The Oil Palm The Oil Palm Unclassified

How Will the New EU Political Landscape Impact the Palm Oil Industry?

2019 will be remembered as a pivotal election year for the European Parliament and the Commission. Green parties (Liberals, Socialists and Greens) made significant gains across Europe. Their growing presence and their influence on the agenda of other political parties will lead to more environmental regulations. Populist parties of the left and right made big gains also and they have strong protectionist views and policies.

This result will have a dramatic, and negative, effect on palm oil, as the new Parliament and Commission will pursue a greater emphasis on environmental and sustainability regulations, and the Populist parties who will favour economic protectionism.

The EU Commission will now feel even more entitled to push environmental regulation and to target imports from non-EU countries, including Malaysia. The new European Commission President Ursula von der Leyen has made green policies part of her political guidelines which will be carried through all key portfolios, alongside the major piece of work for the first 100 days of the new Commission: The European Green Deal.

The European Green Deal, aimed at making Europe the first climate-neutral continent by 2050, will be the first objective of the new Commission. Commission Vice President Frans Timmermans is in charge of the European Green Deal. He was notably quite vocal during the revision of the RED and has supported previous planned restrictions on palm oil. It’s likely that opponents of palm oil will call for the Green Deal to include some restrictions on palm oil imports into Europe.

Secondly, the European Commission has published a communication on Stepping up EU Action to Protect and Restore the World’s Forests. The stated objective by the European Commission is to propose, and launch, a series of EU actions to reduce tropical deforestation and forest degradation around the world. It is easy to see how this could be used by protectionists and anti-palm oil activists to call for new import restrictions.

Many within the European Parliament are already calling for a ban on imported products linked to deforestation (they are targeting mainly palm oil, and to some extent soybeans).

The European Parliament’s response will be led by the Agriculture and Rural Development (AGRI) and the Environment & Public Health (ENVI) Committee. The ENVI Committee is chaired by Renew Europe (Liberal) Pascal Canfin of France – former Head of WWF France. His leadership of the ENVI Committee will be a crucial part of the discussions around the EU’s policy on palm oil imports over the coming months and years.

And this will find echo in the upcoming revision of the Renewable Energy Directive (RED) Delegated Act (DA). The publication of the DA back in May 2019 confirmed the progressive phase out of palm oil from 2021 until a complete ban as of 2030. A revision of the DA is foreseen in 2020-2021.

This issue will be followed closely by MEPs, such as Bas Eickhout (Green, from Netherlands), who has said he will not back down from their plans to restrict and ban palm oil, even inviting a fight over it at WTO level.

Outside of specific policies and regulations, there is a wider context. Green parties, and Populists/protectionists will have more influence and control over the EU’s broader policy arena, including foreign affairs and international trade.

There are no exact plans set out– but from public statements made during Commissioners-Designate Hearings it seems that the EU is likely to pursue more protectionist rules within EU free trade agreements – often hiding behind the argument that the protectionism is needed for environmental reasons. 

Mr. Phil Hogan, Commissioner-Designate for Trade, who used to be the Commissioner for Agriculture declared recently that he will ensure any Malaysia-EU FTA or EU-ASEAN FTA includes strict criteria and chapters on environment and sustainability. This, clearly, is aimed at palm oil.

The changing landscape in Brussels presents a new challenge for Malaysia. It is important for the EU to realize that Malaysia is an ally that shares their commitment towards environment and sustainability. But, there is a chance that the EU prefers to continue with its unfair and discriminatory practices towards palm oil. In that case, the question is how – and whether – the palm oil producing countries will stand up for their small farmers. If they do not, then Brussels could simply steamroller over them.

The Oil Palm The Oil Palm

Inconvenient Truth about Palm Oil’s Role in the Haze

No doubt, the haze currently engulfing much of South-East Asia, including Kuala Lumpur and Malaysia is horrible –both for humans and their health, and the planet and her lungs.

