In early July, the EU’s new ‘Green Fuels Law’ was leaked to the public. Although designed to address carbon emissions from one of the world’s dirtiest industries – shipping – the document sparked an uproar among NGO’s and the renewables industry.
Even though the EU hoped to implement policies which would help the shipping industry transition to sustainable fuels, European environmental groups rightly questioned why biomasses – or energy derived from burning plant and animal material, mostly trees - was still among the accepted fuels.
Also, the EU’s idea of ‘green,’ zero-carbon hydrogen was criticised as well. The influential NGO Transport and Environment (T&E) voiced its disagreement claiming that renewable hydrogen is non-existent today. This reaction was echoed by the shipping industry that claimed; “A leaked draft of the EU’s multi-pronged plan to force shipping towards greener fuel choices confirms the worst fears of industry and green NGOs alike — namely that the rules will create a compliance minefield, cost billions of euros and ultimately push shipowners towards fuel choices that will lock fossil fuels into the supply chain for decades.”
The Council of Palm Oil Producing Countries (CPOPC), which represents the top palm oil producing countries of Indonesia and Malaysia, have systematically addressed the EU’s lack of options for clean energy
It’s apparent that the EU lacks viable clean fuel alternatives. Caught between the demands of environmental groups for clean energy and the demands of industries to sustain economies, the European Parliament has meanwhile approved a landmark law to make the EU’s greenhouse gas emissions targets legally binding.
But amid this maelstrom with European NGOs, industries and governments, top palm oil producing countries offered a viable solution. The Council of Palm Oil Producing Countries (CPOPC), which represents the top palm oil producing countries of Indonesia and Malaysia, have systematically addressed the EU’s lack of options for clean energy in a series of blogs.
CPOPC drove home its point in a published statement which claimed the EU could not successfully fight climate change without adopting non-discriminatory policies on biofuels. The statement claimed the previous Renewable Energy Directive and the theory of Indirect Land Use Contribution (ILUC) unfairly stigmatised palm oil. The highlights of the argument included; ILUC identified from data dated 2008-2016 ignored the much larger land footprint of qualifying crops in soy and rapeseed.
A new study identified 43 million km2 square of Land Use Change since 1960 whereas palm oil cultivated areas affected only 250,000 km2. Productivity Factor (PF) which establishes palm oil as the best crop for global sustainability due to its high yield. These arguments are not without merit. If the EU analysed biofuel data using those parameters, palm oil stands out as a renewable feedstock for biofuel.
ILUC is a good theory but impractical
The EU needs to recognise ILUC is a concept that has no place in fighting climate change. One just needs to consider what is happening with soy, which MEP Bas Eickhout dubbed the “new palm oil”.
Originally, the EU sought to smooth trade relations with the US by approving US soy for EU biofuels. Now, the new Biden administration has launched its own biofuels program which threatens the supply of US soy for the EU. This could cause a cascading effect of unintended consequences.
If the EU needs to find other sources of soy, it may turn to Brazil which could force India and China - both major importers of edible oils – to increasingly rely on palm oil producing countries as global prices for soy increase. As India and China care less about sustainability, this could cause global deforestation to rise.
If palm oil was used as a source of energy for the EU, these additional volumes could – for instance - help create green versions of hydrogen.
Could palm-based energy ‘green up’ other sources based on additionality?
There is a strong possibility that palm oil could ‘green’ other energy sources. Chemical engineers from Malaysia are spearheading carbon-neutral or net-zero palm oil production which improves production efficiencies that could yield 3 million additional tonnes of palm oil.
By improving land use efficiency for the 2.5 million smallholders in Indonesia and Malaysia this amount could rise. If palm oil was used as a source of energy for the EU, these additional volumes could – for instance - help create green versions of hydrogen.
Confidence in mandatory due diligence
The palm oil industry has long invested in sustainable production. Today, the industry is backed by national certification under the Malaysian Sustainable Palm Oil (MSPO) and Indonesian Sustainable Palm Oil (ISPO) schemes as well as global certifications from RSPO and ISCC. This has resulted in a supply of sustainable vegetable oils that remain superior – yet under-recognised - in the global commodities market.
To further assure the EU, Indonesia and Malaysia argue their forests are faring better than countries that produce competing crops. This is noteworthy as the EU Parliament adopted a resolution in October 2020 to halt and reverse EU-driven deforestation.
The same resolution advocates for mandatory due diligence requirements for forest-risk products which the MSPO and ISPO provides. Malaysia’s MSPO particularly integrates the support of government, social and environmental NGOs, and a strong commitment from industries.
Yet, the efforts of these mandatory national schemes may fail if the EU continues to blackball palm oil. As the primary driver for sustainability in the palm oil industry, the EU’s position against its use for biofuels could force palm oil producing countries to abandon costly sustainability initiatives as the industry fights to survive against competing vegetable oils.
As a leader in fighting climate change, producer nations cannot afford to lose the EU’s guidance. Its plans to decarbonise will face challenges but palm oil, combined with other sustainable alternatives, should be considered as a solution.