The EU is set to pave the way for much higher rates of deforestation, all while jacking up food prices and discouraging investment in Europe

21/09/2022 (Financial Post) - The European Union has declared war on palm oil — the oil derived from palm trees, which have to be cut down to extract it. Several new proposals suggest the EU is set on forcing the innocuous vegetable oil out of the European market. Perhaps most importantly, Renewable Energy Directive II will phase out palm oil imports for use as a biofuel by 2030.

Apart from its use as a fuel, palm oil is also used in the manufacture of countless groceries and toiletries. Along with other vegetable oils, it is an ingredient in thousands of products that fill our supermarket shelves and until recently flew under the radar.

The EU’s motivation for attacking palm oil is environmental. Following the pledge from last year’s COP26 climate conference to eliminate and reverse deforestation by the end of the decade — a task already considerably behind schedule — European bureaucrats and regulators are feeling the pressure to act. Palm oil is their chosen scapegoat.

In the eyes of many, especially on the left, palm oil is conveniently placed to shoulder the blame for deforestation. Vague hand-waving statements are made about rainforest destruction abroad and echo chambers of interventionists nod in agreement that the palm oil industry ought to feel the full force of the state.

But despite what they and Brussels would have you believe, even wiping out the palm oil industry tomorrow would take us no closer to stopping deforestation. Already, 90 per cent of the palm oil imported into Europe is certified as sustainable and that number will only grow as the industry continues to find new ways to minimize its impact on the natural world thanks to strong market incentives to go green.

According to analysis from the risk analysis group Chain Reaction Research, deforestation from palm oil has fallen to its lowest level since 2017, based on observation of key palm oil exporters like Indonesia, Malaysia and Papua New Guinea.

When compared to other commodities like paper, soy, beef, and leather, the verdict from independent non-profit research group Global Canopy is that the palm oil industry performs extremely well in securing sustainability commitments along its supply chain. Thus 72 per cent of palm oil producers have already made such commitments, a figure much higher than in other high-risk industries.

Even if the appetite to make further progress in the sustainability of palm oil production were to evaporate overnight — which seems very unlikely given recent trends — the EU’s aggressive approach to regulating the product still does not make sense. The widespread use of palm oil removes the need to use other vegetable oil products, almost all of which are worse for the planet.

Possible replacements for palm oil include sunflower, rapeseed (i.e., canola) and olive oil. But researchers have found that making the switch away from palm oil would, in fact, increase deforestation. Production of these other oils is much less land-efficient, needing between six and ten times more land to yield the same amount of oil, which would require more deforestation.

In fact, palm oil currently meets 40 per cent of the world’s vegetable oil demand while occupying only six per cent of the land used for the production of vegetable oil. Curbing palm oil imports would therefore be destructive and short-sighted.

At a time of inflation and a global cost of living crisis, forcing the most commonly used and most land-efficient vegetable oil out of the market will only accelerate already rapid increases in food prices. As energy bills soar and millions of families around the world struggle to make ends meet, artificially inflating the price of food by meddling in the vegetable oil market, as the European Union seems intent on doing, is unwise in the extreme.

Europe provides Canada with a helpful example of what not to do about deforestation. By making attacks on palm oil central to its strategy, the EU is set to pave the way for much higher rates of deforestation, all while jacking up food prices and discouraging investment in Europe. Rather than following the EU’s ill-thought-out lead, Canada would do well to capitalize on the opportunity Europe’s error creates and fill the looming vacuum in the palm oil market by nurturing its relationships with producers and stocking up.

https://financialpost.com/opinion/opinion-dont-repeat-europes-mistaken-palm-oil-ban