Journal of Oil Palm, Environment & Health An official publication of the Malaysian Palm Oil Council (MPOC)
EDITORIAL Open Access
Journal of Oil Palm, Environment & Health 2018, 9:01-49 doi:10.5366/jope.2018.01
Building a Sustainable Future Together: Malaysian Palm Oil and European Consumption Frank Vogelgesang, Uttaya Kumar & Kalyana Sundram
SUMMARY OF THE KEY POSITION explains in detail which those are. By way of STATEMENTS summary:
This paper is born out of the desire to put into First, as a newly industrialized country we perspective the resolution on “Palm oil and stress the importance of rural and economic the Deforestation of Rain Forests” the development enshrined in the sustainable European Parliament (EP) passed by an development goals (SDGs) of United Nations. overwhelming majority in April 2017 Palm oil is vital to the Malaysian economy. For (henceforth: “the Resolution”). a more detailed discussion of this, turn to Section 2.3. What to make of the Resolution? Secondly, we do not accept some of the It calls for EU policy measures to combat fundamental premises on which the Resolution deforestation in the tropics as well as the rests. They contain several key errors, mainly associated effects on climate change and for two reasons: biodiversity. 1) The parliamentary committees that drafted the Resolution in the process The two main recommendations contained in misquoted or misinterpreted parts of the Resolution are the phasing out of palm oil the research they drew upon as feedstock for biodiesel and to switch to 2) Some of the original research itself is 100% certified sustainable palm oil, both by flawed (see Section 4.2 and 4.3). 2020. Malaysia is acutely aware of the environmental challenges planet earth is We insist that policy measures that have far- facing. It considers itself part of the reaching consequences for the Malaysian international community that strives to mitigate economy (and palm oil producing countries greenhouse gas emissions, protect natural elsewhere) must be based on objective habitats and pursue patterns of sustainable evidence and not a limitless application of the production and consumption. precautionary principle, which runs counter to Article 191 of the Treaty on the Functioning of In that same spirit, Malaysia welcomes the the European Union. debate the Resolution has set in motion. As the second largest palm oil producing nation Therefore, Malaysia wishes to express its worldwide we understand the need for views regarding the two primary goals of the supplying palm oil to the international markets Resolution mentioned above. Those are: that has been sustainably produced. We are ready to continue the considerable efforts we Sustainability Certification: we emphasize have taken in that regard and even reinforce that the realities of palm oil production and those. We are ready and willing to align with trade on the ground are far too complex to be the overarching goal to work towards more covered by a single European certification sustainable modes of conducting the palm oil scheme. In our view certification standards business. It is here where we see common must be set and enforced on a national level. ground with the EP Resolution. That is why we choose to invest heavily in building the Malaysian Sustainable Palm Oil However, we differ in some important standard (MSPO). On the other hand, we see respects with several of the Resolution´s the concerns the European Parliament has assumptions and implications. This paper regarding transparency and clarity of different certification standards vis-a-vis the consumer.
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We, therefore, propose to look for ways to solutions possible that are better for all make standards comparable. (see Section 5.2) stakeholders involved, including the earth's ecosystem. Biofuels: The debate over the implications of ______the so-called “Globiom Report” which applied Email: Dr. Kalyana Sundram [email protected] the concept of indirect land use change (ILUC) Published: 9 January 2018 to the calculation of the overall greenhouse Received: 26 October 2017 gas (GHG) emissions of biofuels has been Accepted: 8 January 2018 going on for years without having been settled. © 2018 Malaysian Palm Oil Council In our view, to phase out biofuels on that basis This is an Open Access article which permits unrestricted in fact amounts to a violation of the use, distribution and reproduction in any medium, provided the original work is properly cited precautionary principle.
Considering that the internal combustion engine running on fossil fuels will remain the central pillar of transport for at least another 15 to 20 years, the environmental implications of fossil fuels versus biofuels should be explored further.
It must be remembered that the overall GHG footprint of fossil fuels must consider all activities like traditional petroleum exploration and fracking as well as shale oil and gas production (the former mainly used for kerosene and diesel fuel).
A full evaluation of these factors (incidentally, oil palms undeniably have a non-trivial carbon sink potential) might lead to the conclusion that the alleged cure of abandoning biofuels is worse than the disease.
Likewise, alternative technologies like the electric motor have problems of their own. Electrical power - unlike palm oil - does not grow on trees. Instead, it is often generated by – absurdly - burning fossil fuels like coal.
To summarize: we support the environmental goals laid out in several of the international treaties Malaysia is party to, like the Paris Agreement.
However, we are concerned that the European Parliament and Commission have been misled by false assumptions to pursue a path towards these goals that leads somewhere else: to an outcome that will leave consumer and producer countries as well as the global environment worse off.
To avoid such a result Malaysia is keen to bring its century-long experience, and extensive expertise in all things palm oil to the table. Only working together will make 2
PART I: BACKGROUND PERSPECTIVE The trouble is that the opposing sides in the debate have gotten used to a kind of blame game that is devoid of reason. While 1 Seven and a half billion reasons for environmentalists often equate palm oil with palm oil Armageddon – which is, of course, ludicrous – 1.1 Good or evil? Villain or righteous producer countries can be too much on the man? Right or wrong? defensive. They at times are too quick to The Good, the Bad, and the Ugly, the iconic suspect ulterior motives behind genuine “Spaghetti Western” of the 1960s, is a brutal environmental concerns. Accusations of tale of greed, deceit and changing fortunes. (western) protectionism and “eco-imperialism” What seems right turns out to be wrong, and in fly. This paper attempts to portray that the truth the end, no side can claim the moral high behind palm oil is not a simple dichotomy of ground. Just like in that movie, seeing things good versus bad. Rather it is more like the for what they really are can be challenging in ocean: lots of hidden currents and eddies. the emotional debate surrounding palm oil. Moreover, there is also some ugliness on all For years discussions – often heated – have sides of the debate which should not be buried been going on over the impact of palm oil under the surface. production and consumption on human health and the natural environment. 1.2 No sustainability without efficiency Human population explosion has put a great As of now, most agree that negative health strain on everything that was once assumed claims like an increased risk of coronary heart sustainable. Today, 7.5 billion people inhabit disease are largely inconclusive. In fact, such planet Earth. Just a mere 50 years ago that claims meanwhile are often used as amplifiers number was less than half that. by those who actually pursue an environmental agenda. Possibly because they realize that the The industrial revolution changed everything: environmental debate itself is fraught with too while it took all of human history until around many loopholes. 1800 for world population to reach one billion, the trajectory since then has been steep. The Regarding the environmental effects of palm fifth billion was added within the blink of an oil there is no denying it: some negative eye, in the 13 years between 1974 and 1987. consequences are not only alleged but real. Just during the 20th century, the number of people on earth grew from 1.65 billion to 6 billion.
Figure 1: Global Population Explosion
Source : http://www.worldometers.info/world-population/#density
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Figure 2: CO2 Emissions since the Industrial Revolution are in Step with Population Growth
Source : http://awsassets.panda.org/downloads/lpr_living_planet_report_2016_summary.pdf
Given this explosive growth in the number of seats – reign in transport pollution? Where will individuals living on earth – all of whom need all the electricity come from? A good portion of to be fed, housed, and entertained – is it any it will be generated by burning coal. Moreover, wonder that many people are concerned about the lithium and rare-earth elements required in the depletion of natural resources? The the batteries will be mined in far-away places pollution of air and oceans? The extinction of like Chile or Bolivia, leading to environmental species and the human impact on the degradation there. Plus, recycling of lithium-ion changing world climate? batteries is an unsolved problem, bringing environmental concerns closer to home. Is it a coincidence that illustrations depicting the growth of world population and global Likewise, if you try to protect species by carbon dioxide emissions look uncannily making it unlawful to harm or hunt them or to similar? threaten their habitat, you may actually end up achieving quite the opposite. For instance, Indeed, is it any surprise that safeguarding the there is ample evidence that the introduction of environment today - in a world with twice as the Endangered Species Act in the United many people as a generation ago - is difficult? States can have negative consequences on It has become commonplace to argue that the population numbers of the species it tries to globalized world we live in has grown complex. protect 1. But it is true nevertheless. Any action you take The danger of such unintended perverse to protect the environment it is bound to have outcomes, sometimes also called Cobra effect, some consequence you never intended and is, of course, familiar to social scientists. would have wished to avoid. Unfortunately, policy-makers too often ignore For example, if the European Union tells it’s the Cobra effect. 500 million people to drive electric vehicles, what problems will that solve? Can a country like Germany - where with 45 million cars (50 years ago there were only 10 million) the entire population of 80+ million can sit in the front 1 https://www.perc.org/articles/when-endangered-species- act-threatens-wildlife 4
In our densely populated, globally connected Malaysia fully supports the goal of 100% and interdependent world, the only answer to Certified Sustainable Palm Oil (CSPO). But we conundrums like the above is efficiency. will not get there overnight. Because of the Rather than setting wrong incentives through economic, social, and environmental misguided policies, governments and the complexities that are involved this will be a international community must focus on process, not a one-time regulatory action innovation that creates efficient solutions to mandated from above. pressing problems. Efficiency carries the seed To successfully travel down the CSPO road, of sustainability. any policy measure must meet four criteria: To illustrate: in transport, the ultimate solution 1. the underlying assumptions must be will not be new types of engines. Instead, it will verifiable come from innovations like the software that in the future will power an elaborate grid of self- 2. the economic development of Malaysia driving vehicles, thus dramatically reducing the must not be suffocated number of cars on the road. 3. they must be SMART: specific, Similarly, in agriculture, it is imperative to take measurable, achievable, relevant and advantage of crops that bring the highest yield, time-bound on the smallest cultivated area possible, and at the lowest cost. 4. they must be in line with international agreements Malaysia has entered into as Efficiency is the key component of well as in tandem with our national laws. sustainability. This paper contributes to the debate initiated by the EP´s passing of the Resolution on Palm Cobra Effect Oil and the Deforestation of Rain Forests.
The term originated at the time of colonial Stripped to its bare essence, the Resolution India. The British government, concerned argues that that (European) consumption of about the number of venomous cobra snakes palm oil leads to widespread deforestation in in Delhi offered a bounty for every dead the tropical areas of producing countries. The cobra. Initially this was a successful strategy inferred associated problems of habitat as large numbers of snakes were killed for the destruction, loss of wildlife and biodiversity as reward. Eventually, however, enterprising well as triggering climate change are seen as a people began to breed cobras for the income. global threat. When the government became aware of this, Bar an outright ban on palm oil and derivative the reward program was scrapped, causing products the EP considers the switch to CSPO the cobra breeders to set the now-worthless a viable solution. And Malaysia has made snakes free. As a result, the wild cobra remarkable progress in becoming the leading population further increased. The apparent supplier of sustainable palm oil. solution for the problem made the situation even worse. This paper is organized as follows: Source : http://bit.ly/1QzLkR6 Section 2 considers the role of palm oil in the economy.
Section 3 looks at palm oil and the 1.3 Barking up the wrong tree environment. As far as vegetable oils are concerned, palm oil is the most efficient choice – far and away! Section 4 provides a detailed discussion of the That is where the key to a sustainable Resolution. vegetable oil value chains lies. Section 5 outlines the road to supplying But - again - our globalized, interdependent exclusively sustainable palm oil to Europe. world has grown complex. And while the need Section 6 draws the central conclusions and to protect the world's ecosystems is surely recommends next action steps. something we all agree on, there can be no simplistic, one-size-fits-all solutions.
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2 Palm oil and the economy Figure 3: UN SDG´s focus on Sustainability AND Development 2.1. A note on economic development To many in Western Europe, economic growth seems like an outdated notion. In countries where people by the time they reach retirement age can reasonably expect to live another 20 years, with comfortable pensions and comprehensive healthcare cushioning the downsides of growing old, the concept of GDP growth is often frowned upon. By some, it is considered an outright waste of natural resources.
However, this does not prevent millions of Europeans from driving gas-guzzling SUVs or traveling the globe on airplanes that are powered by fossil aviation kerosene. Unfortunately, in other parts of the world, many people are not quite that lucky. Sometimes it seems to be forgotten that this is the very reason why the UN Sustainable Development Goals (SDG) pursue economic development alongside sustainable practices. Out of the 17 goals at least 12 deal directly with the goal of economic development. Figure 3 shows the first four. This focus is also mirrored in the emblematic 4-Ps summing up the SDGs: People, Planet Peace and Prosperity.
So, why is economic development still so st important even towards the end of the 21 century? Have a look at the following graphs as referenced in Figure 4 and Figure 5. Figure 4: Life expectancy and fertility rates 1960
Source: http://bit.ly/2gS2qmt
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Figure 5: Life expectancy and fertility rates 2015
Source: http://bit.ly/2gRvreo
Figure 6: Gross Domestic Product (GDP), 1960 – 2015
Source: http://bit.ly/2xk9cZ3
Figure 4 and Figure 5 alone tell a gripping tale Citizens of countries as diverse as Nigeria, that could fill a book: a mere 60 years ago in Indonesia, Malaysia, Germany, and France2 the countries of the world life expectancy have all enjoyed extended life spans of roughly overall was much lower than today. In some 10 to 15 years when comparing then and now. places like Mali or Sierra Leone it was as low Significantly, almost all the countries still to be as 30 years, echoing the grim warning of 17th found around the middle of the chart are Century philosopher Thomas Hobbes that life located in Sub-Saharan Africa. in the state of nature was “nasty, brutish, and short.” Compared to the year 1960, in 2015 Is there a lesson in all of this? First, consider most countries are converging towards the one more graph as mentioned in Figure 6. lower right corner of the chart, indicating an overall decline in fertility rates accompanied by drastically improved life expectancy.
