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Ushar Daniele

Malaysia is taking palm oil from the frying pan to server racks, as it banks on its biggest agricultural commodity to crack a code plaguing its data centre boom – keeping servers cool.
Researchers at the Malaysian Palm Oil Board (MPOB) are developing a palm-based liquid to cool computer servers without relying on copious volumes of water, as the country grapples with high resource demands to support its rapidly expanding digital infrastructure.
The new approach – termed the Sawit EcoTherm technology by the government agency – is nearing commercialisation.
As of January, data centres were using 28.68 million litres (7.6 million gallons) of water a day, according to the National Water Services Commission.
But the palm oil technology has raised the question of whether a green solution for data centres would create new pressures further down the supply chain. Experts say this hinges on where palm oil sources are derived and if existing plantations can meet demand or result in more land clearance.
Noor Khairin Mohd, a MPOB senior research officer, said the coolant research had been tested in an operational environment, with a licensing agreement being finalised with a local manufacturer.
Citing the needs of a 100-megawatt data centre, Noor Khairin said palm-based coolant would cost between US$2.44 and US$6.10 per kilogram compared with US$12.20 to US$19.52 for synthetic and petroleum-based alternatives.
Such a data centre could consume between 1.7 and 4.2 million litres of water daily, according to MPOB’s data. In contrast, the Sawit EcoTherm system could eliminate water consumption to cool a data centre.

Noor Khairin said the technology could substantially reduce energy consumption by eliminating server fans and mechanical air conditioning, possibly slashing operational costs by 30 to 50 per cent and reducing data centre energy consumption by up to 40 per cent.
Earlier in June, Minister of Energy Transition and Water Transformation Fadillah Yusof told parliament that as of April, data centres in Malaysia were utilising half of the electricity and water capacity approved for data centres.
In a written parliamentary reply on June 24, Fadillah said the government had put measures in place, including comprehensive technical assessments, to ensure the rapid growth of data centres would not affect water and energy supplies for consumers and planned developments.
Data from Malaysia’s Investment Development Authority showed that 143 data centres and cloud computing investment projects valued at US$35.23 billion were approved between 2021 and mid-2025.
Sustainability pressure
While reducing water and improving energy efficiency is meaningful, “palm-derived” should not automatically be equated with “greener”, according to experts.
“The relevant question is the full lifecycle footprint from feedstock and processing to transport, use, performance and end-of-life,” said Renard Siew, a sustainability and climate change specialist.
Sustainability would be more challenging if demand for palm-derived cooling fluid were to lead to an expansion of palm plantations, thus shifting the environmental burden upstream, said Siew, who is also head of corporate sustainability at Yinson.
“Adoption should therefore be linked to no deforestation commitments, traceable and certified feedstock, strong land-use safeguards, and preferably the use of existing responsible palm-based by-products rather than creating incremental demand for primary agricultural production.”

Yeah Kim Leng, director of the economic studies programme at Sunway University, said the Sawit EcoTherm innovation could reinforce demand for palm oil and support stronger pricing for the industry.
“It would incentivise expanded plantings and intensified efforts to improve fruit and oil extraction yields,” Yeah said.
Amid growing concerns over high water consumption of data centres, the adoption of palm oil-based coolants could offer a vital alternative, he added.
“This can help alleviate pressures on freshwater resources and preserve supplies for essential uses, particularly drinking water.”
Badrul Azhar Md Sharif, an associate professor from the forestry and environment faculty in Universiti Putra Malaysia, said higher demand for palm-based industrial products could create pressure on plantation expansion if adoption by data centres were to reach a sufficiently large scale.
But this may not necessarily lead to new palm plantations in Malaysia, according to Badrul.
“If plantation companies face increasing demand from food, oleochemical, biofuel and emerging industrial applications such as data-centre cooling fluids while the available plantation area remains relatively fixed, there will be strong economic incentives to maximise yield per hectare,” he said.
He warned that intensification could bring environmental costs, leading to heavier use of fertilisers, herbicides and pesticides.
“We need to ask not only, ‘Was the forest cleared to produce this palm oil?’ but also, ‘How was the palm oil produced on the existing land?’” he said.


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However, the proposal has raised concerns that it could lead to an expansion of palm plantations and create an environmental burden


However, the proposal has raised concerns that it could lead to an expansion of palm plantations and create an environmental burden.


Palm oil to cool data centres? Malaysia explores option as water demand surges

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}However, the proposal has raised concerns that it could lead to an expansion of palm plantations and create an environmental burden

However, the proposal has raised concerns that it could lead to an expansion of palm plantations and create an environmental burden