EU's Biofuel Norms Flawed, Penalizes Palm Oil --Executive

Written by Lim Shie-Lynn and sourced from

KUALA LUMPUR (Dow Jones) -- Flawed empirical calculations and wrong assumptions on greenhouse gas emissions make the European Union's (EU) renewable energy policy biased against non-European biofuel producers, including those of palm-based biodiesel, according to Dr Gernot Pehnelt, director of independent research and consulting institute GlobEcon in Germany.

According to the EU renewable energy directive, biofuels must result in greenhouse gas emissions reductions of at least 35% compared with fossil fuels in 2009 and rising over time to 50% by 2017, creating a market for at least 23 million metric tons of biofuels annually.

Under the proposed renewable energy directive, biofuel producers in the EU are able to claim higher greenhouse gas emissions savings than biofuel producers outside the region, said Pehnelt.

"It is particularly problematic since any reasonable emissions budgeting comparison showed palm-derived biofuel is less carbon-intensive than those produced elsewhere, including Europe," said Pehnelt, who is also affiliated to the European Centre for International Political Economy.

"The EU has embedded protectionist measures into the directive at the behest of anti-development environmentalists and the uncompetitive European biofuels industry. These measures set unfair values on greenhouse gas savings for foreign biofuels, thus precluding market access," he said.

Most life-cycle analysis carried out by researchers estimated greenhouse gas emissions savings of 55% for palm-oil based biodiesel, but the EU's calculation, done by its scientific and technical research arm the Joint Research Centre, showed the use of palm-oil based biodiesel failed the 35% requirement, as it achieved only a 19% reduction in greenhouse gas emissions. The life-cycle assessments carried out on palm oil showed a wide variance in greenhouse gas emissions savings as data used by the centre were based on old data.

The proposed directive, which will come into effect at the end of the year, also requires that sustainable biofuels should be produced with "no damage to sensitive or important ecosystems."

As palm oil is widely criticized by environmental groups and blamed for contributing to environmental degradation in Malaysia and Indonesia, some buyers may prefer to source other oils that are less controversial, palm-based biodiesel producers fear.

Europe's push for the use of renewable fuels in the transport sector has created one of the world's largest biofuel markets, with demand from the region estimated around 10 billion liters (3.5 million tons) in 2009.

Though palm oil-based biodiesel exports from Malaysia rose 20% or around 45,000 tons to 227,457 tons in 2009, that figure is abysmally low compared with the increase in general demand, as requirements under the directive are limiting palm-based biodiesel's access to the European market.

"The commission is committed to reducing Europe's carbon emissions. It is clear that the EU can't meet its own biofuel needs, so there is room for imports (of biodiesel). We are not against imports (of biodiesel), but the commission wants to ensure this is good for the environment and for trade as well," Marlene Holzner, spokeswoman for Energy Commissioner Gunther Oettinger, told Dow Jones Newswires, in response to this article.

But there is a ray of hope after a recent study showed the EU recently started referring to oil palm plantations as "continuously forested areas," a move industry experts consider positive for palm-oil based biodiesel in Europe.

A recent study by the International Food Policy Institute, commissioned by the Directorate General for Trade, under the European Commission, found palm oil to be the most efficient feedstock for biodiesel, as it produces byproducts and has an oil yield six times higher than comparable edible oils, such as rapeseed.

"All these studies have different results. We do not comment on the content of the studies. Once studies on the subjects are finalized, the European Commission will issue a report by the end of 2010," Holzner said.

2 Responses to EU's Biofuel Norms Flawed, Penalizes Palm Oil --Executive

  1. Can some one put this forward to our Parliment for a debate and take the necessary actions to counter all the attacks against a key pillar of our economy where millions depend on their livelihood and wellbeing??
    Our Augush House should take up a dialogue directly with the EU Commission urgently to address all the unfounded lies....

  2. Yes. I totally agreed with Ah Fong's proposal. Our leaders must take some quick actions to protect our palm oil industry.

    Palm Oil Supporter

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