2 This country sample was chosen because Indonesia and Malaysia are the two biggest palm oil producers worldwide, Nigeria is the most populous African nation producing palm oil, and France and Germany are the two largest European nations, serving as points of reference. 7
The above three graphs together remind us of The second characteristic is that a growing four crucial insights: agricultural sector either precedes or at least goes alongside general economic growth. It is 1. Rising income leads to addressing poverty important to note that rapid agricultural growth and providing a better livelihood. and a simultaneously declining share of the
sector in an economy's overall output is not a 2. Advanced economic development, higher contradiction. However, life expectancy, and lower fertility rates go hand in hand (here lies the key and pretty “(…) the apparent paradox gave rise to a much only hope for slowing down the widespread misperception that agriculture is global population explosion and the unimportant – that it does not require depletion of natural resources that goes resources or a favourable policy environment – with it). because its relative share of the economy declines”5 . 3. There still is a large income gap between most countries of the world and those of Many experiences of lower and middle-income the European Union, especially Western countries over the past 20 to 30 years confirm Europe (although today most observers these observations. Take as an example expect the Western dominance to come to Malaysia and Indonesia, the two countries that an end rather quickly in light of rapid together supply around 85 percent of the economic growth especially in places like world´s palm oil. Both have built their China, India, Indonesia and Brazil). remarkable advances in economic development on a strong agricultural sector. 4. Sub-Saharan Africa has by far the most Malaysia, after gaining independence only in catching up to do (and that means this is 1957, started out as the world's supplier of where over the next few decades the rubber. The country went on to become the action will be - also regarding sustainability leading producer of palm oil for many years and conservation issues). until taken over by Indonesia. As it turns out, Demographers have known for a long time that the properties of the oil palm make it an ideal the so-called demographic transition, crop to lift societies out of poverty and to put a country on the trajectory for the agricultural “(…) that is the shift from a period in which transformation and economic development in population grows because birth rates exceed general. Let's take a closer look at how the death rates, to a period of low death and birth crop achieves this. rates and thus little or no population growth,”3 comes with economic development. 2.2 The economics of palm oil Economists, for their part, have observed for In Malaysia, people frequently refer to palm oil centuries that economic development goes as “the Golden Oil,” and “a gift of nature.” hand-in-hand with what they call the In Europe, what you often hear is that it is a agricultural transformation. That transformation cheap oil that goes into 50 percent of is marked by two characteristics. First, the everything you see in your local supermarket. declining importance of agriculture that is Some even seem to think that palm oil is the scourge of humanity. “(…) uniform and pervasive, a tendency As diametrically opposed the above attitudes obviously driven by powerful forces inherent in are, they represent two sides of the same coin. the development process, whether in socialist Because whatever your opinion, there is no or capitalist countries, Asian, Latin American, denying that palm oil as an agricultural or African, currently developed or still poor.”4 commodity is one of a kind in several ways.
For one thing, its yield per hectare is several times higher than that of other oil crops. The 3 Birdsall, Nancy (1988), Economic Approaches to significance of this agronomic fact can hardly Population Growth; in: Handbook of Development be overstated: although the oil palm now Economics, Vol. I; Chenery, H. and T.N. Srinivasan (ED.); Elsevier Science Publishers, p. 479 4 Timmer, Peter C., op. cit., p. 276 5 Ibid., p. 277 8
Figure 7: Global Harvested Area of the 5 Most Important Oil Crops
Figure 8: Average yield of the 5 oil crops
provides a larger portion of the vegetable oil with the more familiar measure of metric tons used globally, it grows on only a fraction of the per hectare. land compared to other oil crops. (illustrated by the two diagrams above) This overwhelming comparative advantage of the oil palm has to do with another property of Somewhat confusingly, the above figure uses the plant. It is unique in that its fruits provide as a yield measure hectogram (equivalent to two different types of oil. First, the oil extracted 100 grams or one-tenth of a kilogram) per from the flesh of the fruit (called crude palm oil, hectare. The result is of course the same as 9
Figure 9: The fruit of the oil palm
or CPO) and that gained from the fruit seed, two to three-year crop rotation is necessary, called palm kernel oil. thus requiring even more land and other associated agricultural inputs including fossil This biological peculiarity lies at the heart of fuels to run tractors and mechanization tools. the ubiquity of palm oil. The physical and There even are studies that suggest if chemical differences between palm oil and rapeseed is followed by sunflower, sunflower palm kernel oil open up a wide range of user yields will be significantly lower as well. 6 applications. While palm oil is mainly used for food as well as several non-food and For European agriculture this could turn into a renewable energy applications (including nightmare if not properly managed. Curiously, biodiesel), palm kernel oil goes into we never hear mention of these kinds of oleochemicals used for making soap, challenges in the ensuing debate about toothpaste, candles and other products. sustainable oils and fats production. Nevertheless, palm kernel oil as well has The oil palm, by comparison, needs three several very specific food-based applications things to flourish: lots of sun, warm that are almost impossible to be duplicated, temperatures, and plenty of water. These except by coconut oil (which shares conditions are ideally met in those parts of the compositional similarities with palm kernel oil). globe that straddle around the equator, Closely linked to the superior yields of the oil specifically 10 degrees north and south of it. palm is the fact that the plant has an average Oil palm farming is rain-fed agriculture and productive lifespan of 25 years. This is less dependent upon manmade irrigation something that is much more significant than it systems. However, as it happens, tropical appears at first. Once planted, the oil palm rainforests share the same geographies, seedling grows for about three years before it triggering intense debate about oil palm begins to bear fruits. Then it remains on that cultivation and its encroachment into these patch of land where it grows for another two forests. and a half decades. The environmental problems that entails will be Annual crops, of course, must be replanted dealt with in Section 3 below. For now, it is every year. To complicate things further, important to realize that all these above factors rapeseed, Europe´s number one oil crop, combine to make palm oil the most efficient suffers from something called autotoxicity, vegetable oil there is. meaning that it cannot be planted on the same plot of land for two years in a row. Instead, a 6 http://www.tandfonline.com/doi/pdf/10.1626/pps.14.339 10
Efficiency means two things: it can be sold at a As a result, Malaysia almost entirely lower price than other oils and fats, and eradicated poverty among its population. A regarding resource inputs (land, fertilizers, low-income economy in the 1970s Malaysia pesticides, irrigation water) it is much more reached high middle-income status in 1992. Its sustainable than its alternatives. national per capita income grew more than 25 times from its 1970 level of US$402 to almost Moreover, the favourable economics of palm 11,000 in 2014. During the same period, the oil imply that it is a boon to the economies of incidence of poverty was reduced from a producing countries, like Malaysia. staggering 49.3% to only less than one 2.3 Palm oil in the Malaysian economy percent. 2.3.1 Economic snapshot of Malaysia Since gaining independence in 1957, Malaysia Today most Malaysians have access to has come a long way. Until the 1970s tin and potable water and electricity. But still, gaps rubber were the primary income earners for remain compared to other high-income the country. countries.
Today, Malaysia has turned itself into a The diagram below illustrates the impressive diversified economy, exporting electrical improvements Malaysia attained in this appliances as well as electronic components, indicator of human development. However, it natural gas as well as palm oil and its also shows, that infant mortality in Malaysia in derivatives. 2015 stood at 7, almost double that of Germany (3.7). Indonesia´s rate (27.2) is more According to the World Bank Malaysia is one than seven times that of Germany, Nigeria´s of the few countries that has maintained an (108.8) is a depressing 30 times higher. average annual GDP growth of seven percent for more than 25 years.
Figure 10: Mortality of Children under the age of Five – probability per 1000 births
Source: http://bit.ly/2fkMQwa
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Another interesting measure to look at is the third small but sovereign nation on Borneo is number of physicians per 1,000 people Brunei. (including generalists and special medical Some Facts about Borneo practitioners). Here the extremes are, again, With an area of over 750,000 km² Borneo is more Germany with 3.8 physicians versus Indonesia than twice as large as Germany and larger than any with only 0.14. In this regard, Indonesia and other European country. The coastline of the island Nigeria have practically made no progress stretches over 4971 km. More than 20 million since the 1980s, whereas the indicator for people live there. Malaysia more than doubled during the past 20 years. Borneo is situated on the equator and in its climate the natural vegetation develops into tropical What is the relevance of all this to the rainforest. In its original state, and excluding areas discussion of palm oil? It lies with the fact that that are too high up or too marshy, the island was all of the palm oil producing nations are the third largest area of tropical lowland rainforest in endeavouring to address rural poverty and the world (after the Amazon and Congo-Basin). rising the income levels. Borneo, unlike some other Sunda islands, does not Malaysia, however, has several challenges profit in the same way from volcanism and therefore where further progress is needed. has the typical less fertile soil (leaching) on which most of the tropical rainforests grow. This, and not a It helps to understand that Malaysia is made lack of accessibility, explains the traditionally up of three quite diverse regions: first comparatively low population density. Peninsular Malaysia, which houses the capital city of Kuala Lumpur, a metropolis where more However, the beautiful forests of today cannot than eight million people live (about one-fourth generally be regarded as primary forest. The of Malaysia´s total population of 30 million). indigenous people of the island were mostly not exclusively hunters and gatherers, but practiced Again, what is the relevance of all this to the nomadic slash-and burn agriculture. The ecosystem discussion of palm oil? It lies with the fact that tolerated that as long as the island´s population was all of the palm oil producing nations on the low, and the vegetation had enough time for globe are in the catch-up phase of economic regeneration. development. Albeit at different stages, they all Today, it is often difficult to distinguish between are still trying to close the gap that exists primary and secondary forests. compared to the high-income countries typically associated with “the West.” Malaysia has come a lot further in this catch- It is important to note that Sabah and Sarawak up process than its palm oil producing peers, formally became parts of Malaysia only after whether in Asia or Latin America. But in joining the Malay Federation in 1963. To this particular when compared to the poor African day, both enjoy considerable autonomy from countries that pin their hopes for improved the central government in Peninsular Malaysia living standards on the oil palm. Malaysia, in conducting their affairs. however, has several challenges where further progress is needed. The Malaysian government is grappling with two kinds of inequality regarding income It helps to understand that Malaysia is made distribution. First, with differences between up of three quite diverse regions: first urban and rural areas, which is particularly Peninsular Malaysia, with the capital region of pronounced in Sabah and Sarawak. And, Kuala Lumpur, a metropolis where more than secondly, with the development gap between eight million people live (about one-fourth of Peninsular, and Sabah and Sarawak. Malaysia´s total population of 30 million). More than 80 percent (around 25 million) of Add to that the fact that the Malaysian Malaysians call the Peninsular home. population continues to grow at a currently estimated 1.67 percent annually. That amounts The other two regions are Sabah and to about 140 additional people per day Sarawak, located on the island of Borneo. (including migrants), or more than three million Roughly 80 percent of the entire Borneo island´s territory belong to five Indonesian 7 provinces that together make up Kalimantan. A http://worldpopulationreview.com/countries/malaysia- population/ 12
Malaysians in the past ten years. This First commercial planting was undertaken in population growth alone makes it plain and Malaysia in 1917 (somewhat ironically, given obvious that Malaysia's economy needs to the strong anti-palm oil sentiment in modern- continue to grow. day France, by Frenchmen Henri Fauconnier). Acknowledging this, the Malaysian government Almost 50 years later planted acreage had in 2010 launched the economic transformation reached no more than around 60,000 ha. program (ETP). Its goal is to elevate the However, the growth that ensued was country to developed nation status by 2020, exceptional: over one million hectares were targeting a GNI (gross national income) per under cultivation when the 1980s came capita of US$15,000. The figure is based on around, two million by the 1990s, and today’ the threshold value for a high-income economy planted area is officially set at 5.7 million used by the World Bank. hectares. Working towards that goal 12 National Key Incidentally, it may be interesting to note that Economic Areas (NKEAs), representing this is less than the total area under all economic sectors which account for significant European oilseeds and olive cultivation contributions to GNI have been implemented. (approximately 16 million hectares) and even The ETP is part of the New Economic Model less than rapeseed cultivation alone (6.5 (NEM) also announced in 2010 and the central million hectares) in the European Union. features of which are shown in the following In other words, Malaysia pioneered the diagram. commercialization of palm oil. This heritage Figure 11: The Goals of Malaysia´s NEM makes Malaysia the producing nation not only with the longest trajectory but also with the largest accumulated wealth of knowledge about all things palm oil, residing explicitly in its sector institutions and implicitly in tacit knowledge and tried and tested good agricultural practices. Malaysian palm oil is a world leader in R&D, applying the most technologically advanced and efficient modes of production and processing. For many years Malaysia also was the world's number one producer of palm oil only surpassed by Indonesia relatively recently. Today, Malaysia produces over 30% of global palm oil output.
These figures indicate the role of palm oil in The NEM´s vision is a wide-ranging Malaysia's economy: more than one million transformation of the Malaysian economy and people are employed in the sector, producing a indeed of the society at large. At the centre of share of between five to six percent of it lies the quality of life of the rakyat, which Malaysia´s GDP and 7.8% of total exports, might best be translated into “people” or “civil making palm oil the fourth largest contributor to society.” overall Malaysian exports by value. In 2016 2.3.2 The contribution of palm oil total export value of palm oil and palm related products stood at 67.6 billion ringgits, roughly Palm oil industry is one of the key priority equivalent to 13.5 billion Euros (at the sectors under the NKEA. September 2017 exchange rate). In 2017 Malaysia is celebrating 100 years of Given the pivotal importance of palm oil in the commercial cultivation of the oil palm. The Malaysian economy and the need for further plant of the Elaeis guineensis variety native to economic growth identified above: where will Western Africa was originally introduced to future growth in the palm oil sector come from? Southeast Asia by the Dutch who brought it to Bogor, on the Indonesian island of Java. 13
Figure 12: The EU's leading Oil Crops - Area Harvested
There are three possible sources: third-party suppliers, and tied and independent smallholders connected through extended 1) Increasing planted area; intermediation networks.”8 2) Improving efficiency; In short, four different conceptual stages of the 3) Focusing on products with higher value supply chain can be identified: production, added. processing, trade, and consumption. At each Malaysian policy makers target all three. stage, a complex web of actors and stakeholders comes into play. 2.3.3 Palm oil as an objective of economic policy This high level of complexity is at once good Accordingly, Malaysian authorities have and bad news. Bad, because it makes identified eight enablers for the palm oil sector environmental and other issues so hard to under the ETP called Entry Point Projects track. Good, because it allows for (EPP). improvements at many touch points along the chain. For a better understanding of what the eight EPPs are intended to do, take a look at a And this is where the eight EPP come in. (very) simplified palm oil value chain first. Generally speaking, the Malaysian palm oil (Figure 13) sector strives to move up the value chain and to introduce high-end palm products in food This depiction of “from palm to plate” describes and health-based segments, among others. In the supply chain of palm oil on the most basic the same vein, efforts have been taken to level. In fact, the real-life supply chain is further boost smallholders’ productivity amid infinitely more complicated: increasingly limited agricultural land.