This year it seems the world is literally burning from California to the Amazon to Russia. On September 18, Global Forest Watch had around 9,440 fires in Brazil, around 4,800 each in both Angola and Mozambique, around 4,000 in Zambia and approximately 3,100 in Indonesia.

Global citizens have a right to be angry.

But, what we can’t allow to happen is an alternative truth to be established by Fake News media in the West that only knows how to point the finger in a familiar direction in an attempt to identify a convenient culprit – Palm Oil – without doing any basic fact checking.

This blog is not an attempt to whitewash the haze. It is absolutely a defense of Palm Oil and establishing the facts about the root cause of the haze. For the last week, we have read bogus reports from the BBC to Times UK, to Reuters to the New York Times that incorrectly claim that there is “open burning in neighbouring Malaysia or “fires were set intentionally to make room for palm plantations.” At worst, this is false, and at best, the journalists are simply lazy and don’t have any intellectual grasp of what is actually taking place on the ground.

What’s sad is that we don’t see this type of terrible journalism from the failing New York Times when it comes to fires in California, but when it comes to a developing country like Malaysia, they apply the “Kavanaugh Standard” in their coverage.

Let’s go through some assumptions and claims made by journalists when it comes to Palm Oil and fires.


New York Times Claim #1: All oil palm plantations and farmers are the same

Fact: There are different kinds of oil palm plantations. There are large plantations run by large companies. These are generally thousands of hectares in size. They are well-organised and generally have a sustainability certification such as MSPO, RSPO or ISCC. They make up around 60 to 65% of palm production globally. They are subject to strict laws and regulations. In Malaysia and Indonesia, they are not able to expand significantly because of recent law changes.

There are smallholder farmers. These are farmers that have plantations between 2 and 50ha in size. They are generally family run and have a secure legal title to their land. They will occasionally grow other crops. A small number have sustainability certification. In Malaysia, these farmers are generally part of the FELDA or SALCRA government scheme, which gave farmers land and lifted millions of farmers out of poverty.

Then there are squatter farmers. These are farmers that don’t have secure title and are on plots of 2ha or less. These farmers will farm wherever there is what they consider to be vacant land. They are generally unaware of the legalities. These farmers are generally in Indonesia. Sometimes they are subject to land frauds by conmen offering fake land titles. There have been documented cases of coffee farmers clearing land in national parks in Indonesia.

It is this third category of farmer that is generally unaware of how illegal and destructive their actions are when it comes to fire. They use fire as a tool to both claim and clear land for crops, whether it is palm oil or other cash crops, including coffee, cassava and fruits.


New York Times Claim and Times UK,#2: Fires are started to ‘make room’ for oil palm plantations

Fact: The New York Times stated that, according to an Indonesian official, 80 per cent of the fires have been lit to “make room” for oil palm plantations. The official did not refer to specific crops, and the official was also pointing out that 85% of the fires were lit in forest areas, not palm oil concessions, and that therefore these fires have been lit illegally by squatter farmers.

The official was pointing out the illegality of the fires, and that the fire is being used to clear land for cash crops – of any kind.

This is a gross oversight and omission by the NYT that completely changes the meaning of the statement. Similar lazy journalism was applied by the UK’s The Times when it stated the fires were caused “mostly by convert huge areas of forest for rubber and palm oil.”


BBC Claim #1: The UK Government-funded mouthpiece claims that “open burning in neighbouring Malaysia” has led to “10 hotspots in the Malaysian states of Sabah and Sarawak” suggesting that the Palm Oil plantation owners were openly clearing land by burning for new plantings.

Fact: This year, and in the recent haze event in 2015 for which better data is available, there were few fires in Malaysia. The forest area burned on an annual basis is small and often negligible. In 2012, for when the last FAO data is available, 500 ha was burned.

The fires spread for two reasons. The first is because of exceptionally dry seasons. Lower rainfall means there is a large amount of flammable material such as forest litter. The second is because of degraded peatland. Dry peat is a very flammable material that can smoulder for weeks. The fire can ‘jump’ from smallholder areas into concessions, effectively underground through degraded peat.

