KUALA LUMPUR: With the B15 biodiesel mandate now in effect, Malaysia’s biomass energy sector is drawing fresh attention from investors.
M+ Global Head of Research Loui Low says the growth case is structural, not cyclical.
“Malaysia’s biomass sector is entering a period of structurally mandated growth, underpinned by three converging forces. The fiscal pressure is the most immediate driver.
“A monthly subsidy bill of RM7 billion is unsustainable, and the B15 mandate is the government’s first serious attempt to displace that burden with domestic energy.
“The roadmap to B50 within the next two to three years signals a policy commitment, not an experiment,” Low said.
The RM7 billion figure represents a tenfold surge from pre-conflict levels, driven by supply disruptions in the Strait of Hormuz since early 2026.
The government has since set out a phased blending roadmap from B15 to B20 and B30 under the 13th Malaysia Plan.
The mandate’s impact, Low argues, extends well beyond liquid biodiesel.
“The second-order effect on solid biomass deserves equal attention. As CPO is increasingly channelled into liquid biodiesel, solid residue streams, the EFB and PKS, could transition from a disposal cost into monetisable feedstock across pelletisation, biogas, and coal co-firing, all offering stable baseload characteristics that intermittent renewables cannot replicate,” he said.
“Strait of Hormuz supply risk reframes the domestic biomass argument from an environmental case into an energy security one, which tends to accelerate both policy action and capital allocation far more effectively,” Low added.
The National Biomass Action Plan and GTFS 5.0, a government facility to de-risk green energy financing, provide what Low calls the policy scaffolding needed to sustain investor confidence.
“The growth outlook is not speculative. It is fiscally driven, geopolitically reinforced, and increasingly well-supported by policy infrastructure,” Low said.
Low stresses that a company’s position across the value chain is the critical differentiator: from feedstock aggregation upstream, to processing and upgrading midstream, to energy conversion downstream.
“In biomass, the difference between a vulnerable commodity player and a scalable market leader comes down to how much of the value chain you control and how effectively the logistical challenges are executed,” he said.
Low identified several Bursa Malaysia-listed names offering varying degrees of biomass exposure.
Elridge Energy Holdings Bhd, a pure-play biomass fuel exporter supplying PKS and wood pellets to Japan and Indonesia, stands out for direct exposure.
The company is adding 480,000 MT of new capacity in FY26, of which 240,000 MT is already operational and nearly fully contracted, with the remaining 240,000 MT due onstream by year-end, bringing total capacity to 1.44 million MT.
Each capacity addition anchors new long-term offtake agreements, translating into what Low called “resilient, recurring earnings.”
Similarly, Wasco Greenergy Bhd manufactures industrial biomass boilers rather than trading feedstock, placing it entirely outside feedstock price volatility.
The company recently commissioned one of Malaysia’s largest biomass steam energy systems in Kajang and, in late April, signed a memorandum of understanding with Gas Malaysia Bhd to study biomass-fired steam solutions for industrial customers nationwide.
“Wasco Greenergy profits directly from the capital expenditure cycle triggered when industrial players convert away from fossil fuels,” Low said, pointing to an order book approaching RM250 million that provides near-term to medium-term earnings visibility.
Relatively, SD Guthrie Bhd (SDG) offers a defensive play across approximately 600,000 hectares of plantation land, generating its own feedstock and bypassing third-party logistics entirely.
Low also highlighted SDG’s position in sustainable aviation fuel, combining dividend stability with embedded optionality in an emerging premium biomass segment.
Samaiden Group Bhd is developing three SEDA-approved bio-energy plants totalling 18 MW across Kelantan, Johor and Terengganu, backed by 21-year Feed-in Tariff agreements under the 2025 e-bidding mechanism, with grid export targeted for the second half of 2028.
Low also noted that Kuala Lumpur Kepong Bhd (KLK) and IOI Corporation Bhd offer plantation exposure with downstream biodiesel leverage, though neither is a pure biomass play.
Low said that, for investors, feedstock logistics and supply chain depth remain the critical dividing line between sector winners and laggards.
“Malaysia has abundant raw biomass, but supply is highly fragmented across hundreds of mills and plantation sites.
“Strong conversion technology means little without secured upstream logistics, where supply disruptions and freight cost volatility can cripple operations.
“Long-term collection agreements and reliable transport networks are the foundation on which everything else is built,” he said.
Policy execution timelines and evolving demand patterns across key export markets are additional factors for investors to track.