“The global palm oil value chain has grown in complexity over time. A large number of consumer goods companies use palm oil and derivatives, yet the processing and refining is 8 The Palm Oil Global Value Chain, CIFOR Working paper, concentrated in a handful of corporate groups http://www.cifor.org/publications/pdf_files/WPapers/WP220 and traders, which in turn source their supply Pacheco.pdf from their own concessions, a large number of
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Figure 13: Simplified Palm Oil Supply Change
Source : https://www.sustainablepalmoil.org/infographics/
At this point a brief reference to the structure of With this diversity in mind, the Malaysian the Malaysian palm oil industry is necessary. It government pushes for improvements in the is important to realize that the palm oil sector is palm oil NKEA by dividing the eight EPPs into divided up into broadly speaking three thrusts: first upstream to improve productivity subsectors which are significantly distinct: on and ensure sustainability and downstream to the one hand, there are world leading create higher value-added domestically. plantation companies and vertically integrated enterprises like Sime Darby, Felda Global The biggest impact on issues of sustainability Ventures, or Genting. and deforestation comes from the conditions
upstream. Therefore, the following sections will On the other side of the spectrum, there are focus on the first four EPPs. many thousands of smallholders (in Malaysia defined as holdings under 40.5 ha of size). EPP 1: Accelerating the Replanting and They can either be organized in public New Planting of Oil Palm schemes or (increasingly) in cooperatives or Funds allocated under this EPP are earmarked operate as independent farmers. Most of those for replanting and new planting schemes to be farm dispersed patches of land, making up for carried out. The focus is on replanting, and the holdings of no more than five hectares or less. Many of those smallholders are over 55 years scheme is intended to help independent of age and farm only part-time. smallholders replant old and unproductive trees in planted areas below 40 hectares.
While formerly replanting involved culling and In the middle are what can be called SMEs burning of the old trees, Malaysia has for years (small and medium enterprises). They account a strictly enforced zero burning policy in place. for the largest combined cultivated area, and their operations reach different levels of This includes the shredding of trunks and sophistication. fronds and letting them decompose in situ as a natural fertilizer. 15
Malaysia will focus on enhancing current Thus, the industry puts tremendous efforts into productivity levels taking on board the limited improving the yield per hectare planted. availability of suitable land (in view of Malaysia’s commitment towards retaining 50% EPPs 2 and 3 are similar in that they ultimately of its land area under natural forest cover) for deal with this goal, coming from two different further expansion of oil palm. angels: new plant varieties and/or better farm management. EPP 2: Improving FFB yield and EPP 3: EPP 2 aims to achieve a national average Improving Worker Productivity fresh fruit bunch (FFB) yield (not to be confused with oil yield) of 22 tons per hectare In Malaysia, where available land is limited and (ha) for independent smallholders, 26 tons/ha sustainability governance comparatively for organized smallholders and 28 tons/ha for strong, higher demand for palm oil cannot large estates by 2020. simply be met by increasing cultivated area.
Table 1: Palm oil Entry Point Projects as part of the 2010 Malaysian Economic Transformation Program
Upstream Downstream EPP 1: Accelerating oil palm re- and new planting EPP 6: Focus on high-value oleo derivatives EPP 2: Improving fresh fruit bunch yield EPP 7: Commercializing second generation biofuels EPP 3: Improving Worker Productivity EPP 8: Expediting growth in food and health-based downstream segments EPP 4: Increasing the oil extraction rate EPP 5: Developing biogas facilities at palm oil mills
Figure 14: Different shell thickness in Tenera and Dura oil palm varieties
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EPP 3 acknowledges the fact that the palm oil be appreciated in the two photos below, a industry has long depended on manual labour harvest worker first has to cut off the fronds so (now frequently foreign), particularly to harvest the FFB can be reached. Then the stem of the and transport FFB. That leaves it vulnerable to bunch itself is cut, usually with a pole carrying a labour crunch, potentially hurting a sickle. Working in great height makes this a productivity. challenging and tiring enterprise. Palm oil farming may be more complicated Another issue having to do with height is than it appears and many factors in yield correct FFB selection. The higher up the fruits improvement come into play. A few examples: are, the more difficult it is for workers to determine the degree of ripeness and thus the The thickness of the shell surrounding the right time to harvest. Timely harvesting, of seed of an oil palm fruit can influence overall course, improves yields. yield by up to 33%. The thicker it is, the more space it takes up. This is one of the reasons These examples serve to illustrate the type of why the thin-shelled Tenera variety of the oil challenges faced in oil palm farming, where palm is predominant in Southeast Asia. mechanisation innovation this far has proved to be more or less elusive. Likewise, the height of the individual palm tree is very important for several reasons. Unlike its In fact, Malaysia´s Palm Oil Board (MPOB) South American sister, the Elaeis oleifera every year holds an International Competition which only grows a few meters above the on Oil Palm Mechanization (ICOPM) where ground but unfortunately has overall much participants enter innovations in three lower yields than the Tenera species, Elaeis categories: 1 harvesting technology, 2) loose guineensis can reach a height of up to 15 fruit collection technology; 3) FFB evacuation meters. technology. Lower height would not only make cutting the FFB from the tree considerably easier. As can
Figure 15: FFB sit on top of the palms fronds – which must be cut first
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Figure 16: Workers use Poles, sometimes motorized, to harvest FFB
Figure 17: The Chromosomes of Oil Palm
Source : https://www.nature.com/articles/nature12309?foxtrotcallback=true
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However, the most promising venue for genome select oil palm project in the increased crop yields is genome selection. sustainability category10. Malaysia is the world leader in that regard. The EPP 4: Increasing the Oil Extraction Rate MPOB owns the world's largest oil palm gene (OER) bank and is constantly working on ways to improve the oil palm´s yield. In addition to improvements in cultivation and harvesting, there are other opportunities According to the MPOB, current varieties, further downstream. Especially in what depending on the specific conditions in situ, industry insiders call midstream, i.e., during the yield between three to seven metric tons (MT) milling process yield often gets lost. of oil per hectare. The industry average is said to be four metric tons. The installed milling technology is frequently outdated, and over time this part of the supply However, the MPOB scientists, as well as chain should be upgraded. industry experts working on their own breeding programs, think that a maximum of eight to ten The following diagram shows oil extraction MT is possible. rates (OER) at Malaysian mills. OER is defined as the oil weight extracted as the percentage The optimism rests on the ground-breaking of the weight of the processed FFB. achievement of the MPOB to decode the genome of the African oil palm9. As a result, In the period examined (January 2016) OERs new clone seeds recently have become ranged from a low of 16.6 percent to a high of available. 25.73 percent. While many different factors outside the mill (weather conditions, harvesting The genome sequence of this tropical method, etc.) play a role in OER, it seems safe plantation crop is an important step in to assume that such considerable differences achieving the goals that are critical to the can also be traced back to the efficiency of the sustainability challenges associated with mill itself. growing demands for biofuels and edible oils. Notwithstanding this identifiable room for However, it is important to note that improving improvement in the milling process, Malaysia yield through the introduction of alternate overall is best in class in production and seeds is a rather time-consuming affair. processing of palm oil. Currently, only around two percent of Malaysia´s planted area has been replanted Sustainability issues faced by the global palm with the new seed variety. On average, no oil industry and discussed in the following more than three to four percent of the area section can and should benefit from the currently under cultivation can be replanted per Malaysian expertise. annum. Planted seedlings then take a minimum of three years to reach productivity. 3 Palm oil, the environment, and Malaysia In other words, from seed development to Environmental debates are a tricky affair. What harvest it will take between six to eight years. seems to be obvious fact may turn out to be deceiving. On closer inspection, nothing is as Nevertheless, Malaysia has made tremendous simple as it first looks. Apparent solutions may strides towards significantly higher yields in the turn out to be anything but. Many of the threats future without having to expand the land under to ecosystems are intractable. This section cultivation at the same ratio. wants to widen the perspective in the debate Aside from public agencies like MPOB, private over palm oil. companies are also very active. Recently,
Sime Darby was awarded the Bronze Medal 2017 of the prestigious Edison Awards for its
9 10 http://www.edisonawards.com/winners2017.php; a good http://www.nature.com/nature/journal/v500/n7462/full/natur video explanation is available here: e12309.html?foxtrotcallback=true https://youtu.be/pncqrT_Qm00 19
Figure 18: Different palm oil extraction rates at Malaysian mills
Source : http://bepi.mpob.gov.my/images/oer/oer-2016/1.OER%20Performance%20Januari%202016.pdf
3.1 Exhibit 1: The orang-utan The key question is: how can orang-utan habitats that still exist be preserved while the The global environmental debate is messy. population of the island is growing, and the What seems clear at first look turns murky on exploitation of natural resources and closer inspection. agriculture show a way out of poverty? The result of the messiness of the global The WWF and the Heart of Borneo (HoB) environmental debate is that decisions– be initiative11 are trying. However, already the they by national or governments, supranational description of the problem on the HoB website institutions or international NGOs – frequently indicates confusion. are based more on articles of faith than on hard evidence. At first, the issue is described as: “Logging, land-clearing, and conversion activities are The European discussion on palm oil and the considered to be the greatest threats to the deforestation of rainforests often zooms in on Heart of Borneo. Of particular concern is the habitat loss for the orang-utan, usually conversion of natural forests to oil palm and connected with the island of Borneo. timber plantations.” Misconceptions in that regard abound, and a A little further down it reads: “Borneo also bit of a reality check is necessary. Here are holds rich metal and mineral resources, some key facts: including tin, copper, gold, silver, coal, First of all, Borneo reduced its forest cover not diamonds, and different types of sand and to oil palm cultivation, but to population stone. Together, the forestry and mining pressure and economic development in sectors are the main contributors to forest loss general. in Borneo.” Secondly, Borneo is made up of territory belonging to three different independent nations; the Malaysian share is only about one-fourth. 11 http://wwf.panda.org/what_we_do/where_we_work/borneo _forests/borne 20
The Mega Rice Project “There are many responses possible to the challenges ahead. Whilst not prescriptive, the In 1996 a program of massive peatland 2016 Supplementary report, puts forward a conversion, the so-called Mega Rice Project number of recommendations for state and (MRP), was initiated with the aim of converting federal government policy makers, industry, one million hectares of peatland into rice fields. international agencies and civil society. Key Between January 1996 and July 1998 more than amongst them are: 4000km of drainage and irrigation channels were constructed in the area designated for the MRP. • Ensure ecological connectivity of the landscapes of Borneo through island wide Many people were able to access the previously spatial planning for effective conservation inaccessible interior of this peatland landscape to exploit the residual timber resources, mostly of biodiversity and ecosystem services. doing this on illegal logging basis and using fire in • Evaluate spatial planning per location or the process. landscape to ensure retention of as much
In August 1997 deforestation was initiated by natural forest and species habitats as means of fire clearance as the most economical possible. method. Boosted by the El Niño Southern • Identify and establish a new baseline for all Oscillation (ENSO) episode in 1997, many of idle non-forest land, and consider it as the these fires set for land clearing spread into pristine forest areas where they continued to burn only alternative for new plantations. with greater intensity. The newly established • Develop monitoring systems and drainage system aggravated fire impact, fostering prescriptive action to ensure that all this disaster. During five months of drought, the peat layer lost most of its water and the peat itself production forests remain under natural was ignited. A huge cloud of yellow, noxious forest cover. Expand protected areas to smog covered 15 million km² of Southeast Asia include entire landscapes and better for several weeks. representation of all ecosystems and species habitats.” (Source : https://nus.edu/2wmSwfk) 3.2 Exhibit 2: Peatland agriculture
The physical characteristics of Malaysia – Likewise, international investors build large broadly speaking – are such that as you move dams for power production, oil and liquified away from the coastline, hilly areas with slopes natural gas play an important role in the too steep for development dominate. regional economies, as does timber, rubber, and cacao. The Malaysian State of Sarawak This has helped Malaysia to keep its today features aluminium, glass, and steel commitment made at the Rio Earth Summit in industries. Economic links to China and other 1992. A full 25 years later the country still regional neighbours are strong and growing. maintains somewhere between 55 and 60 Since 2016 Sarawak even has been exporting percent of forest cover. That compares more electricity to West-Kalimantan.12 than favourably to the largest European In this economically diversified, culturally, countries France, Germany, and Italy (all demographically, politically and geographically around 30 percent), or places like the United complex environment, what can be done to Kingdom with only 12 percent. save the orang-utan? In addition, and contrary to popular belief, The WWF in its 2016 HoB13 Report suggests Malaysia has not turned most of its land area the following: into palm oil plantations. While the oil palm is cultivated on approximately 5.74 million ha, that is equivalent to only about 17% of its land area. 12 http://www.thestar.com.my/news/nation/2016/05/11/saraw ak-exporting-power-to-west-kalimantan/
13 http://d2ouvy59p0dg6k.cloudfront.net/downloads/fa__2016 _borneo_executive_summary_a4_webversion_020617.pdf 21
Worth remembering: European countries The following graph is enlightening in that burn their peat – at scale! context: France maintained in the year 2014 no less than 53% of its land area as This is not meant to contribute to the tit-for-tat agricultural area, the German number stands in the discussion over palm oil. Peat should be at 48%; the European Union as a whole at conserved wherever possible, in Europe, Asia, 44%. Far below those numbers are the two or elsewhere. largest palm oil producing countries Indonesia Nor is this the place to differentiate between (at 32%) and Malaysia, at only 23%. the carbon potential between tropical and template peat. In other words, while Malaysia uses most of its agricultural land for palm oil, the agricultural But to know that countries like Finland and sector as a whole uses up only about half the Sweden every year use millions of tonnes of land the countries of the EU use on average. peat in heating does put things into In light of the discussion of the importance of perspective. Other countries like Germany still the so-called agricultural ladder an economy use peat widely for gardening purposes, climbs in the course of development (see although alternatives exist. Section 2.1 above) it is interesting to see that 50 years ago the European countries maintained an agricultural to total land area Mechanized peat harvesting in East ratio three to five times that of Malaysia and Friesland, Germany Indonesia. And the current levels still are far higher than those of the Asian countries.
Therefore, it is fair to say that Indonesia and Malaysia have come a long way on the road to development, eradicating poverty and misery in their populations without putting as much strain on the environment through extensive agriculture.