Moreover, the Miri Fire and Rescue Department in Sarawak confirmed recently that the ban on open burning is enforced in Sarawak.

BBC wants you to think that 10 hotposts in Sabah and Sarawak are a lot…

False. It’s worth pointing out that there are thousands of hotspots in other parts of the region and around the world right now. In Europe, more than 1,900 hotspots were accounted for on 16th September 2019 and in Australia, more than 1,000 hot spots in a single day – and yet, it is the 10 hotspots in Malaysia that the BBC focuses on: the very definition of Fake News.


BBC Claim #2: “Many farmers take advantage of the conditions to clear vegetation for palm oil, pulp and paper plantations using the slash-and-burn method”

Fact: In developing countries, fire is used as a way of claiming land that is assumed vacant. For many of these squatter farmers in Indonesia, this is vital, simply because titling and land tenure systems can be particularly weak.

Despite what is implied by NGOs and media reports, oil palm plantations are usually not the source of burning.  Fires will spread to areas that have been designated for plantations, either via fire spreading from smallholder areas, or because farmers have encroached onto existing concessions.

In 2013, just 20% of fires were reported as starting in oil palm areas. The remainder – the vast majority – were from natural forest areas, pulp and paper plantations, and other market crop areas.  The one major company that has been held responsible by Singaporean authorities for the haze in 2015 was a pulp and paper company – not a palm oil company.

There’s another problem with this BBC claim: farmers do not grow trees for pulp plantations. They are simply not profitable enough for farmers. They will grow any other number of trees for fruit or rubber, but pulp logs are not one of them. This exposes a high level of ignorance by the BBC’s reporters.


BBC Claim #3: “The problem has accelerated in recent years as more land has been cleared for expanding plantations for the lucrative palm oil trade”

Fact: This is inaccurate on a number of levels. In Malaysia, using fire for clearing land is illegal and is punished with jail sentences and heavy fines. There is a blanket prohibition on burning of peatlands.

Oil palm plantations are not expanding in Malaysia. The Malaysian Government announced last year that Malaysia halted expansion of oil palm plantations, effective immediately. This further protects Malaysia’s already expansive forest area.

Moreover, Malaysia has instituted world-leading environmental conservation efforts: including a cap on expansion of oil palm; implementing the Malaysian Sustainable Palm Oil (MSPO) standard; and a commitment to preserve 50% of land as forest area, first made at the Rio Earth Summit in 1992 and still kept today. Malaysia’s commitment to environmental protection is as good as – if not superior to – the European Union.


Reuters Claim #1: “Malaysian palm oil companies are responsible for the haze in Indonesia”

Critics of the Malaysian industry claim it is responsible for the fires in Indonesia. Many major Malaysian plantation companies do invest in companies and other joint ventures in Indonesia. But major Malaysian companies do not use fire to clear land. ‘No burn’ policies are implemented across all plantations. Fires on plantation lands harm business operations as they result in criminal liability, crop damage, worker health problems and reputational problems. No palm oil company has an incentive to start fires.

Malaysian Palm Oil Association (MPOA) Chair Franki Anthony Dass confirmed that the fires were not caused by Malaysian companies or by their staff. This was also confirmed by the Minister of Primary Industries Ms. Teresa Kok.

Malaysians themselves are not angry about Palm Oil this year. They have learned the facts about the last major haze event, and that many of the problems lie in the fact that Indonesia simply does not have the resources to deal with the problem.

The Oil Palm The Oil Palm

EU’s Top Diplomat Travelling to Jakarta to Discuss Palm Oil, WTO and Sustainability

Ahead of the 52nd ASEAN Foreign Ministers’ Meeting/Post Ministerial Conferences in Bangkok this week, the EU’s High Representative/Vice-President Federica Mogherini gave an interview setting out her vision for the future of the EU-ASEAN relationship.

Inevitably, VP Mogherini was asked about palm oil – the EU’s attempts to restrict palm have led to a rocky few years for the EU’s image in southeast Asia. Her responses to the question were telling, and gave an indication that the EU does not seem ready to give up its discriminatory approach.

