Being a major agricultural commodity producer in the region Malaysia is well positioned amongst the ASEAN countries to promote the use of biomass as a renewable energy source in the national energy mix. The palm oil industry, the second largest in the world, has over 4 million hectares of plantation. The palm oil milling industry produces large amount of solid residues, the volumes of which for the year 2007 are: empty fruit bunches EFB (16.7 million tonnes), fruit fibres (12.2.million tonnes), and palm kernel shell (4.9 million tonnes). Besides the oil palm milling industry residues, other biomass contributors includes, the timber industry, rice industry and bagasse. These biomass residues, if fully utilized as fuel for power generation, would have the potential of annual generation of 31,900 GWh, with maximum generating capacity of 3,600 MW. Under the National Energy Policy set in 1979, three principal energy objectives, which are instrumental in guiding the future energy sector development, were established. These are Supply, Utilization and Environmental Objectives. In 2001, the beginning of the Eighth Malaysian Plan, Renewable Energy (RE) was regarded as the fifth fuel in the new Five Fuel Strategy in the energy supply mix. The target is that RE contributes 5% of the country’s electricity demand by the year 2005. Malaysia’s Five Fuel Diversification Policy provides the renewable energy policy guidance while the current grid-based small renewable energy programmes (SREP) and the renewable energy power purchase agreement (REPPA), embodies the national renewable energy strategy. To reinforce these policy instruments, the Malaysian Ministry of Energy, Green Technology and Water launched the National Green Technology Policy in the middle of 2009 that include Green Energy Technology. This paper presents the overall scenario of the Malaysia’s biomass resources, the status of biomass contribution to the nation’s energy mix, the challenges faced by the biomass promoters, and future research and development activities in developing optimized and efficient technologies at the Centre for Renewable Energy, Universiti Tenaga Nasional.

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