1 The report “Fuel Peat Industry in the EU” The above observations are important to summarizes the situation as follows: understanding why palm oil producing nations feel patronized when being told to limit the “The total annual peat usage during the area they cultivate with a particular crop. It 2000´s has been 3,370 ktoe. The three largest amounts to denying them the right to avail users are Finland (59 % of total use), Ireland themselves of an engine of growth that Europe (29%) and Sweden (11%), corresponding to has used for centuries. 99% of the total use. Peat is used in central heating power plants (CH) (45% of the total This of course is not to say that the producing use), in condensing power generation (CP) countries can simply lean back and claim (38%), district heating (DH) (10%) and equal rights for all. Today´s world is not the residential heating (RH) (8%). The total same as 200 years ago, and different number of power plants is 125. The approaches to development are necessary. approximate number of people receiving heating energy from peat is 1.94 million.” Much of the nation’s lowland that is suitable for oil palm development has been exhausted. The metric toe means “ton of oil equivalent” The remaining areas for new plantings will be and as a unit of energy is defined as the in Sarawak. amount of energy released by burning one ton of crude oil. Thus, 3,370 kilo toe are equivalent to burning 3.3 million tons of fossil oil.
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Figure 19: Share of Agricultural Area in Land Area
Source: http://bit.ly/2iXK69I
The following assessment undeniably has The answer must be: develop, but in the most much truth in it: sustainable manner possible. Cultural, structural, and political hurdles to sustainable “While the conversion of PSFs (peat swamp development must be overcome, step by step. forest) has been portrayed as a developmental necessity, this article also outlines the Regarding peatland policies in Malaysia, this economic, social and environmental costs might mean for instance to tackle problems associated with this approach. Such costs associated with the decentralization of land include the short- and long-term impact of peat policy. fires and transboundary haze and associated health and income impacts to millions of “Originating from the constitution of 1960, but people both nationally and regionally. still in place today, land, forests, water and Increasingly, these costs also include losses other natural resources (primary sector) are predicted in yield and land area due to under state jurisdiction, while the then limited subsidence and associated flooding to vast tertiary sector (e.g. services, banks, tourism coastal areas of the region, and financial and also now oil) was and still is federally implications of future flood control investments controlled. Originally this arrangement meant (Hooijer et al., 2015). These, when combined that the then buoyant tin and rubber sectors with global costs from climate change, may provided state governments with substantial offset the short-term perceived benefits gained revenues. However, the decline of these from drainage-based agriculture.”14 industries means that in recent years, the federal revenues significantly exceed those of Nevertheless, things are complicated. If a the state (Memon, 2003). The conservation of region like Sarawak, faced with population lands for ecosystem services and conservation pressure, comparatively high rates of poverty raises no income, and as any environmental and limited land resources cannot use disaster (such as flooding) is covered by peatland for agriculture or infrastructure of any federal funds, there is little incentive for states kind, what is it to do? to maintain habitat or ecosystem service functionality. Thus, while at a federal level, policies such as environmentally sensitive areas (ESAs) within the Environmental Quality 14 Keep wetlands wet: the myth of sustainable development of tropical peatlands – implications for Act 1974 acknowledge the hydrological policies and management Stephanie Evers, Catherine M. importance of peatlands and their need for 1 Yule, Rory Padfield, Patrick O'Reilly, Helena Varkkey; km buffer zones, at a state level, policies are Global Change Biology 2017 Vol: 23 (2) :534-549. 23
often different (e.g. 100 m in Selangor Czech Republic, home to the April 4th EU State).”15 Parliament Resolution´s sponsor).
3.3 The predicament To get a grip on issues like these is the responsibility of Malaysia. The two sections above are intended to On the other hand, the responsibility of the EU illustrate that environmental policy indeed is a is to get the facts straight. messy business. This next graph shown in Figure 20 is as surprising as it is fascinating. It shows CO2 Data usually are difficult to collect. If you drill emissions or removals from total land use. down to their sources, most of the time they can be interpreted in different, if not opposed This is how the FAO describes the data: ways. Consequently, to derive sensible policy measures from them often is all but “Land Use Total contains all GHG emissions impossible. Select the wrong policy, and you and removals produced in the different Land are bound to cause some effect you never Use sub-domains, representing the three intended. And even if you decided wisely on IPCC Land Use categories: cropland, forest policy instruments, the facts on the ground can land, and grassland, collectively called lead to implementation and enforcement emissions/removals from the Forestry and problems that invalidate everything. Other Land Use (FOLU) sector. FOLU emissions consist of CO2 (carbon dioxide), Who is the worst offender when it comes to CH4 (methane) and N2O (nitrous oxide) deforestation? Looking at net forest conversion associated with land management activities. data from the FAO (see Figure 23 below), in CO2 emissions/removals are derived from 2014 it was Brazil. There, at 1.1 million estimated net carbon stock changes in above hectares net conversion was almost 60 and below-ground biomass pools of forest percent more than in Indonesia. land, including forest land converted to other land uses.” By comparison, Malaysia at 54 thousand hectares pales and finds itself more in a In the debate on climate change through GHG league with France (24 thousand ha). emissions, it is remarkable to see that in 2014 France, Germany, the EU, and Malaysia all And what about GHG emissions? When palm removed CO2 from net carbon stock, while oil is blamed for emissions from land Indonesia emitted almost double the amount conversions, difficult questions emerge: is the compared to 15 years ago. oil palm planted on mineral soils, or on peatland? If the former is the case, what was While the data would be more meaningful on a there before? In case of the latter, what kind of per capita basis, it is still surprising to see that peat is it? And how deep? Malaysia´s net removals (minus 133 thousand gigagrams) are 1.7 times higher than those of Moreover, what about carbon sequestration of France (minus 79 thousand gigagrams). And the oil palm? Do green critics of palm oil take more than three and a half times the removals note that organizations like the World attributed to Germany (minus 37 thousand Agroforestry Centre, one of 15 members that gigagrams). make up the CIGAR (formerly the Consultative Group for International Agricultural Research) Whatever concrete policy conclusion such data network says that the oil palm can help to can induce, it can hardly be to focus on sequester more carbon?16 Malaysia for the biggest win.
Even when CO2 emissions per capita are considered, it turns out that – although they have grown – Malaysia´s emissions remain clearly lower than those of Germany, for example (or, for that matter, those of the 16 http://blog.worldagroforestry.org/index.php/2015/02/13/oil- palm-can-help-to-sequester-more-carbon/ 15 Op.cit., pp. 543 and 544 24
Figure 20: CO2 emissions/removals from total land use – gigagrams -
Source: FAOSTAT
Figure 21: CO2 emissions per capita
Source : http://bit.ly/2fpb7Ro
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Figure 22: Net Forest Conversion in `000 hectares
Source: FAOSTAT same boat (see Section 5.1 below). When the British weekly The Economist writes Consumer countries should not forget that it is that governments do not know the best way to their consumption that brings business save the Amazon rainforest17, the reason may opportunities to the producers. And the simply be that there is no best way. As the producer countries must without reserve article explains, even paying crop producers accept their responsibility to go about that to let their land sit idle can set the wrong business in the most sustainable manner incentives and lead to outcomes worse than possible. the status quo. Mutual trust, open communication and pulling Who is good, who is bad? And where does it together is called for. First and foremost, get ugly? The answers to these questions in policy actions and legal measures must be most cases are not as obvious as they seem SMART. at first. Life on earth by definition means consuming natural resources. And the more The EU Resolution too often fails this test. affluent a society is, the more resources it That is unfortunate and needs to be corrected. consumes. That is the reason why high- income countries by most measures are guilty PART II: REALITY CHECK of more environmental sins then nations that insist on the “right to development”. It seems understandable that the latter often feel that 4 Dissecting the European Parliament´s the former are sitting on a high moral horse Resolution when it comes to well-meaning advice. 4.1 Explaining Structure and Function
All this sounds like a bleak message. Does it The European Parliament (EP) is the all mean that the only option left is to give up legislative branch of the European Union. In it, and let everything run its course? Certainly 750 Members of Parliament (MPs) work in not. preparation for plenary sessions in 24 committees. The EP is the only EU body that But environmental activism and policy action is directly elected by the citizens of the is a slippery slope. And no nation or region Union's member states. Together with the can go it alone. North and South, East and European Council, it is one of two law making West must realize that we are all sitting in the bodies.
However, only the European Commission 17 https://www.economist.com/blogs/freeexchange/2015/11/ (COM) composed of 28 commissioners, one economics-deforestation 26
for each country, has the right to legal In her introduction of the Resolution, its initiative, i.e., to send legislative proposals to sponsor (“rapporteur”) Kateřina Konečná (MP Parliament and Council for their consideration. for the Czech Republic) says that she is often asked why she takes such an interest in palm Parliament's Committee on the Environment, oil as opposed to other vegetable oils, for Public Health and Food Safety (ENVI) in instance, “soya and avocado.” She replies accordance with Rule 52 of the parliamentary that the topic of palm oil got under her skin in rules of procedure18 in 2016 tabled a so-called late 2015 ´own-initiative report´. With this motion for “when we had these fires in Indonesia. The Resolution, the ENVI expressed a political rainforests were burning; the environmental desire to act on the topic of the Resolution: impact was devastating. Nobody was doing Palm oil and deforestation of rainforests.19 anything about it.”
In the April 2017 plenary session of the EP, This is a first indication of emotion over fact. this Resolution was adopted by the overwhelming majority of 640 votes to 18, with In his contribution the responsible 28 abstentions. It is in no way legally binding. Commissioner, Karmenu Vella (Malta, Instead, it calls on the COM to exercise its Commissioner for Environment, Maritime right of initiative. Affairs and Fisheries) states:
On September 07, 2017 the COM responded “Addressing illegal logging is not sufficient on to the Resolution (please turn to Section 4.3.1 its own. The main drivers of deforestation are for more details). related to a broad range of societal factors. In that context, we also must look, for Following the formal conventions for this type example, at our own consumption and of text, the Resolution is structured as follows: agricultural commodities that are often • 19 “citations” representing the legal basis associated with deforestation, such as and preparatory EU work the Resolution soybean and palm oil here in the EU. We are rests on of course aware of the degree of public • 27 “recitals” giving the EP´s reasons for concern at the environmental impacts of bringing forth the Resolution palm oil production, such as deforestation • 25 “general considerations” providing and biodiversity loss, greenhouse gas further background on palm oil´s role in emissions and indigenous rights issues, But deforestation as perceived by the EP we are also aware of the opportunities that it • 59 “recommendations” (numerals 26 to presents, for instance contributing to lifting 84) detailing the measures the EP is thousands of people out of poverty in proposing producing countries.
The debate in plenary20 one day before the The Commission believes that we need to vote on the Resolution sheds some interesting address the issue of deforestation by looking light on the discussions surrounding palm oil at a much broader range of issues and and deforestation. drivers. As a follow-up to the 7th EAP, the Commission launched this last year in 2016 a study to consider the feasibility of options to step up EU action to combat deforestation 18 and forest degradation. The results of this http://www.europarl.europa.eu/sides/getDoc.do?pubRef=- 21 //EP//TEXT+RULES-EP+20170116+RULE- report should be available by mid-2017 . 052+DOC+XML+V0//EN&language=EN&navigationBar=Y The Commission believes also that it is ES essential to cooperate and to support the
19 see the official procedure file here: http://www.europarl.europa.eu/oeil/popups/ficheprocedure 21 As of end of November 2017, a draft for review version .do?lang=en&reference=2016/2222(INI) of this study, entitled “Study on the environmental impact of palm oil consumption and on existing sustainability 20 standards” was available, a validation workshop had http://www.europarl.europa.eu/sides/getDoc.do?pubRef=- taken place and the final report is expected to be //EP//TEXT+CRE+20170403+ITEM- published in 2018. 019+DOC+XML+V0//EN&language=EN 27
efforts of producer countries to minimise "More generally on policy coherence, the deforestation and other negative impacts that Commission is committed to […]: studying the palm oil cultivation can have in order to impact of EU consumption of imported food achieve sustainable production of this and non-food commodities (e.g. meat, soy commodity.” beans, palm oil, metal ores) that are likely to contribute to deforestation. This could lead to considering policy options to reduce this 4.2 Fact-checking the central impact". assumptions
From the standpoint of objective (scientific) All the addressees of the Communication argument, the Resolution is highly “expressed strong support for such a study.” problematic. Frequently, assumptions or Note how already in this first of two seminal assertions are just plain wrong. In some documents palm oil was not singled out as a cases, the sources used are misread or driver of deforestation but considered one of misinterpreted. In others, the sources the several commodities “likely” to contribute themselves are wrong. Sometimes it is to deforestation. impossible to trace the origin of a statement, much less to validate it. The result of the events set in motion through Some examples follow. the Communication eventually was the comprehensive study on „The Impact of EU 4.2.1. Deforestation Consumption on Deforestation “(2013-063).24 4.2.1.1. Background This report forms the basis of further actions taken by either COM or EP and together with To better understand how the Resolution the Communication itself, therefore, must be came into being it is helpful to quickly recap considered the foundation of the EU debate the genesis of the thinking of EU institutions on palm oil and deforestation. on the issue of deforestation. Both documents, therefore, warrant a closer Sometime during the first decade of the inspection of their basic premises and line of 2000s, the issue came to the fore and began argument. Unfortunately, it turns out that there to be analysed through official EU channels. is ample ground to criticize the reasoning of both. As a first response to the problem of global deforestation, the COM in October 2008 came First of all, the concept of deforestation is out with an official Communication22 directed highly complex and the EU analysis of the towards the European Parliament, the issue does not do justice to this complexity. It Council, the European Economic and Social is important to realize that reliable figures on Committee, and the Committee of the the scale of global deforestation in a given Regions. It was entitled: "Addressing the period of time simply do not exist. challenges of deforestation and forest There are numerous reasons for this, starting degradation to tackle climate change and with the problem that there is no universally biodiversity loss" (COM, 2008, 0645)23 and accepted definition of what actually expressed the intention to further explore the constitutes a forest. links between deforestation and EU consumption patterns. To quote the The Resolution touches on this in Communication: Recommendation No. 62 which reads:
“Urges the Member States and the 22 A Commission Communication is a policy document Commission to establish a definition of forest with no mandatory authority. The Commission takes the that includes biological, social and cultural initiative of publishing a Communication when it wishes to set out its own thinking on a topical issue. A diversity, so as to prevent land grabbing and Communication has no legal effect. See also: http://ec.europa.eu/civiljustice/glossary/glossary_en.htm# Communication 24 23 http://eur-lex.europa.eu/legal- http://ec.europa.eu/environment/forests/pdf/1.%20Report content/EN/TXT/?uri=celex%3A52008DC0645 %20analysis%20of%20impact.pdf 28
