PETALING JAYA: Malaysia and South Korea have strengthened their strategic partnership in renewable energy by exchanging a letter of intent (LoI) for the Terengganu State Palm Oil Mill Biogas Upgrading Project, an initiative that will convert waste from the palm oil industry into bio-compressed natural gas (bio-CNG).
Supported and coordinated by Malaysian Bioeconomy Development Corporation (Bioeconomy Corp), the project brings together South Korean renewable energy companies Polaris Bio Co Ltd and Sudokwon Landfill Site Management Corporation (SLC), along with Malaysian technology partner MTC Orec Sdn Bhd, to unlock the commercial potential of waste from the palm oil industry as a high-value clean energy source.
The LoI for the project was signed by Song Byeong-eok, president of SLC, Junghwan Kim, CEO of Polaris Bio, and Dr Zahari Mohamad, CEO of MTC Orec. The ceremony was witnessed by Han-il Lee, minister and consul general of the South Korean Embassy in Malaysia.
The signing ceremony was attended by about 40 representatives from government agencies, public institutions and private sector organisations from both countries, including Natural Resources and Environmental Sustainability Ministry (NRES) Climate Change Division Undersecretary Ahmad Farid Mohammed.
The Terengganu Bio-CNG Project is a continuation of the memorandum of understanding signed between Bioeconomy Corp and Polaris Bio in October 2025 for the feasibility study and development of biogas projects. The initiative paved the way for an RM700 million investment pipeline to develop palm oil waste-based Bio-CNG facilities across Malaysia.
In the long term, the initiative aims to establish more than 20 biogas upgrading facilities based on palm oil mill effluent (POME) across Malaysia.
The Terengganu project is expected to be among the earliest developments under this initiative and will serve as a reference model for future projects nationwide.
Through the facility, biogas generated from POME, a liquid by-product of palm oil milling, will be processed and upgraded into bio-CNG, a cleaner, renewable fuel suitable for transport, industrial applications and electricity generation.
By harnessing biotechnology to convert palm oil waste into a high-value energy resource, the project supports Malaysia’s transition to cleaner energy while enhancing national energy security by reducing reliance on fossil fuels.
Nationwide implementation of the initiative is expected to reduce greenhouse gas emissions by up to 384,000 tonnes of carbon dioxide equivalent annually, contributing to Malaysia’s energy transition agenda and sustainable development goals.
Bioeconomy Corp CEO Mohd Khairul Fidzal Abdul Razak, said the Terengganu Bio-CNG Project marks an important milestone in the development of Malaysia’s palm oil waste-based bio-CNG industry while reinforcing the country’s position as a preferred destination for bioeconomy and renewable energy investments in the region.
“Building on the RM700 million investment pipeline announced last year, this initiative demonstrates that Malaysia’s POME-to-bio-CNG ambitions are moving beyond the feasibility stage into actual implementation.
“This development comes at a time when global biogas and biomethane production is projected to increase by 22% between 2025 and 2030. We look forward to seeing this strategic partnership continue to grow and contribute to the advancement of Malaysia’s bioeconomy and renewable energy sectors.”
He added that Malaysia’s palm oil industry generates substantial volumes of biomass and by-products that can be converted into high-value renewable energy resources.
Innovations such as Bio-CNG can transform palm oil waste into new economic opportunities while strengthening energy security and supporting the country’s low-carbon development agenda.
Throughout the project development process, Bioeconomy Corp has played a strategic role in connecting Malaysian and South Korean stakeholders through investment facilitation, government engagement and market access support.
Its involvement has strengthened investor confidence in Malaysia’s growing bioeconomy and renewable energy sectors.
Project implementation will involve Polaris Bio and MTC Orec, a company in Bioeconomy Corpn’s Bio-based Accelerator Programme.
MTC Orec will provide local technical expertise, while SLC has supported project development through feasibility studies, technical assessments, carbon-reduction calculations, and investment facilitation.
SLC and its consortium partners – GS Caltex Corporation, Dohwa Engineering Co Ltd and Greenwave Co Ltd – have undertaken extensive field surveys, technical reviews and commercial feasibility studies over the past year to evaluate the project’s viability.
The project will initially involve one palm oil mill in Terengganu, with plans for expansion. It will commence preliminary development activities in 2027 and target the start of commercial operations in 2029.
Beyond renewable energy generation, the project is expected to support technology transfer between Malaysia and South Korea, create employment opportunities, strengthen local expertise and contribute to the development of a more resilient bioeconomy ecosystem.
The initiative is aligned with Malaysia’s National Energy Transition Roadmap, which targets 40% renewable energy capacity in the national energy mix by 2035, as well as the National Biotechnology Policy 2.0, which promotes innovation-driven and sustainable bio-based industries.
The project marks another significant milestone in international climate cooperation.
During the ceremony, NRES, Malaysia’s lead ministry for reducing greenhouse gas emissions, issued a letter of acknowledgement for the development.
The acknowledgement makes this the first Malaysia-South Korea project to receive formal recognition from the Malaysian Government under Article 6.2 of the Paris Agreement, thereby establishing a foundation for future international carbon-reduction cooperation between Malaysia and South Korea.
Song said the organisation remains committed to supporting international climate initiatives that deliver both environmental and economic benefits.
“SLC has developed extensive expertise in greenhouse gas reduction initiatives and has achieved more than 8.82 million tonnes of greenhouse gas reductions since 2006. We look forward to the successful implementation of this project while further strengthening renewable energy cooperation between Korea and Malaysia,“ he added.