First, she claimed that “The EU is not banning palm oil”. This is a tired, well-worn Brussels line that is inaccurate and has been debunked multiple times. H.E. EU Ambassador to Malaysia Maria Castillo Fernandez made similar remarks while visiting smallholders on a FELDA oil palm plantation earlier this year. The simple fact is that a withdrawal of the RED subsidy for palm oil biofuels is a de facto ban: any biofuels in Europe are uneconomic once that RED subsidy is removed. The EU knows this, which is why MEPs have regularly described the EU’s actions as a ban. It is disrespectful to the ASEAN audience to continue pushing this line, when the palm oil sector and the region’s government both know that it is not accurate.

Ambassador Castillo Fernandez made some additional comments during that FELDA visit. She argued that smallholders weren’t certified and so wouldn’t be affected by the EU’s ban on palm oil biofuels. The Ambassador is wrong. Many FELDA plantations are in fact certified and the EU ban on palm oil will affect the whole palm oil industry, smallholders being an integral part of that industry.

Returning to Vice President Mogherini’s intervention – the core of her response on the issue of palm oil was to highlight the EU’s determination to address the “climate urgency that our world faces” and to see any action on biofuels as part of that broader effort.

Now, it is true that the EU has been a global leader on climate regulation: that is a matter of record. But the question that needs to be asked is how does the EU now go about its current and future plans for sustainability and climate policy? Will the EU take a cooperative, international and collegiate approach – or will it go down the road of protectionist regulation, and putting up barriers? This is at the heart of the question on palm oil – and Mogherini did not address this strategic question.

The fact is that Malaysia shares Europe’s commitment to sustainability and fighting climate change. Malaysia’s track record is extremely clear on this point, with world-leading forest conservation commitments stretching all the way back to the Rio Earth Summit in 1992.

If the EU would take a cooperative approach to climate and sustainability action, then VP Mogherini and her colleagues would recognize these facts. The palm oil sector is a key part of Malaysia’s ongoing leadership on conservation and sustainability. Minister of Primary Industries Teresa Kok announced earlier this year that Malaysia will implement a cap on the expansion of oil palm plantations, effective immediately.

The Minister is also finalizing the mandatory introduction of MSPO, an internationally recognized sustainability scheme that will cover every palm producer in Malaysia, guaranteeing a palm oil sector that is tightly regulated and heavily monitored, with strict requirements for sustainability and best agricultural practices.

Shutting off market access for Malaysia’s small farmers under the RED’s Delegated Act is a clear example of such protectionism. It will not advance the EU’s climate objectives, nor will it help to build bilateral, or multilateral, cooperation. Earlier this week, the Malaysian Ministry of International Trade and Industry (MITI) called for the EU to accept MSPO and not discriminate against palm oil within the RED Delegated Act (revision in 2021). MITI described the DA is “a protectionist measure and a form of disguised trade”.

A third interesting comment in VP Mogherini’s recent interview was her assertion that the RED DA is “in line with WTO obligations”. This is disputed by independent experts, and both Malaysia and Indonesia have confirmed they will file a WTO complaint over the issue.

During the last ASEAN Ministerial meeting in January 2019, Malaysia’s Foreign Affairs Minister Saifuddin also confirmed that no ASEAN-EU Strategic Partnership would be signed, if the EU didn’t withdraw the palm oil ban.

How, then, can the EU make up for the recent missteps in ASEAN? VP Mogherini only has a few months left in office – her successor, likely to be Josep Borrell from Spain, will have to lead on the issue. He would be well advised to acknowledge environmental leadership where they find it, including in Malaysia. He should embrace a cooperative, international approach – not an approach of building up trade barriers and import restrictions. And he needs to accept that palm oil is part of the solution, and essential to the region’s leadership on poverty alleviation, economic growth and sustainable agriculture. If not, and if the EU persists with discrimination against palm oil, it is hard to see how the relationship can be rebuilt.

