KL, Jakarta fight EU directive on palm oil

The following are articles by my colleague Rupa Damodaran and state newswire Berita Nasional Malaysia (Bernama).

THE move by Indonesia and Malaysia, the top two palm oil producers, to take up the industry trade dispute against the European Union (EU) will clear the name of the commodity, says Malaysian Palm Oil Council (MPOC) chief executive officer Tan Sri Yusof Basiron.

There are currently too many exaggerated figures being used to "bash" palm oil from making its mark in the European market, he said.

"We have done a study and there is a case against the EU for the way it has formulated the Renewable Energy Directive and that is already against the WTO guidelines," he said in an interview recently.

There was also a recent report stating that the EU, through its environmental ministries and commissions, is funding up to 70 per cent of the operating budgets of environmental NGOs. Such funding implicates the EU for creating barriers to trade for agricultural products from developing countries.

Plantation Industries and Commodities Minister Tan Sri Bernard Dompok is expected to meet his counterpart in Indonesia later this month on the possibility of drafting a substantive complaint against some of the most developed countries in the EU. "The strategy of these big economies has stacked a lot of issues against small countries like Malaysia, making us hapless."

Many of these issues were used by the environment NGOs to dispute the sustainable agricultural practices of oil palm growers in Malaysia to take the "heat" off the European oils like rapeseed which enjoys subsidies.

Yusof, who has been pursuing the Malaysian fight against the European environment NGOs for their allegations, admitted that it could probably take years before the results are seen. "In the meantime, we will take all avenues to correct the inaccuracies about the commodity."

One important fact which Malaysia and Indonesia want to stress is palm oil's ability to supply a vital food component to billions of people around the world while providing millions of jobs and income to small farmers and plantation workers.

Deforestation is also another area which Malaysia has found some allegations unfair and unfounded. "Why should we be dictated when other oils are not working sustainably and, instead, continue to be given preferential treatment while in countries like Canada there is still deforestation going on."

Malaysia still maintains 56 per cent of its total land area under forest, thereby keeping its pledge made at the 1992 Rio Summit to keep at least half of its land as forests.

EU envoy: Malaysian CPO exports not affected

THE sustainability criteria in the European Union (EU) Renewable Energy Directive (RED), due to come into force on December 5, will not affect Malaysia's palm oil exports to the region.

EU ambassador and head of delegation to Malaysia Vincent Piket said there will be no change for crude palm oil (CPO) imports. "The EU will not block any Malaysian CPO exports. Exports into the EU can continue just as they are today, with no new tariffs, quotas, restrictions or conditions," he said in Kuala Lumpur yesterday.

"The EU RED and its sustainability criteria do not concern Malaysia's CPO exports to the EU market for consumer products, like food, cosmetics, detergents and so forth. In other words, 90 per cent of Malaysia's palm oil exports to the EU are in no way affected by the new EU rules," he said.

Certain quarters have voiced their concern about the EU new directive and its effect on palm oil exporting countries like Malaysia and Indonesia. Piket said the EU RED is an essential element of the climate and energy package to meet the group's climate change and energy policy objectives.

He said the directive contains a 10 per cent binding target for renewable energy in transport, including biofuels, by 2020. This will provide an opportunity, also for developing countries, to supply biofuels to the EU market.

"With this directive, the EU is creating a new market and we want to make sure that we do it right. It is crucial that the measures to fight climate change and implement the renewable energy policy, including biofuels, do not have negative side-effects on the environment," he said.

Piket said it is for this reason that the directive contains sustainability criteria for biofuels. The sustainability criteria are related to two issues - the lifecycle greenhouse gas emissions of biofuels and the land used to produce the biofuels. "They aimed to achieve significant greenhouse gas savings compared to fossil fuels and prevent negative side-effects on biodiversity," he said.

Piket said the sustainability criteria used by the EU RED were science-based, verifiable and in accordance with the World Trade Organisation principles. "The criteria will be the same across the EU. They will apply to both EU production and imported biofuels," he said.

The EU RED foresees incentives for sustainably produced biofuels, though biofuels which do not meet the criteria can still be imported and marketed in the EU, Piket said. "They will not, however, receive tax exemptions, subsidies or other incentives from EU member states, nor will they count towards the objective of 10 per cent of renewable energy in transport." 

According to Piket, it is important for Malaysia to note that there are incentives for sustainably produced biofuels. The EU RED, he said, is exclusively about trade in biofuels. "The EU countries will be offering incentives to promote the use of sustainably produced fuels, including biodiesel," the envoy said. - Bernama

4 Responses to KL, Jakarta fight EU directive on palm oil

  1. In fact, palm oil plantation expansion is responsible for roughly a third of all deforestation on islands like Borneo and Sumantra. If nothing changes, palm oil plantations are planned to replace an area of rainforest the size of Missouri and continue to endanger species like the orangutan, displace communities, and contribute to climate change. And Indonesia is the third largest greenhouse gas emitter on Earth, after the U.S. and China, mainly due to emissions from deforestation and forest degradation.

