MARKET DEVELOPMENT
Agrofuels \'Ruinous\' for Environment and Communities
Agrofuels \'Ruinous\' for Environment and Communities
26/06/2013 (PublicServiceEurope.com) - Firms backed by European finance are banking on the continued growth of the agrofuels and food commodity markets – but decisive action is needed to prevent harm to people and the environment, say campaigners
The myth of industrial agrofuels as an environmentally benign, sustainable solution to our energy needs has long been debunked, and replaced with the more accurate picture of an industry hungry for land, and expansion. The famous words of Mark Twain – "buy land, they're not making it anymore" – reflect a very modern conflict over a limited resource.
This battle for land pitches agrofuel corporations and big commodity producers against small-scale farmers, subsistence communities and the environment. And it is becoming increasingly clear that European financial actors are weighing into the mix. Investors see land as a safe bet for now and the long term, in contrast to uncertain stock markets. European policies to mandate agrofuels and promote future growth in the bio-based, and therefore land-based, economy reinforce this. The result is monoculture plantations that devastate biodiversity, threaten the livelihoods of communities, and often shift land use from local food to global commodity production, including for fuel.
The European Commission has proposed reforms to cap the contribution of food-based biofuels towards renewable energy targets. They hope that 'advanced' biofuels can quickly develop to enter the market – though some of these fuels may still require large land resources, and the full environmental consequences are yet to be appraised. Yet despite these potential reforms to agrofuels policy, markets continue to bank on land. Friends of the Earth Europe research shows major European investors are banking on continued growth of the agrofuel and food commodity markets.
In particular, the most destructive of agrofuels, palm oil. Could it be that these investors are counting on the large lobbying effort by the agrofuels industry being successful? Or that, with 65 per cent of the European Union's total vegetable oil harvest already being diverted into our fuel tanks, they see an increase in palm oil exports to Europe irrespectively? Or do they have an eye on new markets for palm oil worldwide, with new mandates for agrofuels proliferating from Ethiopia to Jamaica to Colombia?
Whatever the reason, this is something we cannot allow. The new frontiers of palm oil are ruinous for the environment and threaten local communities where they are in the way. Globally significant quantities of potential carbon emissions lie locked under the ground in the peatlands and forests of Sarawak and Borneo, where the palm oil industry has its sights set. GRAIN and Oxfam France have highlighted stories of local devastation in the global south to meet the needs of the international agrofuels market.
One particular concern is the new expansion of palm oil producers into Africa, with the financial backing of major European banks and pension funds. Wilmar International, the world's biggest palm oil producer, receives financial assistance of over €1bn from banks including HSBC, BNP Paribas, Deutsche Bank and Rabobank. Various European and American financial institutions own shares in the company totalling €621m. According to new research, Wilmar's subsidiaries are linked to land grabs in Uganda – destroying ecosystems, and displacing communities.
Malaysian palm oil giant Sime Darby, responsible for environmental degradation and alleged violations of national regulations in Liberia, have received financial assistance worth more than €450m from European banks, pension funds and private equity funds. Independent studies confirm that Sime Darby operations could lead to a loss of biodiversity, food sources and livelihoods – leading to chronic poverty.
In order to avoid financing palm oil companies involved in land grabs, almost all EU financers have developed codes of conduct that companies need to uphold such as respecting the Roundtable on Sustainable Palm Oil or the UN Global Compact Principles. However, the same European banks and pension funds continue to finance the work of Sime Darby and Wilmar International. These institutions are uniform in their inaction when pressed on how the financing of these projects violates their own sustainability principles.
European financial institutions should, as a bare minimum, follow their own rules on appropriate investment, and push firms such as Wilmar to clean up their act. Neither European policy, nor European money, should be contributing to land conflicts with local communities, deforestation or violations of national law. The Norwegian pension fund has already divested from Wilmar because of continuous problems with its operations – what will EU investors do?
Europe is not alone in banking on agrofuels, but it must provide leadership and decisive action to prevent further harm to people and the environment. Removing the €10bn of subsidies for the agrofuels industry, correcting carbon accounting to include land-derived greenhouse gas emissions, and going beyond a cap to set a trajectory to phase out the use of agrofuels in transport will reduce pressure on food, land and communities. We must stop burning food in our fuel tanks.
