The real impact of palm oil and failed policies

Oil companies profit from the direction the European Commission is proposing whereby no differentiation is made between biofuels.[Scott & Emily / Flickr]

The true negative impact of palm oil, the interests that the trade serves and the failure of policy to deal with deforestation and other consequences, write Jakub Kvapil, Stanislav Lhota and Zoltán Szabó.

Palm oil as currently produced is fundamentally unsustainable. This is mainly because of the draining of peatlands in Indonesia and Malaysia to make way for palm oil plantations.

But there are also other impacts on the environment linked to this process that result in massive forest fires, drainage of rivers, soil erosion, pollution of soil and water that together affect the global climate.

Those clearings result in prohibitive greenhouse gas (GHG) emissions and are evidently triggered by market forces. This means that the palm oil market is closely linked to substantial land use change GHG emissions.

The Globiom report, the latest scientific research, highlights the very high ILUC impact of palm oil production. Any activity that stimulates additional palm oil production causes a highly adverse climate change impact.

This is not because palm oil cannot be produced sustainably but rather because the level of global demand for additional palm oil is such that it so often leads to the draining of peatland in Malaysia, Indonesia and other tropical countries around the world.

GHG emissions associated with peatland land use change continue over decades (approximately 75 years). Hence virtually all palm oil used now in Europe has a high GHG impact, irrespective of when the land used for the production was cleared in the first place.

Unless tropical deforestation is brought under complete control it is inevitable that palm oil use will come with a high GHG impact.

Reality of sustainable palm oil schemes

Regrettably, there is no effective mechanism in sight to control peatland emissions and the so-called “sustainable certification” is deficient and its users acknowledge as much.

Sustainable palm oil has been proposed as an alternative to “unsustainable palm oil”. A certification scheme suggests that palm oil production can be made sustainable if produced on an already cultivated land.

It is assumed that if palm oil is certified as sustainable, no land use change has occurred, hence no significant ILUC emission. However, that is an untenable assumption.

In reality, the palm oil market cannot be divided into two parts, whereby the certified supply is assumed to be sustainable, and the rest is assumed to shoulder all the negative impacts. The multiyear longevity of GHG emissions from peatland drainage does not allow this.

Traceability is also a concern. Only one of 14 multinationals surveyed by Greenpeace could trace its palm oil back to the plantation where it was grown. None could say with certainty that they did not use palm oil from recently deforested land.

In 2014, Nestlé, a champion of a sustainability scheme, could trace back to the plantation only 13% of palm oil they purchased.

The effectiveness of the certification scheme in securing the sustainability of the total palm oil market is, therefore, questionable. Sustainable palm oil certification schemes (RSPO) do not extend to cover productivity gains, so ILUC-free palm oil is not included in RSPO.

The credibility of this scheme is illustrated by WWF’s statement that “there are still many parts of the industry that are in denial about the true climate impacts of developing peat”.

While certification (if rigorously applied) may address social and some environmental problems associated with palm oil, such as land grabs, community displacement, unacceptable working conditions and local environmental impacts of production, it will not address the broader issue of peatland GHG emissions until it incorporates the “High Carbon Stock” approach and follow its consistent implementation.

Role of big food and cosmetics

Unilever and Nestlé are the two leading champions of the sustainable palm oil certification scheme. They have an interest in palm oil’s credentials as they are the largest consumers of palm oil for their food and cosmetics businesses. If palm oil was considered in any sense unsustainable their business model would suffer.

The mechanism of high GHG emissions is the same for biodiesel feedstock as for food and cosmetics raw material production. If biodiesel feedstock production is associated with high land use change impact and thus high GHG emissions, the same applies for palm oil used in the food processing sector or in cosmetics.

Curiously, in the current debate, it would appear that cosmetics use is given a priority over energy use. Some usage of palm oil in food can be defended.

But why should soap or personal care products be preferable to oil displacing biofuels? Palm oil use in food products can also be questioned as substitutes are available, in particular, vegetable oils, such as rapeseed oil. Substitutes for palm oil in preparing food (cooking and frying) are also available.

Using palm oil in food and the cosmetics industry has been legitimised by clever strategies of Unilever and Nestlé while the biodiesel industry and all biofuels, including ethanol, suffer the blame. Even Oxfam praises these food companies for their “sustainable” business practices.

All palm oil use should be subject to similar calculations that up until now have been applied only to transport fuels. If so, big food could no longer hide behind their allegedly sustainable certification schemes.

Oil companies also benefit

Recently, oil companies have taken an interest in palm oil. Several European oil companies have invested in Hydrogenated Vegetable Oil (HVO). These include Neste, Total, ENI, REPSOL and BP. Palm oil diesel is marketed as HVO. The aim is to differentiate it from biodiesel, disassociating it from a bad image.

At 3 million tonnes per year European palm oil biodiesel accounts for 5% of world palm oil output and 15% of world palm oil growth. In essence, the biodiesel market in the EU has largely been taken over by oil companies at the expense of European biodiesel producers. For instance, Total is investing in a plant in Southern-France to process palm oil imported to Europe to make HVO diesel.

Increasingly, the biodiesel used in Europe is sourced from palm oil instead of European produced rapeseed oil. Before 2010 palm oil represented a negligible share in biodiesel use in Europe, whereas, in 2015, 46% of all palm oil imported into Europe was used as fuel for transport, which is a six-fold increase since 2010.

Oil companies profit from the direction the European Commission is proposing whereby no differentiation is made between biofuels. Good and bad biofuels are treated equally. iLUC impacts are not included in the sustainability requirements, so the real climate impact of palm oil biodiesel is not made visible.

A coherent policy requires differentiation between biofuels

The Globiom report attributes very high levels of GHG emissions resulting from land use change to all vegetable oils used in biodiesel production. Globiom’s analysis shows that this is almost solely due to the emissions associated with drainage of peatlands in Indonesia and Malaysia.

Unless palm oil is clearly differentiated from other biofuels, and hence clear difference is made between the major biofuels, it is difficult to imagine a coherent EU bioenergy policy. Ethanol needs to be differentiated from biodiesel, and palm oil HVO in particular.

European-produced ethanol results in 64% less carbon emissions than fossil oil and is quickly getting better. Its indirect land use change impact is shown to be moderate, and manageable.

It is made from a minor portion of European starch and sugar which are materials available in abundant and increasing quantities, and its animal feed co-product results in equal amounts of protein feed allowing Europe reduce its extreme dependency on soy imports from plantations in less developed countries which may contribute to deforestation.

By being readily available now to displace fossil oil, ethanol produced from European feedstocks (not sugarcane) provides a fossil displacing bridge solution for the two to three decades it will take for electric vehicles to fully kick in.

If we are serious about climate change mitigation, a logical step would be to ban and eventually phase out all palm oil use in the EU. There is no shortage of substitutes for palm oil use in the EU, be it for fuels, food or cosmetics.

Until peatland drainage is brought under control in Malaysia and Indonesia, a ban on palm oil imports to Europe seems an effective way forward to advance climate change mitigation and preserving biodiversity.

Palm oil used in biodiesel production (HVO) should not be recognised as contributing to climate and renewable energy targets in the EU.

January 23, 2017
By Jakub Kvapil, Stanislav Lhota, Zoltán Szabó

Jakub Kvapil and Stanislav Lhota are founding members of Lestari, an NGO active on palm oil. Zoltán Szabó is a sustainability adviser in the bioenergy industry.

Originally published in

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