  2. Hi Chelsea,

    You're wrong on two counts.
    1. Oil palm expansion IS NOT responsible for 33% of all deforestation on Borneo and Sumatra. North America and Europe's rapeseed have, for so long, caused tens of millions of acres of boreal deforestation. What of the wilderbeast, beavers, ferns, flora and insects killed by the forefathers of farmers in Europe?

    2. Until today, there is no emperical evidence of Indonesia, China and the US being the top three polluters in the world. Who spilt oil in the Gulf of Mexico and killed a host of wildlife there? A European company called British Petroleum.

    Celsea, what you have uttered are not facts but rehearsed mantra obliged by EU funding to stir up vegetable oils politics and fuel trade war against the financially weak developing nations like Malaysia and Indonesia.

    Either you have a heart of coal like the "green mercenaries" living on European taxpayers' money or you're darn right ignorant.

  3. I am glad to read of this comment from MPOC and from the press. At last the growers and governments in Malaysia and Indonesia are working together so that all in the world will get the right picture about palm oil. We are growing food at a comparatively low price to feed a growing population.

    I hope the move will succeed to have Tun Dr Mahathir and Tun Dr Lim Keng Yaik to speak for us as they are effective communicators, funds should be raised to engage prominent scientists to get the true figures, these should get to the schools, colleges, and the media. Decision makers and visitors from consumer countries can come and see how palm oil is grown, and how provisions are made for the environment, including flora and fauna. Similarly the governments have a role in bringing to book the black sheep who disregard the requirements that are being set.

    The palm oil industry is still young and already it is making a big success that the market share increase in a few short years must be a source of concern for competitors. Yet one day we may see the same spread of palm areas in South and Central America, and wherever else the palms can grow well, because the oil is of high quality, versatile, and trans fatty acids are not an issue. Few are aware that the trees absorb carbon dioxide and generate oxygen, and the soil is disturbed for planting only once in 25 years.

    We need to communicate well. I have shown visitors through our oil palm industry and quite a few are shocked when they realise that many products are using palm oil, and it becomes clear to me that the enemies of the industry had got at them.

    We must go on to correct the impression of the consumers, and step up the effort, or else fallacious arguments can stay in their minds and the success story that we have can be put at risk.

  4. In 2006, the Stern Review on the Economics of Climate Change stated that 18% of global carbon emissions came from deforestation. This 2007 Intergovernmental Panel on Climate Change (IPCC)Report stated that 17.3% of carbon dioxide emissions were caused by deforestation and decay of biomass and that 20% of emissions were due to “land use change flux”.

    Both these claims are based on calculations from the Woods Hole Research Centre. This research contained a margin of error for the rate of tropical deforestation of ± 50%.

    A number of scientific experts have since stated that these figures are based on ‘poor science’ and ‘inaccurate data’ and as a consequence, have been grossly overstated.

    The director of Brazil’s National Institute for Space Research (INPE), Gilberto Camara, stated that the figure was far more likely to be just half that figure at 10% of global emissions. INPE collect annual data on deforestation in Brazil via detailed satellite imaging.

    The Stern Review relied on FAO data stating that 31,000 sq km had been cleared between 2000 and 2005.

    Data collected by INPE in the same period concluded that 21,500 sq km of forest had been cleared – a decrease of more than 30%. INPE also found that land clearing data from the FAO for 2005-2009 was more than twice the real figure. On this basis, INPE has concluded that the real contribution of deforestation to global carbon emissions is more likely to be 10%.

    Even then, INPE’s conclusion did not account for the increase in emissions from fossil fuels since the Stern Review and IPCC Report. The percentage contribution of deforestation to emissions could therefore be even lower.

    Researchers from the University of Amsterdam recently considered the contribution of deforestation to global emissions and found that claims that deforestation causes 20% of global emissions were based on out-of-date information and that the rate of tropical deforestation had been overstated.

    The researchers found that, because of increases in fossil fuel consumption, it is more likely that deforestation contributes to 12% of total carbon dioxide emissions, and that the figure could be as low as 6%.

    The Dutch research stated that global fossil fuel emissions has now increased to 8.5 Gt C per year. However, the research only assessed new data on deforestation , not total global emissions.

    In which case, using a global extrapolation of the INPE assessment that FAO deforestation data is overstated by a factor of two combined with increases in global carbon emissions, it is not unreasonable to assume that the range of deforestation emissions falls between 4% and 8% – roughly half of the IPCC estimates.

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