Could the EU’s ban on palm oil in biofuels do more harm than good?

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum. Author: Shareen Shariza Abdul Ghani, Director and co-founder, Sorga Ventures

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In an era where trade wars and tariffs are commonplace, it is often the case that developing countries are held to double standards by Western nations. Commodities are among the pawns of political trade wars – and palm oil is no different. While palm oil is controversial from a sustainability perspective, the EU’s plans to ban its use in biofuels by 2030 is part of the problem.

The fight against climate change is a global imperative best solved through collaboration – but rather than working together, the EU’s ban threatens our best weapons against climate change: cooperation and global solidarity.

Palm oil biofuel was once seen as the best way to fight climate change, even by the EU, but it is now seen purely as a contributor to deforestation. The EU ban on palm oil favours alternative crops like rapeseed and soybeans that are grown in Europe as a source of oil for biofuel. However, these alternative crops require much more land to generate the same amount of oil as palm plantations, and they store less CO2 than palm oil. Rapeseed, for example produces four to 10 times less oil than palm oil per unit of land and requires more fertilizer and pesticides. Net palm oil production is more efficient in preventing climate change through biofuel than alternative crops.

The EU ban disincentivizes efforts to ensure that palm oil production adheres to robust standards and practices in poorer countries. The Roundtable for Sustainable Palm Oil (RSPO) is a pathway to environmentally sound palm oil production. Its mission is to provide a valuable biofuel while implementing policies that ensure sustainable development, including research and development to increase yields, enhancing the use of fruit bunch for biomass, creating safe corridors for wildlife, and natural pest control methods.

The RSPO unites stakeholders across palm oil production and sets environmental and social criteria that companies must comply with in order to produce certified sustainable palm oil (CSPO).

The RSPO is a not-for profit which receives little attention in the West – nonetheless it has achieved genuine progress that will be thwarted if the EU ban goes ahead. Why? Because ASEAN countries will cease investing in certification methods and standards, particularly in the case of smallholder farmers, and instead will ramp up production and sell to alternative markets like China to maintain profitable production. And that will result in devastating deforestation in Malaysia, while land quality is also depleted in Europe as a result of increased levels of rapeseed production to fill the gap. The ban could threaten both the livelihoods of 650,000 smallholder palm oil farmers in Malaysia alone as well as continued investment in sustainability programmes.

The International Union for the Conservation of Nature has warned that a ban on palm oil would lead to increased consumption of land-intensive rapeseed, soy and sunflower oils to keep up with rising demand. The EU is the world’s second-largest importer of palm oil, after India. The ban will simply reduce competition for the EU’s own oilseed production in countries such as France, Germany, Poland and the UK.

While ASEAN countries fully understand the intricacies of palm oil production and its influence on their environment, the public debate remains eurocentric. The EU owns the conversation around palm oil in the guise of sustainability while ignoring organisations like the RSPO. Even Greenpeace, which has expressed scepticism about palm oil certification schemes, has said it supports the principle of sustainable palm oil. Large global manufacturers such as Nestlé, Unilever and Palmolive are all using sustainable palm oil in their products but negative press means they avoid any public support or promotion of sustainable palm oil for fear of misplaced consumer concerns.

Malaysia’s palm oil industry hopes that an honest, fair and reciprocal trade relationship with the EU can be salvaged, for the sake of farmers, consumers and the environment.