As palm oil for biofuel rises in Southeast Asia, tropical ecosystems shrink
20.04.2020 (Eco-Business) - Back in 2003, the European Union ruled that biofuels must make up 10 per cent of the bloc’s transport fuel by the year 2020.
Intended to help tackle climate change, the move had the opposite effect. Emissions resulting from changing tropical landscapes to grow biofuel crops were three times higher than from the fossil fuels they replaced, according to a 2015 report.
Biofuels – liquids or gases made from plant products including oil crops such as palm, soy, corn, coconut and rapeseed – are not the sound green alternative to petrol and diesel they were once thought to be.
Europe has recently amended regulations to limit future imports of palm oil for biofuels. But rising demand in Indonesia, Malaysia and China could make up for this market shift in Southeast Asia, where roughly 90 per cent of the world’s palm oil is produced.
Unscrupulous producers could be let off the hook by a lack of sustainability certification schemes for palm oil destined to become biofuel, as well as of communication between those that do exist and similar certification schemes covering palm oil for food.
“Biofuels create an outlet for really the worst of the worst rogue actors,” said Deborah Lapidus, senior campaign director at Mighty Earth, an environmental NGO that engages companies to conserve threatened landscapes like tropical forests. “It is one of the biggest remaining sustainability concerns in the palm oil space.”
From innovation to villain
Around the time the EU delivered its 2003 ruling, US demand for palm oil was growing for use in processed foods and cosmetics. Its popularity had to do with the oil’s relative cheapness to alternatives like soy and rapeseed oil.
Imports of biofuel-designated palm oil from Southeast Asia to Europe grew nearly 400 per cent between 2008 and 2018, according to data from the International Council on Clean Transportation. In 2014, it overtook palm oil imported for food and cosmetics. The NGO Transport and Environment estimates that 65 per cent of all the palm oil imported into the EU in 2018 was used as biofuel for vehicles or electricity generation, a record high.
As the industry grew, so too did evidence of the negative environmental and social impacts of palm oil plantations. Thanks to campaign efforts from groups such as Greenpeace and WWF, consumers were waking up to the widespread deforestation of tropical rainforest and carbon-rich peatland – key habitats for species such as orangutans, tigers and rhinos. In response to calls for greater transparency and outrage over impacts, companies began to step up efforts to ensure palm oil was being produced sustainably.
The first certification organisation set up to promote the growth and use of ethical palm oil was the Roundtable on Sustainable Palm Oil (RSPO), which features stakeholders including WWF and Unilever. Its goal was not to ward brands and consumers off palm oil, but to shift them towards sustainably grown varieties that respected forests and biodiversity.
Research showed that alternative vegetable oil crops could result in more deforestation and biodiversity loss because they need more land.
“It is important to consider the net consequence of replacing this ingredient and a move to an alternative oil, which will require more land and water, thus failing to reduce the carbon footprint,” said Dan Strechay, interim director of outreach and engagement at RSPO.
Considering its full lifecycle, Transport and Environment estimate palm oil biofuel produces three times the emissions of fossil diesel, and significantly more than rapeseed or soy, its two main European competitors.
“We see that an increased promotion of biofuels … was becoming one of the major threats against rainforests,” said Nils Hermann Ranum, Rainforest Foundation Norway, who were active in efforts to change Europe’s biofuels policies.
Emissions from palm oil production vary greatly depending on where plantations are located. Peatlands, for example, store huge quantities of carbon that is released when they are drained for oil palms.
In 2017, these issues led the European parliament to increase the minimum sustainability criteria and enhance anti-deforestation standards for palm oil imports destined to become biofuel. That was followed up by a revision of the EU Renewable Energy Directive in 2018, which comes into force this year. It aims to phase out the use of palm oil by 2030, along with most first-generation biofuels that use food. It drew a fierce response from Southeast Asia.
“Malaysia joined Indonesia in claiming that the EU directive is protectionist, and called it a ban, even though it’s not a ban,” said Martin Baker, director of strategy at Traction Energy Asia.
The initial impact is likely to be fewer exports to Europe. Some Malaysian palm oil, grown under stricter sustainability standards, could still be eligible for export to Europe. Indonesia, however has instead reacted by threatening trade retaliation, including a potential case at the World Trade Organization.
“Palm oil is now a very sensitive subject in Indonesia,” said Tommy Pratama, director of Traction Energy Asia. “Any questioning of the palm oil biodiesel policy is met defensively, with claims that palm oil is the most efficient crop, that it helps farmers, balances the trade deficit, etc.”
Shoring up demand in Southeast Asia
To counter any economic impact from the EU’s move, Indonesia and Malaysia have taken action to bolster demand. Partly due to pressure from industry groups, they are aiming to grow domestic demand for biodiesel made from palm oil, and expand the biofuels export market. Both countries have recently increased mandates for the inclusion of palm oil-derived biodiesel in fuel mixes – 20 per cent in Malaysia and 30 per cent in Indonesia.
They are also pushing for increased exports to India and China, two growing biodiesel importers, as a green alternative to aviation and shipping fuel.