The myth of industrial agrofuels as an environmentally benign, sustainable solution to our energy needs has long been debunked, and replaced with the more accurate picture of an industry hungry for land, and expansion. The famous words of Mark Twain – "buy land, they're not making it anymore" – reflect a very modern conflict over a limited resource.
This battle for land pitches agrofuel corporations and big commodity producers against small-scale farmers, subsistence communities and the environment. And it is becoming increasingly clear that European financial actors are weighing into the mix. Investors see land as a safe bet for now and the long term, in contrast to uncertain stock markets. European policies to mandate agrofuels and promote future growth in the bio-based, and therefore land-based, economy reinforce this. The result is monoculture plantations that devastate biodiversity, threaten the livelihoods of communities, and often shift land use from local food to global commodity production, including for fuel.
The European Commission has proposed reforms to cap the contribution of food-based biofuels towards renewable energy targets. They hope that 'advanced' biofuels can quickly develop to enter the market – though some of these fuels may still require large land resources, and the full environmental consequences are yet to be appraised. Yet despite these potential reforms to agrofuels policy, markets continue to bank on land. Friends of the Earth Europe research shows major European investors are banking on continued growth of the agrofuel and food commodity markets.
In particular, the most destructive of agrofuels, palm oil. Could it be that these investors are counting on the large lobbying effort by the agrofuels industry being successful? Or that, with 65 per cent of the European Union's total vegetable oil harvest already being diverted into our fuel tanks, they see an increase in palm oil exports to Europe irrespectively? Or do they have an eye on new markets for palm oil worldwide, with new mandates for agrofuels proliferating from Ethiopia to Jamaica to Colombia?
Whatever the reason, this is something we cannot allow. The new frontiers of palm oil are ruinous for the environment and threaten local communities where they are in the way. Globally significant quantities of potential carbon emissions lie locked under the ground in the peatlands and forests of Sarawak and Borneo, where the palm oil industry has its sights set. GRAIN and Oxfam France have highlighted stories of local devastation in the global south to meet the needs of the international agrofuels market.
One particular concern is the new expansion of palm oil producers into Africa, with the financial backing of major European banks and pension funds. Wilmar International, the world's biggest palm oil producer, receives financial assistance of over €1bn from banks including HSBC, BNP Paribas, Deutsche Bank and Rabobank. Various European and American financial institutions own shares in the company totalling €621m. According to new research, Wilmar's subsidiaries are linked to land grabs in Uganda – destroying ecosystems, and displacing communities.
Malaysian palm oil giant Sime Darby, responsible for environmental degradation and alleged violations of national regulations in Liberia, have received financial assistance worth more than €450m from European banks, pension funds and private equity funds. Independent studies confirm that Sime Darby operations could lead to a loss of biodiversity, food sources and livelihoods – leading to chronic poverty.
In order to avoid financing palm oil companies involved in land grabs, almost all EU financers have developed codes of conduct that companies need to uphold such as respecting the Roundtable on Sustainable Palm Oil or the UN Global Compact Principles. However, the same European banks and pension funds continue to finance the work of Sime Darby and Wilmar International. These institutions are uniform in their inaction when pressed on how the financing of these projects violates their own sustainability principles.
European financial institutions should, as a bare minimum, follow their own rules on appropriate investment, and push firms such as Wilmar to clean up their act. Neither European policy, nor European money, should be contributing to land conflicts with local communities, deforestation or violations of national law. The Norwegian pension fund has already divested from Wilmar because of continuous problems with its operations – what will EU investors do?
Europe is not alone in banking on agrofuels, but it must provide leadership and decisive action to prevent further harm to people and the environment. Removing the €10bn of subsidies for the agrofuels industry, correcting carbon accounting to include land-derived greenhouse gas emissions, and going beyond a cap to set a trajectory to phase out the use of agrofuels in transport will reduce pressure on food, land and communities. We must stop burning food in our fuel tanks.