs for the supply chain options and constraints.

Proposed Research Milestones This study will aim to achieve its intended milestone within three (3) years. YEAR ONE SEM 1 SEM 2 Q Q Q Q 1 2 3 4 YEAR TWO SEM 1 SEM 2 Q Q Q Q 1 2 3 4 YEAR THREE SEM 1 SEM 2 Q Q Q Q 1 2 3 4

STAGE OF STUDY Thesis Proposal Stage Review & Formulation of Research Model Goals and Objectives Formulation Methodology Development Pilot study/Interviews Data Collection Data Input and Analysis Findings Write-up Drafts and Submission

During the first (1st) year, this study will be equipped with a structured self-quarterly research review. It is expected that the first (1 st) year research will focus dedicatedly within the UK and EU current practices and comparatively the relevancy to MY. The review will be presented to the supervisor for potential improvements or amendments of proposed chapters that could be enhanced towards the ultimate aim of this study. The consolidated year-end review will be enclosed together with the compulsory annual report research to be submitted to the supervisor evidencing the efforts that would have been made.

During the second (2nd) year, this study will adopt the similar review and focus dedicatedly to the Malaysias supply chain. Similar mechanism will be applied during the compulsory annual report submission to the supervisor. Detailed research milestones of the first (1st) year and second (2nd) year of interviews, analysis, findings and consultations will be made towards achieving the feasibility of this study. Upon provisional acceptance of the second (2nd) year write up and research towards the fulfilment of MPhil level, this study will attempt to detail the roadmap for PhD level. During the third (3rd) year, this study will attempt to write the potential draft thesis that would have been derived from the outcome of the first (1 st) and second (2nd) year of research. A detailed grant chart will be presented subject to the acceptance of this proposal. Tentatively, the expected date to commence this study shall be from 1 October 2011 until 1 October 2014.

Literature Review [1] U. Martin Persson and Christian Azar, Preserving the Worlds Tropical ForestsA Price on Carbon May Not Do (Environ. Sci. Technol., 2010, 44 (1), pp 210215).

[2] Navneet R. Singh, W. Nicholas Delgass, Fabio H. Ribeiro and Rakesh Agrawal, Estimation of Liquid Fuel Yields from Biomass (Environ. Sci. Technol., 2010, 44 (13), pp 52985305). [3] Jerald L. Schnoor, Biofuels and the environment (Environ. Sci. Technol., 2006, 40 (13), p 4042). [4] Evangelos C. Petrou and Costas P. Pappis , Biofuels: A Survey on Pros and Cons (Energy Fuels, 2009). [5] Kellyn Betts, A renewable route to green gasoline (Environ. Sci. Technol., 2008, 42 (7), p 2211).

[6] Yongxi Huang, Chien-Wei Chen and Yueyue Fan, Multistage optimization of the supply chains of biofuels, Institute of Transportation Studies, University of California, Davis, CA 95616, USA. [7] Man Kee Lam, Kok Tat Tan, Keat Teong Lee and Abdul Rahman Mohamed, Malaysian palm oil: Surviving the food versus fuel dispute for a sustainable future (Renewable and Sustainable Energy Reviews 13 (2009) 14561464). [8] Chun Sheng Goh, Keat Teong Lee, Will biofuel projects in Southeast Asia become white elephants? (Energy Policy 38 (2010) 38473848). [9] Ayhan Demirbas, Political, economic and environmental impacts of biofuels: A review Sila Science, Trabzon, Turkey, 3 January 2009 [10] K.T. Tan, K.T. Lee *, A.R. Mohamed, S. Bhatia, Palm oil: Addressing issues and towards sustainable development, School of Chemical Engineering, Engineering Campus, Universiti Sains Malaysia, 14300 Nibong Tebal, Seberang Perai Selatan, Pulau Pinang, Malaysia, Received 1 October 2007; accepted 4 October 2007 [11] Mike Hilliard (hilliardmr@ornl.gov) or Richard Middleton (middletonrs@ornl.gov), Biofuel Supply Chain Infrastructure: Optimizing the Evolution of Cellulosic Biofuel - Center

for Transportation Analysis (CTA) Research Areas, Center for Transportation Analysis, Oak Ridge National Laboratory. [12] Fengqi You, Diane J. Graziano, Charles M. Macalyouf@mcs.anl.gov; graziano@anl.gov; macal@anl.gov Argonne National Laboratory, Argonne, IL