the destruction of tropical forests resulting A prime example is a false statement in the from vast palm oil monoculture, as this would 2008 Communication (“Addressing the jeopardise EU climate change commitments; challenges…”) that is hard to explain. stresses the need to give priority to native species, thereby protecting ecosystems, The document's summary on page 3 plainly habitats and local communities;” states: “According to FAO estimates some 13 million hectares of forests are lost every year.” On the “definition of forest”, the Encyclopedia of Environment and Society25 has this to say: Apart from the fact that a timeframe is missing to make this statement at all meaningful “Forests are one of the dominant forms of (every year for the past how many years? land cover on earth, and forested landscapes Every year from here to eternity?), the real are central in constituting human environment numbers the FAO uses are completely relationships. Human relations with forests are different! also highly specific, complex, and dynamic, featuring considerable historic and When consulting the FAO´s Global Forest geographical variation, making a universal Resources Assessment 201528 the following definition of what actually constitutes a forest figures emerge: difficult.” “There was a net loss of some 129 million ha Nevertheless, the Food and Agriculture of forest between 1990 and 2015, about the Organization of the United Nations (FAO) size of South Africa, representing an annual does attempt to define and track forest cover. net loss rate of 0.13 percent. Yet this should In the definition used by FAO forests are: be understood in context: The rate of annual net loss of forest has slowed from 0.18 “Land spanning more than 0.5 hectares with percent in the 1990s to 0.08 percent over the trees higher than 5 meters a canopy cover of last five-year period. Between 2010 and 2015 more than 10 percent, or trees able to reach there was an annual loss of 7.6 million ha and these thresholds in situ.26” an annual gain of 4.3 million ha per year, resulting in a net annual decrease in forest However, as the Encyclopaedia of area of 3.3 million ha.” Environment and Society cautions: That leaves us with 13 Mha versus 3.3 million! “Even in this basic definition, there is evidence How is such a discrepancy possible? Is it the of some subjectivity and convention, as these difference between absolute and net standards would seemingly exclude much of (factoring in afforestation) loss? Or is it that the far northern boreal forest.27” the Commission continues working with data that is just too old to still be relevant? Of course, these conceptual problems go far beyond academic discourse. They are directly Be that as it may, even the 3.3 million figure relevant in designing policy measures that the FAO uses would be useless as a basis for have very real and practical effects. policy-making as it is a global aggregate that clouds large geographical differences (see 4.2.1.2. Criticism further below). An illustration of this problem is found in Citations No. 3 and 4 of the Resolution that In this context, one more thing must be mentions both, the 2008 Commission mentioned. According to the most recent FAO Communication and the 2013 Impact Study. Global Forest Resources Assessment 2015, There are numerous issues. the UN organization sounds anything but alarmist over the current state of forests globally. 25 Robbins, P. (Ed),2007, SAGE Publications, p. 698 Page 16 of the Assessment states: 26 FAO Forest Resource Assessment 2015, Terms and Definitions, p.3; http://www.fao.org/docrep/017/ap862e/ap862e00.pdf 27 Robbins, ibid. 28 http://www.fao.org/3/a-i4793e.pdf 29
“Over the past 25 years the world’s forest importance of a) soya and b) South America area has declined from 4.1 billion ha to just (in particular Brazil) when it comes to tropical under 4 billion ha, a decrease of 3.1 percent. deforestation. Here are a few of those The rate of global forest area net loss has occasions: slowed by more than 50 percent between the periods 1990–2000 and 2010–2015 (Table 1). • p.21: points towards animal grazing This is a result of a combination of reduced pastures as having the biggest impact forest area loss in some countries and on deforestation before crops as a increased gains in others. It appears that net group. Within that group, it identifies forest area change has stabilized over the palm oil as being only the third largest past decade.” contributor to deforestation (at 8%), after soybeans (19%) and even maize One may, of course, argue that a positive (11%). balance on a global scale should not be used • p.22: “The regions that exported most to be apologetic over the loss of forest in the deforestation embodied in crop tropics. But the FAO assessment still helps to products were South America (64%), put things into perspective. Southeast Asia (23%) and Sub- Saharan Africa (12%).” In a first conclusion, it seems fair to say that • p.24: “This embodied deforestation the COM in its original assessment of the was mainly associated with two crops problem of deforestation (using the 2008 and their derived secondary crop Communication) started from utterly wrong products, namely soybean cake and premises! soybeans (together 82%) and oil palm (17%).” But what about the continuation of the work, • p.31: a chart shows soy products to the impact study of 2013? be responsible for 60% of embodied Unfortunately, this document as well raises deforestation, palm and palm kernel serious concerns over the assumptions it oil only for 12%. contains. To begin with, it repeats the wrong • p.83: “Within the group of oil crops, figures on global deforestation discussed two commodities are of paramount above. importance, soybeans/soybean cake and palm oil. Soybeans and soybean While the EU study (p. iv) uses 239 million products account for 80% (4.45 Mha) hectares of cleared forests between 1990 and of deforestation embodied in oil crops 2008 quoting FAO statistics, the FAO itself, in (and derived products) imported into what it calls it “most comprehensive forest EU27 countries. Nearly all soybean review to date”, (The Global Forest Resources deforestation is imported from South Assessment 2015) puts the number at a America (73% from Brazil, 19% from whopping 110 Mha lower at 129 million – for a Argentina). Palm oil accounts for period roughly seven years longer than the about 16% of the EU27 associated one considered for the EU study! deforestation (0.9 Mha). The main But leaving aside the apparent difficulties of source of deforestation embodied in knowing – albeit only as an approximation – imported palm oil are countries in the amount of deforestation that did take Southeast Asia, notably Indonesia.” place, the Impact Study – confusingly - on numerous occasions cites the overwhelming
30
Figure 23: Deforestation embodied in agricultural commodities, 1990 - 2008
Figure 24: Deforestation embodied in EU27 net imports of crop products, 1990 – 2008
• p.138: “When allocating deforestation • p.140: “For the consumption of goods to the sector and region where the and services in the EU27 leading to agricultural and forestry commodities deforestation, 48% of the deforestation were sourced, we found that the EU27 occurred in Brazil, 9% in Argentina, sources agricultural products from a 6% in Nigeria, 5% in Indonesia, 5% in variety of different countries and the “Rest of Western Africa”, and 5% sectors with an important country in Paraguay.” being Brazil, representing about 40% of deforestation.” 31
Naturally, this crystal-clear focus of the Impact Nature of Illegality in Forest Conversion for Study on soya and South America begs the Agriculture and Timber Plantations”30 question why the EU does not direct its efforts and scarce resources toward tackling the The Resolution relies in several more issues of deforestation there? After all, the EP instances on the findings of Forest Trend, thus has not adopted a resolution on soya and the displaying a worrisome tendency to draw on deforestation of rainforests. sloppy or wrong research, accepting third-party results without questioning them and However, in all fairness, it should be added continuing to use that kind of research as a that in July 2017 several EU Ministers of basis for policy conclusions. Agriculture signed the so-called Soya Declaration29. However, this move seems A good example is when Forest Trends quotes primarily motivated by a desire of particularly Hosonuma et.al31.: Eastern European member states to support their own agricultural sectors than by “Agriculture alone accounts for over 70 environmental concerns. As such it may be at percent of all deforestation across tropical and odds with the reform of the Common sub-tropical countries.” (p. iii). Agricultural Policy (CAP) the EU is planning. In fact, Hosonuma et al. do not make that But even so, given the findings in the statement anywhere. Instead – and it is worth comprehensive study (it is a tome of more than quoting this at length – on page two of their 350 pages) the EU itself carried out on drivers study they say: of deforestation, it is inexplicable that only “Despite this relevance, quantitative national- palm oil – clearly not the main culprit by any level information on drivers and activities stretch of the imagination – would end up causing deforestation and forest degradation being the primary target of the only EP are widely unknown. For example, the resolution on the subject to date. question of how much or what fraction of deforestation (emissions) in a country is This is all the more disconcerting when caused by a specific driver (i.e. expansion of realizing that much of the thinking of the EP on agriculture versus infrastructure) cannot be palm is (ill) informed by a seriously flawed answered for many developing countries. report published by Forest Trends, an NGO. Scientific research in the past (Geist and Lambin 2001) has mainly been based on Recital E of the Resolution is where this local-scale studies or regional to global problem comes to light. The recital states: assessments (De Fries et al 2010, Boucher et “whereas nearly half (49 %) of all recent al 2011). They have highlighted the tropical deforestation is the result of illegal importance of differentiating between clearing for commercial agriculture and proximate or direct drivers and underlying or this destruction is driven by overseas indirect causes. demand for agricultural commodities, including palm oil, beef, soy, and wood Proximate or direct drivers of deforestation products; whereas it is estimated that the are human activities that directly affect the illegal conversion of tropical forests for the loss of forests and thus constitute proximate purposes of commercial agriculture sources of change, that result from complex produces 1,47 gigatonnes of carbon each interactions of underlying forces in social, year – the equivalent of 25 % of the EU’s political, economic, technological and cultural annual fossil fuel-based emissions.” domains (Geist and Lambin 2001). Direct drivers can be grouped into different As a source for the above the Resolution text categories such as agriculture expansion, names this study: “Consumer Goods and expansion of infrastructure and wood Deforestation: An Analysis of the Extent and
30 http://www.forest- trends.org/documents/files/doc_4718.pdf
29 https://www.neweurope.eu/article/13-eu-member-states- 31 http://iopscience.iop.org/article/10.1088/1748- sign-european-soya-declaration/ 9326/7/4/044009/pdf 32
extraction (Geist and Lambin 2001). Although show up on the satellite image as agricultural expansion has been determined deforestation. as the key driver of deforestation in the tropics (Gibbs et al. 2010), drivers vary regionally and In sum, it can be said that one of the central change over time (Rudel et al. 2009, Boucher affirmations the Resolution rests on draws on et al. 2011).” the highly problematic Forest Trends report, which is ripe with errors and unscientific The only reference to “over 70 percent” is operations, leading to meaningless deductions. found on page six of the Hosonuma et al. study where it says that “Timber extraction and But even the report itself notes some caveats logging account for more than 70% of total regarding the conclusions drawn that should degradation in Latin America and Asia.” have indicated to the EP's Committees that this report cannot be used as a serious basis Furthermore, Gibbs et al. (2010) quoted above for policymaking. examines data from the 1980s and 90s only! This is a telling example of the way fallacious This unfortunate use of using wrong or statements have crept into the Resolution. The unverifiable data as a basis for the conclusions process looks something like this: contained in the Resolution, unfortunately climaxes in General Consideration No. 4 which • the EP Committees working on the text reads: of the motion for Resolution in 2016 “Notes that 73 % of global deforestation arises draw on the Forest Trend report from the clearing of land for agricultural published in September of 2014. commodities, with 40 % of global • That report is largely based on the deforestation caused by conversion to large- finding by Hosonuma et al. which were scale monoculture oil palm plantations.” published in October 2012. • Hosonuma et al. for their above This 40% of global deforestation caused by statement on agriculture “as the key palm oil is, of course, the main argument the driver of deforestation in the tropics” entire Resolution rests on. One could even say resort to Gibbs et al. who in 2010 that it is the very heart and soul of the published an analysis using data that Resolution. However, as hard as it may be to by now is between 17 and no less than believe, it is totally false. 37 years old! What is going on here? General Consideration This cannot possibly be an acceptable No. 4 draws on the 2013 report mentioned basis for policy making! earlier, so let´s take a closer look. But there are other issues with the Forest Trend study like a questionable methodology First of all, it is entirely unclear, where the 73% used or the lumping together of national data come from. The figure is mentioned on pages to arrive at estimations at a global aggregate. 68 and 107 of the report but in completely Another difficulty is the reliance on satellite different contexts. Without going into details imagery32 which only measures tree cover and here, even excruciating examination of the therefore does not distinguish between natural report does not reveal how the authors of the forests and plantation forests. However, Resolution arrived at the statement that 73 % plantation trees are eventually cut down and of global deforestation arises from the clearing take time to regrow. An oil palm plantation in of land for agricultural commodities. the process of being replanted would thus And mind you, the report is not talking about deforestation somehow observed or measured but embodied deforestation instead. On page 32 Mainly drawing on work done by Hansen, M.C., P.V. Potapov, R. Moore, M. Hancher, S.A. Turubanova, A. IV the following is offered as an explanation: Tyukavina, D. Thau, S.V. Stehman, S.J. Goetz, T.R. “The concept of `embodied deforestation´ is Loveland, A. Kommareddy, A. Egorov, L. Chini, C.O. used for linking deforestation to consumption. Justice, and J.R.G. Townshend. 2013. “High-Resolution It refers to the deforestation embodied (as an Global Maps of 21st-Century Forest Cover Change.” Science 342 (6160): 850-853. doi: externality) in a produced, traded, or 10.1126/science.1244693. consumed product, good, commodity or 33
service. It is the deforestation associated with this junction that in an article published on The the production of a good, commodity or Conversation33 (a network of authors from the service.” academic and research community – including the Universities of Aberdeen, Birmingham, How exactly this concept works remains Leeds, Liverpool, Glasgow, Trinity College and somewhat of a mystery. It uses what is called so forth - who consider “academic rigor” their LANDFLOW modelling. However, searching duty) the authors conclude: for help in the report´s Section 1.2. on “The “But exploring the source of this data shows complexity of the task of linking consumption that palm oil is actually responsible for only to deforestation” (page 6), or Section 2.2 2.3% of the world’s deforestation.” “Summary of the methodology: apparent and final consumption” (page 17), leaves the Even if you concede that all data having to do reader flabbergasted. Both passages are most with global deforestation is fraught with confusing and full of assumptions and ambiguities and uncertainties, the difference references to external sources as to make it all between 40% and 2.3% is nothing short of but impossible to drill down to the origins of the mindboggling. Finding an explanation for why concepts used. the core assumption of the EP Resolution is so blatantly false presents a real challenge.
EU Precautionary Principle In all fairness, it should be added that it is no secret that today´s complexities present MPs The Principle is laid out in Article 191 of the the world over with an information overload Treaty on the Functioning of the European that is hard to handle. The COM report, Union: running over 348 pages, and incorporating “It aims at ensuring a higher level of models like LANDFLOW that alone would take environmental protection through preventative the beginner days to understand is especially decision-taking in the case of risk. daunting. It may be invoked when a phenomenon, product or process may have a dangerous 4.2.2. Biofuels effect, identified by a scientific and objective 4.2.2.1. Background evaluation, if this evaluation does not allow the Around 40% of the palm oil imported into the risk to be determined with sufficient certainty.” EU is used to produce biodiesel. The
environmental debate surrounding biodiesel Source : http://bit.ly/2fDDA9Q from feedstock is at least as complex as that
on deforestation.