The Oil Palm The Oil Palm

The EU’s Inconsistency Towards Malaysia and Palm Oil

A new EU document commenting on Malaysia’s record on ‘human rights and democracy’ exposes the inconsistency in EU policy towards Malaysia, and specifically Malaysia’s major export commodity, palm oil.

The European External Action Service (EEAS) – the EU’s top diplomats – released a statement about the latest EU Annual Report on Human Rights and Democracy in the World for 2018, which includes a section on Malaysia. The EU report praises the changes taking place in Malaysia since Prime Minister Dr Mahathir Mohamad was sworn in mid 2018.

The EU Report praises Malaysian policies that have led to a freer media and notes that 90% of charges previously levelled against human rights defenders and political opposition figures have either been dropped, or acquitted.

Yet, despite welcoming those important developments and encouraging them, the EU has spent the past 18 months undermining Malaysia’s economy by attacking palm oil via the Renewable Energy Directive (RED) and its Delegated Act. The recently published Delegated Act, which will enter into force on 10thJune, will phase out palm oil biofuels completely by 2030. Other oilseeds – such as rapeseed and sunflower (both grown in Europe) will continue to be allowed. Only palm oil is targeted.

Why is this inconsistent from the EU?

The EEAS is the EU’s diplomatic service. Its mandate is to make sure the EU’s voice is heard. It is supposed to support the EU’s key international missions on human rights, democracy and sustainable development.

But it seems it will only support development if EU interests aren’t compromised.

Support for human rights, democracy, and other core values is based on, and runs concurrent to, economic development. Economic freedom is crucial for a country’s broader development. Palm oil has given economic freedom to millions across Malaysia: it has allowed property right to flourish, reduced poverty massively in rural communities, and built local supply chains and industrial clusters that employ 3 million Malaysians.

The EU ban on palm oil biofuel undermines this economic progress.

This EU Report is a positive and realistic portrait of Malaysia. It should also point out that Malaysia is a recognized leader in environmental protection and sustainability as attested by the UN FAO and the World Bank. EU Ambassadors also used this opportunity to re-assess that the Delegated Act was not a discriminatory measure tackling palm oil, but the Malaysian Government has not budged from its stance.

Instead of promoting Reports on Human Rights and other EU public statements aimed at trying to appease Malaysia, if the EU really wanted to support the Malaysian society and democracy, the easiest path to provide such encouragement would be to recognize and embrace Malaysia’s environmental leadership – including with the world-leading sustainability standard MSPO. EU endorsement of MSPO would be real-world support for Prime Minister Dr Mahathir Mohamad and his Government’s approach to palm oil (rather than simply kind words in a report).

The EU – in particular EU Ambassadors – have an important role to play, here. Recent statements from European Ambassadors in Kuala Lumpur and Jakarta, essentially denying the fact that the Delegated Act is a protectionist discrimination against palm oil, are not helpful. Instead of covering up the truth, EU representatives would be better served working with Malaysia to tell the truth about the country’s environmental leadership and track record.

The Malaysian Government and the Malaysian people know the truth about Delegated Act. Continued attempts to deny reality are not helpful or constructive.

The EU’s discriminatory Delegated Act will have consequences for European trade policy, as Malaysian Minister of Primary Industries Ms Teresa Kok recently evoked in meetings with government officials across Europe. Foreign Affairs Ministers Datuk Saifuddin Abdullah echoed this by announcing that the ASEAN Strategic Partnership won’t be signed until the situation around palm oil is resolved, and that no ASEAN trade agreements would be finalised until palm oil discrimination ends. This is a major blow for the EU, given that the Commission has been trying for years to finalise trade agreements with ASEAN.

What is the way forward out of this inconsistency?

First, the Human Rights and Democracy Report is welcome, and accurate. However, flattering Malaysia with such words while continuing to undermine and attack palm oil experts is not a good strategy. Instead, the EU’s trade and foreign policy establishment must realize that their anti-palm oil approach has harmed their image in Malaysia and South-East Asia as a whole.

