02. 02. 2018

Palm Oil: the Edible Oil Westerners Love to Hate!

Just back from another visit to KL as part of the work Forum for the Future does with Sime Darby Plantation – one of the biggest (and most sustainable!) palm oil companies in the world.

Oh boy! Are they (and the Malaysian palm oil industry as a whole) up in arms about some of the ongoing controversies about palm oil that preoccupy the minds of Western politicians and NGOs. And I have to admit that I have some considerable sympathy for their position here.

1. Zero Deforestation – that old favourite!

I’ve blogged about this umpteen times, yet the situation is as murky and polarised as ever.

All the big Malaysian companies are committed to ‘no deforestation’ positions and are still observing an embargo on any new developments, which was agreed several years ago. That means going along with the definition of High Carbon Stock (determining the threshold between forest areas that can be cleared and those that can’t) agreed by a coalition of Western NGOs under the High Carbon Stock Approach (‘HCSA’).

But this position applies almost exclusively to Malaysia and to Indonesia’s fragmented landscapes – not to some of the world’s poorest countries that just happen to have a lot of forest. Eighteen months ago, the NGOs that dominate the HCSA agreed that they would sort out a ‘compromise’ for these countries (including Liberia, Gabon, Papua New Guinea and so on), but absolutely nothing has happened since then – apart from lots of meetings and endless hot air. There are a number of growers on the HCSA (and indeed on the working group looking at High Forest Cover Landscapes), including Sime Darby and Wilmar, but the NGOs still seem to call the shots.

What that means for Sime Darby in Liberia is that they can’t do anything to help further alleviate that country’s chronic poverty – because they can’t develop any more land. Even old rubber plantation land!

Meanwhile, the forest is coming down anyway, inexorably eroded away by charcoal burners intent on providing valuable fuel for Liberia’s energy-starved capital city, Monrovia.

Who wins here? Literally nobody.

2. Palm oil-free labels – the latest idiocy.

Many food companies in Europe are using ‘palm oil-free’ labels ostensibly to tell consumers that they’re ‘the good guys’ in helping their consumers steer clear of anything that contains palm oil – even miniscule amounts.

This is staggeringly hypocritical. The inference is that those palm oil-free products are either ‘healthier’ than products including palm oil, or ‘better for the environment’. There is not a shred of evidence on health grounds: the substitute edible oils – predominantly from rapeseed or sunflower – are no better and no worse. As for ‘better for the environment’, as long as food companies and own-label retailers are using sustainable palm oil, certified under the Round Table on Sustainable Palm Oil’s criteria, then demonstrating the environmental superiority of substitute edible oils is impossible.

Moreover, these labels have been deemed ‘illegal’ by the European Commission, as the companies making those claims are inferring benefits for their consumers that simply don’t exist.

But that seems to make little difference to those intent on grandstanding their pretentions on this issue. A rumour on the grapevine is that the UK retailer, Iceland, is contemplating making a palm oil free commitment. One of the problems here is that one of the key indices people often refer to (Ethical Consumer’s ‘palm oil free and sustainable palm oil’ index) very unhelpfully conflates these two things. So when Iceland performed badly in the Index, it apparently decided to go for the ‘palm oil free’ option rather than the 100% sustainable palm oil option. And that’s just plain stupid.

3. A ban on imports of palm biodiesel – this one’s complicated!

Back in the mists of time, EU countries signed off on something called the Renewable Energy Directive. It’s been massively controversial ever since – essentially on two levels.

First, one of the basic ideas underpinning the Renewable Energy Directive was to be able to substitute bio-based liquid fuels (for both petrol and diesel) to help reduce volumes of fossil fuels. On top of ambitious targets for renewable energy in general, all EU countries must ensure that at least 10% of their transport fuels come from renewable resources by 2020. Right from the start, this caused a storm of protest from environmentalists concerned about using precious land for fuel rather than for food or fibre – with the inevitable risk that new forest land would be continuously cleared for that very purpose. This is known as the issue of ‘Indirect Land Use Conversion’ (‘ILUC’).

This debate hinges on demonstrating that there is a genuine benefit in terms of reducing greenhouse gases, with scientists, policy-makers and NGOs toiling away over the last decade to come up with a robust and consistent methodology to make those calculations – ie one that applies equally to all bio-based substitutes. It would obviously be bordering on the insane to ramp up volumes of biofuels if there was literally no benefit from a climate point of view!

Both the EU Parliament and the Commission are agreed that all biofuels (home-grown or imported) must be able to demonstrate compliance with this critical climate criterion.

Beyond that, however, at the next level, things quickly start to go pear-shaped – or oil palm shaped!

For all sorts of reasons, the European Parliament has decided that any imports of palm oil for biodiesel should be treated differently from other potential feedstocks – largely at the behest of two very powerful lobbies: first, trade associations seeking to protect EU-based producers of rapeseed oil and sunflower oil. Here’s an interesting quote from Emmanuel Desplechin, the Secretary-General of the European Renewable Ethanol Association: “We call on the European parliament to translate its position into binding requirements, and limit the contribution of transport fuels from palm oil and its derivatives to the share of renewables in transport in the Renewable Energy Directive until peatland drainage is halted.” https://www.theguardian.com/sustainable-business/2017/apr/04/palm-oil-biofuels-meps-eu-transport-deforestation-zsl-greenpeace-golden-agri-resources-oxfam

And the second main lobbying group here is made up of the self-same NGOs that have done nothing to resolve the issue of High Carbon Stock in some of the world’s poorest countries. To be fair, most of those NGOs are still campaigning for a ban on all crop-based biofuels, which would at least be consistent across all the different feedstocks. But I’m not sure what Monsieur Desplechin thinks of that!

As a result, taking advantage of the latest revision process to the still controversial Renewable Energy Directive, the EU Parliament has voted to ban imports of palm-based biodiesel, which are currently entering the EU at around three million tonnes a year.

Whatever else is going on here, this is a patently protectionist measure – and the EU’s ethanol industry and various biodiesel bodies make no bones about it, given that their members can’t compete on price, and have difficulties demonstrating superior performance from a greenhouse gas point of view – if one starts with the assumption that large Malaysian and Indonesian producers are in a position to guarantee that the oil used for that three million tonnes will come from certified, traceable supplies. And that they can demonstrate compliance with ‘no deforestation’ and ‘no peat’ commitments, thus avoiding the still legitimate ILUC concerns.

Any such ban will almost certainly be struck down by the WTO, but not before huge damage to companies and smallholders in both Malaysia and Indonesia.

So you can see why representatives of the industry in Malaysia are just a bit pissed off! They wonder what it is that makes it possible for parliamentarians and NGOs to go on singling out palm oil for ‘special attention’ of this kind, even as more extensive damage is being done to the environment by producers of soybean oil and other products, let alone by producers of beef all around the world. But that never seems to get much of a mention.

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22. 02. 2018
Roderick Leslie

I've never been keen on biodiesel - obviously, we should be greening transport and whilst this seems an obvious one does it really work ?

Whilst following the palm oil story with great interest, I just don't have the knowledge to make worthwhile judgements.

European oils are a different matter - UK rape oil must be just about the worst possible way to save carbon because the carbon used to produce it is c 70% of the eventual carbon value - that compares with c 5%, max 10% for locally used (not big electricity) wood for heat. On top of that, as NFU bang the food security drum, we're all going to starve if we don't max out on intensive agriculture, farmers are quite happy to switch land from food to energy.

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