But what about the assertion that 40 % of A quick recap of the EU´s position: in its global deforestation is caused by conversion to Renewable Energy Directive (RED) of 2009 large-scale monoculture oil palm plantations? the EU set the goal of meeting at least 20 Again, this figure is nowhere to be found. percent of its total energy needs through
renewable energy sources (RES) by the year The 40% mentioned in the report (p. 56) 2020. evidently seems to refer to Indonesia and is understood to be a proportion of that country´s Total energy needs fall into three sub-sectors: crop sector representing palm oil. The relevant electricity (RES-E), heating and cooling (RES- paragraph reads: H&C) and transport (RES-T). RED calls for a “It was estimated that 40% of the minimum 10% threshold of RES in transport deforestation attributed to the crop sector is fuels. associated directly or indirectly with oil palm production, followed by rubber and paddy rice In 2014, the 20% goal was adjusted to at least (both 11%), and cocoa beans (9%). Other 27% by 2030. To meet that goal certain RED important crops include maize, coconuts, coffee, cashew nuts, and bananas.”
33 http://theconversation.com/no-palm-oil-is-not- Again, here is not the place to drill down to the responsible-for-40-of-global-deforestation-78482 sources of all this confusion. Suffice it to say at 34
adjustments are necessary, and the COM in Nevertheless, the insights of the study November 2016 published a proposal for a “Recalculating Default Values for Palm Oil”37, Revised Renewable Energy Directive (“RED published jointly by the respected Friedrich recast34”). Schiller University and the Max Planck Institute of Economics in Jena shall be quoted here Regarding biofuels from feedstock (e.g., from because if its high relevance: palm oil), the decisive issue is the impact of “Given the remarkable difference between the the so-called indirect land use change (iLUC). calculation of carbon reduction performance This acronym describes a concept to assess of palm oil based biofuel by the EU and a the additional carbon emissions through range of scientific studies which we expansion of crop cultivation to meet the documented in an earlier paper (Pehnelt and demand for biofuels from RES. Vietze 2009), we are re-calculating GHG emissions saving potentials for palm oil To cut a long story short, in 2012 the EU, biodiesel in order to further assess the carbon differentiating between so-called conventional footprint of palm oil to overcome the lack of biofuels (mostly from vegetable oils derived transparency in existing publications on the from rapeseed or the oil palm) and advanced issue and EU regulations governing the biofuels (basically liquids processed from biofuel feed-stocks. agricultural or forestry residues like straw or sawdust) published an iLUC Impact Our results indicate default values for the Assessment.35 The assessment concluded that GHG emission savings potential of palm oil the iLUC impact (i.e., the carbon emissions) of biodiesel not only way beyond the 19 percent conventional biofuels are considerably worse default value published in RED but also than that of advanced biofuels. beyond the 35 percent threshold. Our findings conclude that the more accurate default value Given the difficulties to scientifically prove the for palm oil feedstock for electricity generation results of the assessment, the COM decided to to be 52%, and for transportation biodiesel resort to the precautionary principle and set a between 38.5% and 41%, depending on the limit of 7% for the contribution of conventional fossil fuel comparator. Our results confirm the biofuels to the RES-T targets (to be further findings by other studies and challenge the reduced to 3.8% by 2030). official default values published in RED.”
This target should be viewed in connection However, be that as it may, the reality is that with the broader goal set out in the COM July for the time being the iLUC song is sung. 2016 Strategy on Low Emission Mobility: Therefore, the November 2016 RED-recast “Speeding up the deployment of low-emission states: alternative energy for transport, such as “3.1: In particular, the regulatory uncertainty advanced biofuels, electricity, hydrogen and caused by the long lead political discussion on renewable synthetic fuels and removing how to address the risk of Indirect Land Use obstacles to the electrification of transport.36” Change (ILUC) associated to food based As mentioned earlier, a fierce debate (not least biofuels has had a negative impact in the fuelled by conventional biofuels producers in deployment of renewables in the transport Europe) over the validity of the iLUC sector.” assessment has been going back and forth for years, and the EU appears to have made up Then, under 3.4 when the options to increase its mind on the issue. low-carbon and renewable energy in the transport sector are considered, Option 2 is identified as the preferable choice: “EU incorporation obligation for advanced renewable transport fuels (including advanced 34 http://eur-lex.europa.eu/legal- content/EN/TXT/?uri=CELEX:52016PC0767 biofuels), alongside a reduction of food-based 35 https://ec.europa.eu/energy/sites/ener/files/swd_2012_034 4_ia_resume_en.pdf 36 37 http://zs.thulb.uni- https://ec.europa.eu/transport/themes/strategies/news/201 jena.de/servlets/MCRFileNodeServlet/jportal_derivate_002 6-07-20-decarbonisation_en 11246/wp_2011_037.pdf; pp. 1 and 2 35
biofuels with a range of variants covering the This part of the Resolution quotes the so- speed and extent of reduction;” called Globiom Report38 as a source. That report, published in 2015 under the title: “The A progressive reduction of food based land use change impact of biofuels consumed biofuels and their replacement by more in the EU” informs much of the thinking of the advanced biofuels will realise the potential for Resolution on the matter of palm oil and decarbonising the transport sector. However, deforestation and shall, therefore, warrant a in determining the progression of the closer look. reduction of conventional biofuels, it is important not to retrospectively undermine the The name Globiom derives from Global business models incentivised by the existing Biosphere Management Model developed by directive. IIASA, the International Institute for Applied Systems Analysis. That, incidentally is the Therefore, the proposed trajectory same research institution that developed the progressively reducing the share of concept of “embodied deforestation.” conventional biofuels aims at avoiding stranded assets and unintended job losses, The impact of indirect land use change that whilst taking into account the important past comes out of the Globiom Report is the nail in investments realised so far, and is also in line the coffin of palm as biofuel as far as the EP is with a realistic rollout of advanced biofuels in concerned. And it is about peatland, not the market. The exact path of the gradual deforestation per se. reduction trajectory set out in this Proposal reflects an informed political assessment of On page xiii the report states: what would constitute a balanced approach to “If peatland drainage in Indonesia and stability of investments and the reduction of Malaysia were stopped, the negative greenhouse gas emissions in transport.” greenhouse gas impact of land use change would reduce dramatically. This requires an The detailed trajectory is found in Annex X to effort either from the Indonesian and the RED-recast: Malaysian governments, all palm oil using sectors (food, personal care products, Part A: Maximum contribution from liquid biofuels, biofuel) or, best of all, a combination of produced from food or feed crops to the EU both.” Renewable Energy target as referred to in Article 7, paragraph 1 Another point is that Resolution Recital W Calendar Year Maximum Share above acknowledges that the numbers 2021 7.0% mentioned are estimates. The Globiom Report 2022 6.7% itself on page (iv) goes quite a bit further in 2023 6.4% cautioning the reader by saying that: 2024 6.1% “ILUC cannot be observed or measured in 2025 5.8% reality, because it is entangled with a large 2026 5.4% number of other changes in agricultural 2027 5.0% markets at both global and local levels. The 2028 4.6% effect can only be estimated through the use 2029 4.2% 2030 3.8% of models. The current study is part of a continuous effort to improve the understanding and representation of ILUC.” 4.2.2.2. Criticism Against this background, Biodiesel and ILUC It seems clear that responsible policymaking has found its way into the Resolution. Recital cannot draw numbers from such a report and W of the Resolution states: use them as a decision basis. “whereas it is estimated that by 2020 the amount of land that will be converted globally to produce palm oil for biodiesel will be 1 Mha (million hectares), of which 0,57 Mha will be converted from Southeast Asian primary 38 https://ec.europa.eu/energy/sites/ener/files/documents/Fin forests.” al%20Report_GLOBIOM_publication.pdf 36
4.2.3. Biodiversity Diversity (CBD) is in place. It comprises five Matters of biodiversity are for example dealt goals and 17 targets to be met by 2025.40 with in Citations 11 – 16 of the Resolution. Malaysia is one of the world’s megadiverse Just to mention two examples take the CFSMP countries. It is also ranked 12th in the world, (Central Forest Spine Master Plan) on according to the National Biodiversity Index, Peninsular Malaysia. The central forest spine which is based on estimates of country is composed of four main forest complexes, richness and endemism in four terrestrial and CFSPM incorporates rehabilitation as well vertebrate classes and vascular plants. as conservation measures for these complexes. Likewise, the National Tiger The Convention on Biological Diversity (CBD) Conservation Action Plan (NTCAP) aims to Malaysia is Party since 1994 by ratification specifically to conserve the national emblem of has this to say: 39 Malaysia, the Malayan tiger.41 “Malaysia has undergone rapid economic development since independence which is 4.2.4. Future demand for palm oil attributed to the utilization of the country’s rich Recital N of the Resolution deals with natural resources and development of human consumption patterns: capital. Based on 2012 statistics, “whereas demand for vegetable oils in general approximately 60% of the country’s total land is set to increase, while demand for palm oil area is still forested, including permanent will, according to estimates, double by 2050; reserved forest (PRF), state land forests, whereas, since the 1970s, 90 % of the growth national parks, and wildlife and bird in palm oil production has been concentrated sanctuaries. in Indonesia and Malaysia; whereas, moreover, oil palm cultivation is also taking off This is in line with Malaysia’s commitment to in other Asian countries, as well as in Africa maintain at least 50% of forest and tree cover and Latin America, where new plantations are in perpetuity, as pledged at the 1992 Rio constantly being established and existing Earth Summit. In addition, a total of 10.6% of ones expanded, a state of affairs that will lead Malaysia’s land area has been designated as to further damage to the environment; notes, terrestrial protected areas. The remaining land however, that replacing palm oil with other uses comprise agricultural crops, rubber vegetable oils would create a need for more plantations, oil palm plantations, urban and land for cultivation;” other uses. Malaysia has an estimated 15,000 species of While, unfortunately, also in this case the vascular plants, 306 species of mammals, 742 Resolution does not reference its sources, the species of birds, 242 species of amphibians, estimate of a doubling of palm oil consumption 567 species of reptiles, over 449 species of over the next 30 years seems like a stretch. freshwater fish, over 500 species of marine However, the demand for palm oil will grow fish and more than 150,000 species of and that in no small measure has to do with invertebrates.” nutrition. On a planet with a growing population, where under and malnourishment Thus, when the Resolution in Recital Y implies still are sizable problems, palm oil used as that natural habitats as a whole are being cooking oil and in other food applications is in destroyed this notion must be rejected in the fact a source of hope for many. case of Malaysia. The FAO, in a recent report entitled World A National Policy on Biodiversity for the period Agriculture Towards 2030 – 205042 observes: 2016 – 2025 to meet the obligations under the United Nations Convention on Biological 40 http://www.nre.gov.my/ms- my/PustakaMedia/Penerbitan/National%20Policy%20on% 20biological%20Diversity%202016-2025%20Brochure.pdf 41 http://www.my.undp.org/content/malaysia/en/home/operati ons/projects/environment_and_energy/improving- 39 connectivity-in-the-central-forest-spine--cfs--landsca.html https://www.cbd.int/countries/profile/default.shtml?country= my#facts 42 http://www.fao.org/docrep/016/ap106e/ap106e.pdf 37
“As noted, the growth of food demand in the EU has some environmental homework to do developing countries was a major driving force within its own confines. behind the rapid growth of the oil crops sector in the historical period. The most populous Regarding the UN SDG 12: “Ensure countries, China and India, played a major role sustainable consumption and production in these developments.” patterns”, the UN has this to say:43
The fact that there is an obligation merely on ENERGY nutritional grounds to meet future demand again moves the superior efficiency of the oil Despite technological advances that have palm crop into focus. The Resolution is correct promoted energy efficiency gains, energy use in reminding us that “replacing palm oil with in OECD countries will continue to grow other vegetable oils would create a need for another 35 percent by 2020. Commercial and more land cultivation.” residential energy use is the second most rapidly growing area of global energy use after In General Consideration No. 6 the Resolution transport. moves this point even further when it: “Observes that other plant-based oils produced In 2002 the motor vehicle stock in OECD from soybeans, rapeseed and other crops countries was 550 million vehicles (75 percent have a much higher environmental footprint of which were personal cars). A 32 percent and require much more extensive land use increase in vehicle ownership is expected by than palm oil; notes that other oil crops 2020. At the same time, motor vehicle typically entail a more intensive use of kilometres are projected to increase by 40 pesticides and fertiliser;” percent and global air travel is projected to triple in the same period. It is remarkable how inconsistent and contradictory the Resolution´s treatment of this FOOD insight is overall. While substantial environmental impacts from It should also be pointed out that as production food occur in the production phase increases in other places of the world (in (agriculture, food processing), households particular in the equatorial regions of the influence these impacts through their dietary African continent where governance issues are choices and habits. This consequently affects of a much higher concern than they are in the the environment through food-related energy big producing nations Malaysia and indeed consumption and waste generation.” Indonesia) those will require the heightened attention of the world community. It fits into the picture that obesity rates over the past few decades have multiplied, mainly in In that regard, it is reasonable to expect that the industrialized high-income countries. This future African, and to some degree also Latin scarcely has much to do with responsible American producing nations can learn and consumption patterns. benefit from the experiences gained in Southeast Asia on the way to incorporating Another illustration of this is the status quo with sustainable palm oil into the global supply regard to SDG 13: “Take urgent action to chain. combat climate change and its impacts” and SDG 15: “Sustainably manage forests, combat 4.2.5. Sustainable Development desertification, halt and reverse land The Resolution speaks about sustainable degradation, halt biodiversity loss”. development and best practices (see for instance Recitals B and C). It must be said that It is Malaysia according to the UN Sustainable 44 when the EU's worldwide ambitions in that Development Knowledge Platform that: regard are mentioned, the reader at times has to wonder if efforts should not be directed to targets closer to home. Without a doubt, the 43 http://www.un.org/sustainabledevelopment/sustainable- consumption-production/ 38
• has “Laws, regulations, policies, and plans 4.2.7. Sustainability certification in place to better protect and ensure In General Consideration No. 24 the sustainable use of natural assets” Resolution (referring to SDG 7, 12, 16); “Notes the existence of various types of • “As of 2015, maintained more than 50% voluntary certification schemes, including forest cover, 10.76% as terrestrial RSPO, ISPO and MSPO, and welcomes their protected areas and 1.06% as marine role in promoting the sustainable cultivation of protected areas. Carbon intensity reduced palm oil; notes, however, that the by 33% since 2009, increasing renewable sustainability criteria of these standards are energy capacity. Malaysia also participates the subject of criticism especially with regard in international trans-boundary to ecological and social integrity; emphasises conservation efforts like the Coral Triangle that the existence of different schemes is and the Heart of Borneo initiatives.” confusing for consumers and that the ultimate (referring to SDG 13, 14, 15, & 17). objective should be the development of a single certification scheme, which would 4.2.6. Land tenure improve the visibility of sustainable palm oil Recital U of the Resolution states: for consumers; calls on the Commission to “whereas there are no reliable data available ensure that such a certification scheme will in producer countries on the areas of land guarantee that only sustainably produced given over to the cultivation of oil palms, palm oil enters the EU market.” whether authorised or not; whereas this obstacle, from the outset, undermines the On a general level, it must be noted that measures taken to certify the sustainability of sustainability certification for palm oil is an palm oil;” immensely complicated issue. The palm oil supply chain is highly complex and intertwined, While it is true that in Malaysia land involving at the production level professionally administration could benefit from certain run plantations, small and medium enterprises improvements like for instance implementing a in the middle and in the case of Malaysia tens standardized Malaysian Land Administration of thousands of smallholders some with plots Domain Model45 it certainly is not the case that of less than 5 ha. All these players feed into “no reliable data” is available, as the the supply chain. Resolution suggests. With MSPO, which – other than the Resolution A comprehensive institutional infrastructure is text implies - will be mandatory in Malaysia by in place, like the Department of Survey and the end of 2019, Malaysia is going to Mapping Malaysia (JUPEM)46, or the considerable lengths to address the numerous Department of Director General of Lands and issues that have to be dealt with in Mines (JKPTG)47 within the Ministry of Natural sustainability certification. Resources & Environment (NRE)48. As far as a single certification scheme is In addition to the public land administration concerned this is simply not feasible. The framework the Malaysian government is taking realities on the ground in different producing significant steps within the Malaysian nations and even within producer countries on Sustainable Palm Oil standard (MSPO) to a regional level are far too varied to be close informational gaps (see Section 5.2. covered by a single scheme. below). Please turn to Section 5.2 for more details on certification schemes. 44 https://sustainabledevelopment.un.org/memberstates/mala 4.3 Evaluating the proposed policy ysia 45 measures http://www.ccsenet.org/journal/index.php/ass/article/view/5 0214 This section reviews the main policy 46 https://www.jupem.gov.my/v1/en/ recommendations of the Resolution and 47 https://www.jkptg.gov.my/en evaluates them using two standpoints: the 48 http://www.nre.gov.my/en-my/pages/default.aspx 39
official response of COM and Malaysia´s elaborating the Resolution. Some of those position. statements even found their way into the Resolution text itself. For ease of reference, the relevant paragraphs of the Resolution are reproduced at the It is encouraging to see signs that point to the beginning of each sub-section. possibility of constructive dialogue between the EU and Malaysia on the issue of palm oil in the future. 4.3.1 The Commission Response
In September 2017, the Commission published 4.3.2 FLEGT a follow-up to the European Parliament non- legislative Resolution of April 4, 2017 on palm The EU´s Forest Law Enforcement, oil and deforestation of rainforests. Governance, and Trade (FLEGT) Action Plan was set in motion in 2003 to combat illegal In it, the commission speaks of a logging outside the EU. At its core are VPAs “comprehensive Resolution” that calls for a (Voluntary Partnership Agreements), bilateral “wide range of actions” and a “large number of trade agreement between the EU and a measures.” timber-exporting country outside the EU. To date, no VPA country has embarked on With this choice of words, the Commission FLEGT licensing, although the EU considers seems to indicate that it considers the Indonesia and Ghana to be far along in the Resolution to be somewhat (overly) ambitious. process.