If the EU wants to make amends with Malaysia and other palm oil producing countries, reverse the course of action on palm oil. That will be the only way for trade agreements, and the ASEAN Strategic Partnership. It will also have the benefit of allowing palm oil to support the economic and social development that the EU has praised in its recent Report – and it will avoid trade retaliation against EU exports. In other words, a win-win.

The Oil Palm The Oil Palm

Europe’s Latest Push to Target Palm Oil Gathers Pace

Despite 2019 being an election year, the EU has continued to be in active in pushing regulations targeted at palm oil. The Renewable Energy Directive (RED) Delegated Act banning palm oil biofuels was finalised in May – it will take effect in 2021. The EU has also spent 2019 continuing its progress on the Action Plan on Deforestation, launching a Feedback and Public Consultation on how to proceed with a new Deforestation Regulation.

The summary of the findings of this consultation have now been published: and the indications are clear that palm oil will be the main target for the Deforestation Regulation.

The summary provides highlights of the 995 responses from the Public Consultation, which took place from 14thJanuary 2019 until 25thFebruary 2019.

The key question asked which forest risk commodities should be addressed by an EU initiative on deforestation. The summary indicates that “80% of all respondents selected palm oil [as a commodity that should be regulated by the EU], followed by meat (54%), soy (52%), bio-diesel (45%) and wood (34%)”

But who were the respondents who overwhelmingly voted to target palm oil? It doesn’t come as a surprise. A significant percentage of the 995 submissions came from EU Commission-funded Green NGOs who have long been anti-palm oil campaigners.

These ‘consultation’ results give the EU a perfect excuse to craft a Deforestation Regulation targeted at palm oil. Importantly, this is not only about biofuels (like the RED). This Regulation would target all palm oil imports, including for food production.

Why, then, is the EU pushing this?

First, it appeases the Green lobby. The Commission will claim that the majority of the ‘public responses’ are in favour of action against palm oil – though in reality it was not the public, but rather EU funded anti-palm oil NGOs who drove this result.

The science is ignored, even though many studies including the EU’s own research, have shown that livestock/beef, maize and soy are the biggest drivers of deforestation.

Second, this will appease the European Parliament. In 2018 and 2019, MEPs Heidi Hautala (Green) and Katerina Konecna (Communist) – both of whom were re-elected in May 2019 – led the charge with Reports pushing anti-palm oil regulation, and further putting pressure on the Commission to act. The Greens gained seats in the May 2019 elections, and others (especially the Liberals) have moved towards Green positions. So – the Commission is ready to move on key Green MEP priorities, such as restricting palm oil.

Third, by focusing on palm oil, the EU avoids attacking Brazilian/US Beef and Soy, who are the real drivers of deforestation. This will ensure the EU avoids a trade war with its ‘historical allies’, and continue to appease President Trump in an attempt to avoid imposing tariffs on cars, Airbus and other EU goods.

Finally, this move paves the way for the EU Member States to help their domestic oilseeds industry which is less efficient and less competitive than palm oil. It will only be imported oils and products that are targeted – again, despite the evidence that shows that Malaysia’s forest protection track record is substantially better than any country in Europe.

In listening to the voices at the fringes of the palm oil debate, though, the Commission will risk hollowing out the mainstream, and alienating allies in Asia and other parts of the developing world.

Trade agreements will suffer; that impacts jobs, growth, and exports. Alliances and strategic partnerships in southeast Asia especially, will not grow – meaning the EU falls further behind in its political influence and trade weight in that region. The possibility of retaliatory action against EU exports to ASEAN would exacerbate these issues – Malaysia and Indonesia have both made clear publicly that they will not accept discriminatory regulation of their main export.

Malaysian Palm Oil Council (MPOC) CEO Datuk Dr Kalyana Sundram confirmed that the Malaysian Government and its negotiating parties “are leaving our options open at this point. We would prefer to go down on a negotiated route and come to terms and conditions that all parties agree to before we take any action.Trade is a two-way negotiation…we are looking at the best possible ways that are based on scientifically proven facts and figures. The producing nations have indicated that they would be taking likewise trade-related activities against EU imports”.

