Quick Takeaways

• Asian Agri recovers palm kernel shells (PKS) during processing and uses them as biomass fuel to generate heat, steam, and electricity.
• In 2025, PKS supplied 509 terajoules of energy, accounting for 5.4% of Asian Agri’s total energy use.
• By putting PKS to productive use, Asian Agri turns a processing by-product into energy and supports a more circular approach to resource use.

Palm oil production creates more than crude palm oil and palm kernel oil. It also generates various organic materials that can be recovered and utilized for different purposes. Finding practical applications for these materials helps maximize resource efficiency and supports more circular production practices.

One example is the palm kernel shell, commonly known as PKS, which is the hard shell that surrounds the palm kernel and is separated during palm oil processing. It can be used as a solid biomass fuel to generate heat, steam, and electricity.

At Asian Agri, PKS is used in mill boilers and can also support other energy applications. This reflects a broader circular economy approach that keeps useful materials in circulation and creates more value from the production process.

Why do Palm Kernel Shells Matter?

Palm kernel shells provide an opportunity to convert a processing by-product into a useful energy resource.

At palm oil mills, PKS is commonly used together with mesocarp fiber as biomass fuel for boilers. While both materials serve the same purpose, they have different physical characteristics that influence their combustion behavior when used as biomass fuel.

Mesocarp fiber is light and fibrous, so it ignites more easily and burns relatively quickly. PKS is harder and denser, which allows it to burn more slowly and provides a steadier source of heat.

Used together, they help boilers produce the steam needed to run mill equipment and, in some cases, generate electricity. Mesocarp fiber can provide regular base fuel, while PKS helps support more sustained heat within the boiler.

When mills produce more PKS than they need for their own operations, the surplus can be supplied to other biomass users as a solid renewable fuel source. This gives the shells a practical role beyond the mill itself.

Using PKS in this way also helps mills make fuller use of the materials generated during processing. Rather than treating the shells as residue with no further purpose, they can be used to produce energy or supplied to external users.

Palm Oil Processing By-products and Their Uses

Palm kernel shells are one of several valuable materials generated during palm oil processing. Rather than being discarded, these materials can be recovered and directed toward different applications based on their characteristics, including energy generation, agricultural use, and animal feed.

The table below shows some of the key materials produced during palm oil processing and how they are commonly utilized:

Material	Origin	Common Use
Palm Kernel	Inside the palm nut	Palm Kernel Oil production
Palm Kernel Shell	Shell separated from the kernel	Biomass energy
Palm Kernel Expeller	Residue after kernel oil extraction	Animal-feed applications
Mesocarp Fiber	Fibrous part of the fruit	Mill boiler fuel

How does Asian Agri recover and use Palm Kernel Shells?

The utilization of PKS begins with its recovery during palm oil processing. At Asian Agri, the shells are separated from the kernels and retained for biomass energy applications.

During processing, palm nuts are recovered and cracked to separate the kernels from their shells. The kernels are further processed into crude palm kernel oil, while the shells are retained for biomass energy applications.

Within the mills, the recovered shells join mesocarp fiber in the biomass fuel mix. These materials help produce the steam and energy required for processing, allowing part of the mill’s energy needs to be met with materials already generated on site. Surplus PKS can continue to serve a useful purpose outside Asian Agri’s operations, including as fuel for biomass power plants.

Palm Kernel Shells as Part of Asian Agri’s Circular Economy Practices

The recovery and utilization of PKS form part of Asian Agri’s circular economy practices, where materials generated during production are recovered and directed toward applications that match their characteristics and potential value.

This approach is also applied to other palm oil processing outputs. Empty fruit bunches and bunch ash can be returned to plantations, palm kernel expeller can be processed for animal feed, and decanter solids can support methane production or feed applications. Palm oil mill effluent (POME) can also be treated for land application or used to produce biogas. Rather than applying one solution to every by-product, each material is directed toward a use that suits its characteristics.

By identifying suitable uses for different processing outputs, Asian Agri aims to maximize resource efficiency and keep valuable materials in productive use.

How Palm Kernel Shells Support Asian Agri’s Renewable Energy Goals

The utilization of PKS contributes to Asian Agri’s broader renewable energy efforts by transforming a palm oil processing by-product into a valuable biomass energy source. According to the Asian Agri Sustainability Report 2025, the company produced 292,391 metric tons of shells during the year. Some were used as fuel in mill boilers, while surplus volumes could be stored for later use or supplied to other energy users.

In 2025, PKS provided around 509 terajoules of energy, accounting for 5.4% of Asian Agri’s total energy use. In practical terms, this means that a material created during palm oil processing helped meet part of the energy needed to run the company’s operations. Alongside mesocarp fiber, biogas, and other sources, PKS contributed to renewable energy making up 95.7% of Asian Agri’s operational energy use in 2025.

Asian Agri’s palm kernel shells have also held Green Gold Label certification since 2021. This provides independent assurance that the shells meet recognized requirements related to sustainable biomass sourcing and supply chain traceability.

Looking ahead, Asian Agri’s focus is not simply on using more PKS. Under AA2030, the company aims to reach 100% renewable energy across its operations. This includes making mills more energy-efficient, improving how energy use and savings are tracked, continuing to recover value from processing by-products, and exploring other renewable energy options where they are practical.

By using palm kernel shells within its mills and supplying surplus volumes for other energy applications, Asian Agri keeps a processing material in productive use. This supports renewable energy use, reduces reliance on fossil-based sources, and shows how circular practices can be applied in everyday operations.

Frequently Asked Questions (FAQs)

What are palm kernel shells?

Palm kernel shells, or PKS, are the hard shells that surround palm kernels. They are separated and recovered during palm oil processing for use as biomass energy.

How are palm kernel shells produced?

Palm kernel shells are recovered during the processing of oil palm nuts. The nuts are cracked, after which the kernels and shells are separated. The kernels continue to palm kernel oil production, while the shells can be collected for energy use.

What are palm kernel shells used for?

Palm kernel shells are used as solid biomass fuel. They can fuel mill boilers that produce steam and electricity and can also be supplied to biomass power plants for energy generation.

Are palm kernel shells a renewable energy source?

Palm kernel shells are used as a renewable biomass energy source because they come from plant material. However, this does not make them automatically carbon neutral. Their overall environmental impact depends on factors such as sourcing, processing, transportation, and energy-conversion efficiency.

How does Asian Agri use palm kernel shells?

Asian Agri uses palm kernel shells as boiler fuel at its mills, alongside palm fiber, to help produce energy for operations. Excess shells may be supplied to third parties for energy recovery, including use as biomass fuel in power generation.