KUCHING: Jatropha oil has great potential to emerge as an economically-viable bio-fuel but much work lies ahead to develop the originating shrub (jatropha curcas) and build a market to sustain it as a cash crop.
Alvin Tai, an analyst from OSK Research Sdn Bhd (OSK Research) told The Borneo Post that the crop (and its derivative oil) remained a very underdeveloped market but earlier trials and progress had been encouraging so far.
“It is a non-edible oil and one of the second-generation bio-fuels which does not compete with food requirements. Much advancement has been made with jatropha in the past five years.
“We were pleasantly surprised to hear that airlines have been testing jatropha-derived jet fuel amidst tougher carbon emission standards and fuel efficiency.
“We understand that even without regulations driving demand, ‘jat fuel’ has its allure. It freezes at lower temperatures than regular jet fuel, thus allowing jets to fly higher; hence lowering resistance and consuming less fuel,” he highlighted.
The European Union is imposing carbon tax on all airlines flying into Europe, using 2009 as a baseline for carbon emission.
This had led to a number of airlines, including Lufthansa, Japan Airlines, Air New Zealand, Thai Airways and several other airlines testing green jet fuel derived from Jatropha, the analyst stated.
The tests were conducted in collaboration with aircraft maker Boeing, jet engine maker Rolls-Royce and refinery technology provider UOP Honeywell.
The plant was said to be optimally viable when grown in arid land as it needed distinct dry weather to shock it into flowering and fruiting. As such, it would less suitable in regions with no distinct dry period.
In terms of commercialisation, Tai told The Borneo Post that the commodity had good potential was nearer to commercial realisation than other bio-fuels such as algae-based bio-fuel which promised high yields but at high costs.
This was because ‘jat fuel’ had a much lower production cost, comparable to palm oil at US$320 to $450 per metric tonne. Moreover, it could also be refined to produce bio-diesel, indicating that it was a potentially more versatile commodity.
“As the trees start to flower and produce fruits within six months of field planting and reach peak production in four years, it has a shorter gestation period than oil palm.
“Its economic lifespan is also much longer at 45 years although technological improvements may hasten the feasibility of replanting,” the analyst pointed out, in comparison with oil palm trees which had an average life span of 25 years.
In terms of yield, the crop could produce 2.6 metric tonnes of crude jatropha oil (JPO) but current average selling prices for the commodity were not available as it remained a fairly new cash crop with little market representation.
However, the JPO purchase price for a trial run about two years ago was at US$980 per metric tonne, suggesting that current prices could be on par with that of crude palm oil.
Tai stated that of the companies under OSK Research’s coverage, only Genting Plantations Bhd (Genting Plantations) had exposure to jatropha, having completed the genome sequencing of the crop.
“We believe jatropha may be one of the ways Genting Plantations can monetise its investments in genome research,” the analyst said while revealing that the planter had a trial site for the crop.
However, he had not incorporated any contributions from the Genting Plantations’ biotech division into OSK Research’s earnings forecast for the group.