The COM continues in its response to call for paragraph 31: Calls for the EU to addressing the issues having to do with palm maintain its commitments, to step up oil production in a “balanced manner,” ongoing negotiations on the FLEGT including the important role palm oil plays in Voluntary Partnership Agreements and to the economies of producing countries and its ensure that the final agreements cover contribution to “lifting people out of poverty.” conversion timber taken from the It also notes the lower productivity of other development of palm oil plantations; vegetable oil crops which “therefore require stresses the need to ensure that these more extensive use of land and other inputs.” agreements are in line with international law and commitments concerning The Commission further stresses that palm oil environmental protection, human rights cultivation is “not the sole driver of and sustainable development, and that deforestation” and that “deforestation they bring about adequate measures for dynamics differ between affected countries.” the conservation and sustainable Therefore, in the opinion of the Commission, management of forests, including the no blanket approach across different producer protection of the rights of local countries nor the singling-out of palm oil does communities and indigenous peoples; justice to the subject of the Resolution. notes that a similar approach could also be taken with a view to ensuring The Commission also acknowledges the responsible palm oil supply chains; “significant efforts” that have been undertaken suggests that EU policies for the palm oil by producer countries “to reduce sector build upon the FLEGT principles environmental impacts” and explicitly mentions of multi-stakeholder dialogue and Malaysia and Indonesia. The Commission tackling deep-seated governance issues emphasizes its belief that the EU should “build in producer countries, as well as on these efforts and enhance its cooperation supportive EU import policies; notes that with producer countries” as well as with other these measures could lead to improved stakeholders, national and international. controls on the palm industry in countries of destination; Malaysia emphatically welcomes the sense of balance COM brings to the discussion, paragraph 34: Calls on the especially in light of the more unfortunate Commission to assess the necessity of statements that were made in the process of 40
putting in place mechanisms to of all endangered animal and plant address the conversion of forests for species, commercial agriculture within the FLEGT Action Plan Voluntary – has not given rise to changes in land Partnership Agreement (VPA) management practices which have framework and to empower further civil negative environmental impacts, society organisations and native communities and farmer-landowners in – has not given rise to economic, social the process; and environmental problems and paragraph 35: Calls for the EU to conflicts, including the particular create, as a supplementary element of problems of child labour, forced labour, voluntary partnership agreements, land grabbing or the eviction of follow-up legislation on such indigenous or local communities, agreements with regard to palm oil along the lines of the EU Timber – fully respects fundamental human and Regulation which includes both social rights, and is in full compliance companies and financial institutions; with adequate social and labour notes that the EU has regulated the standards designed to guarantee the supply chains of timber, fish and safety and wellbeing of workers, conflict minerals, but has not yet regulated any forest risk agricultural – enables small-scale palm oil cultivators commodity supply chains; urges the to be included in the certification Commission and Member States to system and ensures that they receive step up their efforts to implement the their fair share of profits, Timber Regulation, in order to better gauge its effectiveness and to – is cultivated on plantations that are ascertain whether it could be used as a managed using modern agro- model for a new EU legislative act ecological techniques in order to drive designed to prevent the sale of the conversion to sustainable unsustainable palm oil in the EU; agricultural practices so as to minimise COM Response: adverse environmental and social outcomes; The COM stresses that it “continues to invest significant resources in the implementation of Paragraph 46: Calls for the EU to establish a the FLEGT Action Plan and negotiation of binding regulatory framework to ensure that all VPAs. agricultural commodity importers’ supply It also acknowledges “the Parliament's call for chains are traceable back to the origin of the adopting a similar approach to FLEGT VPA's raw material; and EUTR (the EU Timber Regulation) for agricultural commodities such as palm oil.” COM’s Response:
4.3.3 Supply-chain traceability While the Commission wishes to actively paragraph 43: Calls for the EU to introduce promote the responsible management of minimum sustainability criteria for palm oil and supply chains, it “notes that developing a products containing palm oil that enter the EU single certification scheme may not be feasible market, making sure that palm oil in the EU: nor effective at this stage, and acknowledges that the existence of different schemes may better allow addressing national specificities or – has not led to ecosystem degradation, consumer preferences. Therefore, the such as deforestation of primary and Commission believes that work on the issue secondary forests and the destruction should build on these efforts.” or degradation of peatlands or other
ecologically valuable habitats, whether
directly or indirectly, and does not
cause a loss in biodiversity, foremost
41
Malaysia’s position: distinction between certified sustainable and unsustainable palm oil and their derivatives; Malaysia fully agrees with the COM assessment that a single certification scheme COM’s response: is not feasible. Nor is it desirable. Malaysia is glad to see a tacit endorsement of its national The Commission expresses its reservations certification scheme MSPO and is keen to vis-à-vis this proposal and recalls “that continue its considerable efforts in order to certification is not generally considered as a fully implement MSPO by the end of 2019. We criterion for the creation of specific HS code.” would also welcome the opportunity to explain in detail the validity of MSPO to all interested Malaysia’s position: parties within the EU. Currently, all palm oil and palm-based 4.3.4 Trade issues products are classified under HS code 15.11 of Paragraph 47: Calls on the Commission to the WCO. Differentiation between sustainable increase the traceability of palm oil imported and non-sustainable would neither be possible into the EU and, until the single certification under the current rules nor would it be helpful scheme is applied, to consider applying in the process of moving towards 100% different customs duty schemes that more certified palm oil in the supply chain. accurately reflect the real costs associated with the environmental burden; asks the 4.3.5 Economic cooperation Commission to also consider the introduction and application of non-discriminatory tariff and Paragraph 50: Calls on the Commission to non-tariff barriers based on the carbon include, without delay, binding commitments footprint of palm oil; calls for the ‘polluter pays’ in the sustainable development chapters of principle to be fully applied in relation to its trade and development cooperation deforestation; agreements with a view to preventing deforestation, including, in particular, an
anti-deforestation guarantee in trade COM’s Response: agreements with producing countries, and
with a view to providing strong and The Commission points out that any trade enforceable measures to tackle measures taken by the EU must be in unsustainable forestry practices in compliance with the rules of the World Trade producing countries; Organization (WTO) and concludes: “The application of differentiated customs duties COM’s response: based on criteria applied to vegetable oil derived from one type of plant but not to other The commission points out that “all recent EU possibly `like´ products may thus be regional or bilateral free-trade agreements problematic under WTO rules.” (FTAs) include ambitious, comprehensive, and Malaysia’s position: binding Trade and Sustainable Development
(TSD) Sections” and that these issues would Malaysia is unequivocal in its rejection of the continue to play an important role in future discriminatory trade measures proposed by the negotiations of FTAs. EP. In so far, we thank the Commission for pointing out the importance of adhering to WTO rules. However, Malaysia stands ready 4.3.6 Deforestation to file a complaint before the WTO whenever Paragraph 61: Reminds the Commission of this should become necessary. its Communication entitled ‘Addressing the
challenges of deforestation and forest In paragraph 49, and related to paragraph 47, degradation to tackle climate change and the Resolution: biodiversity loss’ (COM(2008)0645), which Calls on the Commission, in this regard, to emphasises a holistic approach to tropical initiate a reform of the Harmonised System deforestation that takes into account all (HS) Nomenclature at the World Customs deforestation drivers, including palm oil Organisation (WCO) that would allow a 42
production; reminds the Commission of its which found that these schemes are missing objective in the COP21 negotiations to halt important aspects of sustainability such as not global forest cover loss by 2030 at the latest taking into account the indirect effects of and to reduce gross tropical deforestation demand, lack verification and cannot by at least 50 % by 2020 compared to guarantee that certified biofuels are not current levels; causing deforestation and related negative socioeconomic effects; is aware of concerns COM’s response: about transparency in the evaluation of the certification schemes; calls on the Commission The Commission “notes in this context that any to improve the transparency of the EU action on the issue of deforestation goes sustainability schemes, including by drawing beyond palm oil, looking at all drivers of up an appropriate list of the aspects that deforestation.” should be scrutinised, such as yearly reports and the possibility of requesting audits, to be Malaysia’s position: performed by independent third parties; calls for the Commission to have enhanced powers Malaysia emphatically welcomes the for the verification and monitoring of schemes, Commission´s realization that the issue of reports and activities; deforestation is multi-causal and goes beyond palm oil. In fact, palm oil is nowhere near to Paragraph 81: Calls for the relevant being the most important driver on a global recommendations of the Court to be scale. Under the MSPO Scheme, the issue on implemented, as agreed by the Commission; deforestation and new plantings is adequately addressed in Principle 7 of the MSPO Paragraph 82: Notes with concern that 46 % Standards which states, of total palm oil imported by the EU is used for the production of biofuels and that this requires “Principle 7 prescribes that there should be no the use of about one million hectares of plantings on lands with high biodiversity value, tropical soils; calls on the Commission to take no conversion of Environmentally Sensitive measures to phase out the use of vegetable Areas, while mandating comprehensive Social oils that drive deforestation, including palm oil, and Environmental Impact Assessment be as a component of biofuels, preferably by conducted. In addition, planting on steep 2020; areas and fragile soils are avoided”. Paragraph 83: Notes that simply banning or phasing out the use of palm oil may give rise to 4.3.7 Biofuels replacement tropical vegetable oils being used Paragraph 78: Calls for the EU institutions to for biofuel production, which would, in all include, as part of the reform of the Renewable probability, be grown in the same ecologically Energy Directive (RED), specific verification sensitive regions as palm oil and which may procedures regarding land tenure conflicts, have a much higher impact on biodiversity, forced/child labour, poor working conditions for land use and greenhouse gas emissions than farmers and dangers to health and safety in its palm oil itself; recommends finding and voluntary scheme; calls, likewise, on the EU to promoting more sustainable alternatives for take into account the impact of ILUC and to biofuel use, such as European oils produced include social responsibility requirements in from domestically cultivated rape and the reform of the RED; sunflower seeds;
Paragraph 79: Calls for the inclusion in EU Paragraph 84: Calls on the Commission and biofuels policy of effective sustainability criteria Member States to simultaneously support that protect land of high biodiversity value, high further development of second and third carbon stocks and peatland, and that include generation biofuels to reduce the risk of social criteria; indirect land use change within the Union and to stimulate the transition towards advanced Paragraph 80: Acknowledges the latest report biofuels therein, in accordance with Directive of the European Court of Auditors analysing (EU) 2015/1513 and in line with the circular the current certification schemes for biofuels, 43
economy, resource efficiency and low- Secondly, given the need for further use of emission mobility ambitions of the Union; vegetable oils and biodiesel in the medium to longer term, palm oil will not be replaceable, COM’s response: simply because of its high yields per hectare. Where should the necessary land come from With regard to biodiesel, the position of the to cultivate an alternative crop? Commission seems to be unambiguous. It was already formulated in the November 2016 As a brief backstory on the topic: already in RED- recast, to which the Commission refers September of 2006, the German Environment in its response to the Resolution. Agency stated in a report that because of the limited availability of arable land, rapeseed In short, the Commission shows no intention to grown in Germany could realistically only phase out feedstock-based biofuels as early as replace 1-2% of the diesel fuel used in the 2020. Instead, references are made to the transport sector – a far cry from the EU goals. detailed trajectory outlined in the RED-recast. The report also states that in the US, the Malaysia’s position: processing of the entire soya harvest to biodiesel would cover only 6% of the demand. Malaysia, while not agreeing with the EU's It concluded that given the worldwide demand thinking on indirect land use change effects for diesel-like fuels, palm oil methyl ester could and greenhouse gas emissions, nevertheless become an important fuel due to both, the welcomes the Commission´s pragmatic plant's high yields and the potentially approach regarding feedstock biodiesel. necessary (relatively small) cultivation area.