Yes, some Greens and other fringe voices have made electoral gains in Europe – and they have more clout as a result. Some of these are loudly anti-palm oil voices (including Bas Eickhout MEP, for example). But the Commission is on very uncertain ground – scientifically, diplomatically, and economically – if it begins to craft a palm oil policy based on those fringe voices, instead of the sensible and moderate majority who understand the EU’s true strategic interests.

The Oil Palm The Oil Palm

Pressure Mounts on EU Leaders to Reject the RED Delegated Act

Jet stream is moving Europe far away from South East Asia

On the eve of the largest defence and maritime exhibition show in the Asia Pacific region, Malaysia’s Prime Minister, Dr. Mahathir Mohamad, signaled to Europe’s leaders, foreign policy officials, and the defence and security establishment, that as a result of the European Commission’s black campaign against Palm Oil, Malaysia is now actively considering purchasing new fighter jets from China rather than European arms companies.

This would be a significant blow to France’s Rafale and the Eurofighter Typhoon jets and could reverberate beyond to other defence-related companies doing business in Malaysia.

Indonesia’s Trade Minister Enggartiasto Lukita announced that Indonesia was preparing to take the European Union to the WTO over the imposition of the Delegated Act should the Council of the EU confirm it. And this week, Indonesian Trade Ministry representative, Oke Nurwan, has encouraged Indonesian companies to undertake litigation to combat the EU’s de facto ban on Palm Oil.

Sadly, the EU doesn’t get it. This week, the EU Ambassador to Indonesia Vincent Guérend was in full sales mode when he stated, “all vegetable oils are treated equally” under the Delegated Act. That’s fake news. Palm Oil has been singled out and labelled a ‘High Risk’ biofuel despite its impressive yields, lowest environmental footprint and lower land area usage whereas soya, a driver of deforestation, is considered sustainable by the EU.

The Oil Palm The Oil Palm

Malaysian Minister of Foreign Affairs Urges EU Leaders to Block Commission’s Action against Palm Oil


The Malaysian Government strongly opposes the Delegated Act published by the European Commission that classifies palm oil as “high risk”.

The Delegated Act drafting and feedback process are flawed from the beginning. The EU’s claim that the Delegated Act is based on calculating the relative risk of biofuels is disingenuous: in reality, the Delegated Act is a protectionist instrument to restrict palm oil in the European market. It is mind boggling that the less competitive and less efficient oilseeds such as rapeseeds, sunflower oil, canola and soybean are classified as ‘low risk’. Palm oil produces higher yield than other oilseeds per hectare, about 4 to 10 times more productive than other oilseeds.

The Malaysian Government does not accept that the Delegated Act is justified on scientific or environmental grounds. No convincing explanation or data have been provided to justify the discrimination against Malaysian Palm Oil.

The Malaysian Government therefore views this EU Delegated Act not as an environmental regulation – but as a calculated political act to remove Malaysia’s palm oil exports from the EU marketplace.

Such an aggressive trade barrier targeted at Malaysia’s national interests, and our 650,000 small farmers, cannot pass without a strong response.

The European Union has long been a friend and partner for Malaysia. It is with great regret that the Malaysian Government would announce, if this Delegated Act is passed into law, that Malaysia would look to WTO for recourse. The hard-hitting action by the EU would undermine our nations’ cooperation and mutual friendship. Therefore, this matter should be treated in a fair and non-discriminatory manner with equal treatment and access for Malaysian Palm Oil alongside with other oilseed feedstocks.

This situation is highly regrettable – for Malaysian palm oil producers, and for European exporters. It was also avoidable. Malaysia has not displayed any aggression towards Europe that would provoke such a direct and targeted threat to our economic interests. Malaysia has consistently provided evidence of the sustainability of Malaysian Palm Oil, including the country-wide Malaysian Sustainable Palm Oil (MSPO) certification standard.

It is extremely disappointing that the European Union, a trusted and valued friend and ally, would act to undermine Malaysia’s national interests in this manner. It is doubly disappointing, as the EU has consistently been a supporter of an international trading system, based on WTO rules. This discriminatory Delegated Act undermines the EU’s credibility as a proponent of the WTO-led rules-based system.

