Overview of the key risks in the pioneering stage of the Malaysian biomass industry

Renewable energy sources have increasingly become important in recent decades not only as ways for improving energy security and mitigating climate change, but they also help contribute to economic growth and job creation. As the second-largest producer of crude palm oil, Malaysia has abundance of biomass residues from palm oil industries and other renewable organic matters which can be converted to bio-energy and bio-chemicals. Recognizing the roles of biomass for sustainability and wealth creation, the government has stepped up efforts to promote the growth of the industry. However, despite institutional arrangements, policy frameworks, funding mechanisms and incentives to support the growth of the biomass industry, the industry has not been able to create value along the industry’s value chain. While there are many attractive reasons to venture into the biomass industry, there are also potential risks. Lack of understanding of risks associated with the biomass industry is often cited as one of the reasons for the industry’s slow growth. An industry evolves through life cycle stages and at each stage presents risk factors. This paper identifies several key risks associated with early stage of the biomass industry in Malaysia. The overview of risks associated with the biomass industry not only will provide a perspective from which an industry’s viability can be evaluated but also will help industry participants to better understand key risks and improve their risk assessment methods as well as plan their risk management and mitigation strategies more effectively.