In its response, COM mainly refers to its recent What was true eleven years ago still is true proposal for adapting the Renewable Energy today: for biodiesel, the best bet for the time Directive (RED-recast) and points towards the being is palm oil. detailed trajectory described therein. PART III: THE WAY FORWARD We interpret the Commission's comments to 5 Rowing together mean that the COM has no intentions to entertain the EP´s idea to phase out the use of We all need to smarten up. Today, when vegetable oil in biofuels by 2020. environmentalists speak about the age of the “Anthropocene,” as opposed to the Holocene, We welcome this as a most-needed to stress the increasingly negative impact reassurance that the considerable investments human activity has on the conditions we live in; in biofuel plants, among other things, at home they do have a point. as well as in the European Union will not be rendered worthless practically overnight as the The surface area of the earth is finite. Natural year 2020 by now is merely 24 months away. resources are limited. As we experience every We also wish to point out that in our opinion day, water and air can get polluted up to the the EU might not be left with an option other point where the consequences are deadly. than vegetable oil for renewable biofuels for two reasons: But 7.5 billion people inhabit our planet. Infinitely more than 18th Century scholar First, advanced biofuels at competitive prices Thomas Malthus ever thought possible when are simply not available in the foreseeable he wrote about population growth and food future. As a report by IRENA, the International supply. Renewable Energy Agency indicates, at (fossil) oil prices below US$ 80 per barrel, As we now know, the so-called green hardly any of the different advanced biofuel revolution saved humankind from starvation. technologies can compete with gasoline or And even now we have not come to the end of diesel for transport. In addition, availability of the line. Much hope lies in technological biomass becomes an issue for several of the innovation, and best practices in human advanced biofuels. endeavours like agriculture, mining, or industry. Yield-improving technologies for 44
growing crops, or alternative transport fuels to Problem-solving in a complex world requires a make the transition from the fossil to the different way of thinking. renewable age will all help. The WWF understands that. In its Living It is this proactive attitude towards the future Planet Report 201649 it writes: that will hopefully save the earth, not romanticizing the past. To put it bluntly, the “A prerequisite for affecting significant change tropical island of Borneo will not return to the in human systems is to understand the nature state it was in 200 years ago when forest of the decision-making that results in people dwelled in long-houses, and the environmental, social and ecological orangutan roamed freely. Those days are degradation. Trillions of decisions and actions gone, for better or for worse. take place every day, resulting in both visible and invisible impacts on society and the Earth The truth is, we all need to eat, wear clothes system. In spite of the complexity that defines and have a roof over our head. So, we all need our problems, we often turn to superficial to consume goods and services. And as long solutions when trying to solve them.” as money can be made someone will provide those goods and services. And – with humans Therefore, what is needed is what the WWF being what they are - there will be those who calls “system thinking.” It takes place at four try to take shortcuts, dodge laws, evade levels: environmental regulations, cheat on sustainability certification. Figure 25: The “four levels of thinking” model
It cannot be avoided. Perfection is unattainable. But we refuse to let “perfect” be the enemy of “better.” If we all work together, if decision- makers in companies and governments are serious about it, we can keep this world a hospital place to live in for generations to come.
5.1 Earth System Perspective
In General Consideration No. 18 the Resolution speaks of the complex issue of The trouble is that most environmental palm oil and “emphasises the importance of policymaking occurs at the events level. And developing a global solution based on the dealing only with the visible tip of the iceberg collective responsibility of many actors.” means addressing symptoms, leaving the causes under the surface. However, on numerous occasions, the Resolution fails itself on this principle. To tackle deforestation, you need to get beyond the surface of things. Singling out one The logic of the Resolution all too often is to crop – palm oil -, targeting the largest look at one particular crop in isolation: palm oil. producers – Malaysia and Indonesia – and Then the most visible producers, Indonesia pushing for one-dimensional approaches in a and Malaysia are blamed collectively, and the multi-dimensional issue – like no farming on role of the consumer in Europe is neglected. peat – will not do the trick. Finally, perhaps well-meaning but ultimately inappropriate measures are advocated, like a It is like taking a pill to lose weight when the single certification or the phasing out of real reason is overeating due to some biodiesel. psychological imbalance. The problem will not
The global solution the Resolution supports will 49 not be achieved by targeting palm oil. http://awsassets.panda.org/downloads/lpr_living_planet_re port_2016_summary.pdf 45
go away, it will only pop up again later. Maybe • Because of these complexities auditing in different shape or form, but it will come back and rules enforcement are difficult. For that to haunt you. reason, there is a lot of to say in favour of national schemes with established For instance, should the environmental cost agencies on the ground where local become prohibitive in Asia, global capital knowledge resides. Malaysia´s MPOB has would move to West Africa where governance hundreds of local representatives who do structures are weaker? And the palm oil know the local farmers and conditions sustainability journey would start from the best. beginning. Malaysian smallholders, certification and 5.2 Towards 100% sustainable palm oil MSPO 7 Principles
The way forward for palm oil in Europe must be full sustainability certification.
But certification is a complicated business. Currently, around nine different initiatives are trying to certify palm oil. From formalized standards like the ISCC (International Sustainability and Carbon Certification), and the RSPO (Roundtable on Sustainable Palm Oil), to voluntary initiatives like the Sustainable Palm Oil Manifesto (SPOM) and the Palm Oil Innovation Group (POIG). Other schemes like Palm Done Right have also appeared. What all these efforts have in common is that to be effective they must overcome formidable hurdles. For instance: • Certification is costly. Many producers are Sustainability certification for smallholders has worried about getting their margins hurt, its own specific challenges. not all of them see that in markets like On average, the Malaysian smallholder Europe without certification there might be cultivating oil palm is 55 years of age or older. no margin left to defend. Sustainability as a concept still is unfamiliar to • A myriad of production scenarios on the most. Some pressing issues include: ground make it immensely difficult for 1. the lack of awareness and understanding regulators and certification bodies alike to at all levels and with all stakeholders. ensure standards are being observed. In 2. the lack of solutions that are adaptable to Malaysia, like in other places, the the idiosyncrasies on the ground. Unified smallholding sector in many ways certification schemes on a national or constitutes the biggest problem. much worse on an international level Smallholders are anything but a cannot do justice to what's required. homogenous mass. At a minimum, they 3. The spasm between ethical responsibility fall into the categories “organized” (in and economic stress through more and cooperatives or state schemes like the more fees for certification. It is almost like Malaysian FELDA) and “independent.” The certification has spawned into an industry independent subsector again can mean in itself. There are two types of costs different things: the entrepreneurial involved: a) cost to improve farm smallholder hiring contract workers, often management and b) the admin cost of foreign, the landowner in the next city certification itself. using palm oil as only one income stream According to NASH, the National Association or the traditional small farmer family trying of Smallholders, certification cost threatens the to get by. All of them may use a variety of economic viability of many smallholders. ways to sell FFB to the next mill making traceability a real challenge.
46
This is one of the main reasons why Malaysia 5.3 Stakeholder responsibility currently is putting tremendous efforts into These are the kinds of issues that can only be making its national certification scheme, the solved in an open and constructive multi- Malaysian Sustainable Palm Oil standard stakeholder dialogue. All sides must do their (MSPO) mandatory by December 2019. part.
The MSPO is operated by the Malaysian Palm That means for the EU to be mindful of not Oil Certification Council (MPOCC), an coming across as being somewhat independent organization established in Eurocentric. In a complex world, no one should December 2014. It started operations only in rush to judgments. October 2015.
Malaysia sees various advantages in MSPO For Malaysia, it means not to let national pride despite the enormous cost and effort get in the way of cooperation. The necessary to push it through. environmental concerns of a large portion of
the European consumer are genuine. Getting For one thing, MSPO will give the Malaysian defensive and endless squabbling does not get authorities the means to enforce certification anyone anywhere. Instead, we need to focus standards. This is a key difference to RSPO. on the common ground. Enforcement itself will become more effective as MSPO ties in with existing instruments like Malaysia is working hard to do its part. It is, for for example the official licenses required for instance, the official position of the 11th anyone operating in the palm oil business and Malaysia Plan51 to focus on sustainability. The issued by Malaysian Palm Oil Board (MPOB). plan explains why “green growth” is important The Malaysian authorities have determined to for Malaysia: resolve this by providing financial incentives throughout the palm oil production chain in “Malaysia, like many countries across the Malaysia to become MSPO compliant and world, is grappling with the challenge of certified. balancing a growing population and demand,
with a natural environment that is increasingly However, another advantage of MSPO will under stress. In the global context of benefit the industry. With a rigorous and increasing intensity and frequency of extreme internationally accepted certification standard weather events, adopting green growth has of its own Malaysia can set itself apart in the now become an imperative for Malaysia. It international markets and brand Malaysian represents Malaysia’s commitment to renew Palm Oil as the premier choice. and, indeed, increase its commitment to the
environment and long-term sustainability.” Given the demanding standards of the MSPO, the success of the scheme is also in the It would be unfair not to recognize that interest of European lawmakers. Finding a way Malaysia has made considerable progress in for the EU to accept MSPO as a best in class the sustainability journey. Regarding the palm practice would make it much easier to raise oil sector, existing regulations already are acceptance with local producers as well. more comprehensive and stricter than in other Certification is not a one-way street. Credible places. Efficiency and effectiveness of commitments only work when they are government agencies setting standards and in accepted. charge of enforcement is steadily improving.
Environmental awareness in the general public By supporting national schemes like the MSPO is rapidly growing as well. the EU could bring 100% CSPO a lot closer.
There are of course unresolved issues on how The European Parliament is to be commended to tie in the EU's biodiesel sustainability on the realization that that palm oil is a standards50. Such, fortunately is already under active consideration by the Malaysian authorities.
51 http://www.epu.gov.my/sites/default/files/11MP%20Summ 50 https://ec.europa.eu/energy/node/73 ary%20BI.pdf 47
complex business and that we all need to pull Because of the crop´s superior yields, together. palm oil is a source of income that is essential to rural communities. For However, the EU now should not only talk the overseas buyers in the food, talk but also walk the walk. When it comes to cosmetics, biofuels and other EU law making, principles of good governance industries, palm oil is a valued must not be forgotten. One of them is that production input. Palm oil fuels a policy decisions must be based upon true and significant portion of European verifiable information. industry. Punishing the oil producers for that is akin to shooting the Furthermore, the precautionary principle must messenger. not be used as a blanket justification for actions that are devoid of an objective base. 2. There is an environmental case for The EU must also consider any regulatory palm oil: the superior efficiency of action about palm oil in a wider context for palm oil also makes it indispensable example when tackling the reform of its from a sustainability standpoint. Common Agricultural Policy (CAP). Many Meeting growing global demand for wrong incentives are being set there, as NGOs vegetable oils without doing severe like Fern do not tire to point out.52 damage to the environment would be impossible without palm oil. Last but not the least the private sector must be brought on board as well. Palm oil buyers 3. There is a moral case for palm oil: should not expect to receive premium certified very developed country is using the palm oil without being ready to also accept the natural resources in its reach to price premium. improve or maintain living standards – Norwegian petroleum, German coal Finally, the Resolution is right to point out in and steel, French wine or Italian olives. Recommendation No. 36 that it is necessary Cultivation of the oil palm, a crop of “(…) to provide consumers with unique agronomic characteristics is comprehensive information on the only viable in areas around the positive environmental, social and Equator. It is only natural that societies political consequences of sustainable fortunate enough to be in the precise palm oil production.” geography do not pass up this opportunity. And yes, just like However, current practices, wide-spread in European nations, they, too, are some European countries, of using “Free of entitled to develop. Palm Oil”-labels indeed work to the detriment of such efforts. Such labels violate existing Each of the above three points provides ample consumer protection and labeling laws, as the reason to rebalance the palm oil debate as it court case Nutella won against Delhaize in currently plays out in Europe. Appreciate the June of 2017 demonstrates. This only goes to three together and as a responsible policy and show that palm oil producing countries and EU lawmaker you cannot ignore the facts regulators must work hand in hand to educate presented in this document. the consumer. It is crucial to realize that insufficient 6 Conclusion: do the right thing information, a lack of understanding of the This paper provides background information interconnectedness of issues and a and helpful perspective in the debate over misinterpretation of (frequently flawed) data palm oil. From the discussion, three will lead to results that cannot possibly be in inescapable conclusions emerge. the interest of environmentalists. 1. There is an economic case for palm oil: this is true in more ways than one. Most of the central recommendations in the European Parliament´s Resolution on Palm Oil and Deforestation are therefore steps in the 52 http://www.fern.org/sites/fern.org/files/Fern%20CAP%20F wrong direction. The Resolution errs in many ULL%20REPORT%20FINAL.pdf regards. Should its recommendations become 48
political reality, the direst consequence will be study on the same topic to be available soon in that the EU fails to reach its environmental early 2018. goals. This is the right moment to engage all To summarize: stakeholders –including the producer countries Should the EU decide to take steps that hurt – in a constructive dialogue. The EU should Malaysian palm oil income significantly, three avail itself of the experience and deep things will happen: knowledge a country like Malaysia has after being in the palm oil business for 100 years. It 1) Malaysia will lose; can only benefit from it. 2) Europe will lose; 3) The environment will lose. Not only are Palm oil production is not the equivalent of the alternatives to palm oil worse from environmental degradation. Certain aspects of a sustainability point of view. Also, our business need to be improved, and we are strangling the palm oil business will working on that. In fact, the implementation of drain resources from the industry that MSPO will bring the Malaysian palm oil are needed for further investments in industry a lot closer to being fully sustainable. environmentally friendly processes. There is a future for palm oil in Europe. And Malaysia will be a part of it. Where do we go from here? The right thing to do now is for EU and This year the EP passed the Resolution on Malaysian decision makers to shape that Palm Oil and Deforestation of Rainforests. The future together. COM expects the results of a comprehensive
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