The Malaysian Government urges our friends and counterparts in European capitals and in the Council to reject this Delegated Act and to instead preserve and strengthen the strong economic and trading relationship between Europe and ASEAN.

The Oil Palm The Oil Palm



“Entire Delegated Act process has been based on the politics of protectionism.”

I oppose entirely the decision adopted by the European Commission on Wednesday where palm oil is classified as “high risk”. Palm oil producing countries, including Malaysia, have consistently outlined the facts that demonstrate that the Delegated Act is based on inaccurate and discriminatory factors.

The decision highlights an unacceptable double standard by the European Commission – it failed to apply the same standard to soy bean oil, despite the fact that the EU’s own research proves that soy bean is a bigger contributor to deforestation. Palm Oil produces eight times more oil than the US soy bean oil per hectare but the European Commission classifies soybean as “low risk” for political reasons.

The entire Delegated Act process has been based not on the science of biofuels, or the science of deforestation, but on the politics of protectionism.

The EU likes to speak of its commitment to trade, to poverty alleviation, and the international community. This Delegated Act exposes those words as hollow – the only commitment is to discrimination and protectionism.

I also regret the decision of the European Commission to lower the definition of smallholders to 2 hectares compared with the previously proposed 2-5 hectares in the draft Delegated Act. This is totally unacceptable and it is discriminatory and insulting to smallholders in the palm oil producing countries.

The Ministry of Primary Industries of Malaysia has sent a delegation to meet EU officials and to present Malaysia’s arguments and position on the proposed Delegated Act in early March.

The decision of the European Commission to phase out palm oil as biofuel in Europe on the basis that palm oil causes deforestation is totally without foundation. This move also reflects the EU’s insincerity in implementing the United Nations Sustainable Development Goals (SDGs).

Research shows that palm oil is not a major driver of deforestation, and both Malaysia and Indonesia have declared a moratorium on the expansion of oil palm plantations. Palm oil is, however, a driver of poverty eradication. The EU’s Delegated Act attempts to enrich Western farmers at the expense of Malaysian small farmers.

The Delegated Act is discriminatory against the economies of developing nations in Southeast Asia, Africa and Latin America which produce palm oil, and it is designed to hurt the livelihoods of millions of small farmers.

Malaysia’s Prime Minister has made clear that if the Delegated Act is finally adopted, Malaysia will investigate retaliatory actions against European exports, to combat this aggressive protectionist measure. Malaysia will also be working with partner countries in the Council of Palm Oil Producing Countries to address this issue in the World Trade Organisation (WTO).

The Oil Palm The Oil Palm

New Research Confirms ILUC is Not A Proper Basis for Regulating Palm Oil Biofuels

Kuala Lumpur (4 March 2019) – A new research Paper, authored by experts from Copenhagen Economics, debunks the European Commission’s latest attempt to regulate the EU biofuels market. The Commission’s recently-published Delegated Act claims to determine “High and low Indirect Land-Use Change (ILUC) – risks biofuels, bioliquids and biomass fuels” under the Renewable Energy Directive (RED), but in reality, the goal is to ban Palm Oil Biofuels from the EU market.

Copenhagen Economics (CE) is a long-time consultant to the European Commission, and EU Member State governments, on a vast array of economic and scientific topics. This Paper is a follow up to its previous work undertaken in January 2014 on ILUC: “Use of ILUC in EU regulation: fundamental challenges in science remain unresolved”.

The following statement can be attributed to Martin Bo Westh Hansen, Managing Economist at Copenhagen Economics:

“The concept of ILUC involves fundamental uncertainties that are currently not addressed satisfactorily, and might never be. Specifically, we find that the current science does not support using feedstock-specific ILUC factors for regulatory purposes”

Dato’ Haji Aliasak Haji Ambia, President, National Association of Smallholders (NASH) Malaysia stated:

“A ban on Palm Oil biofuels is unjust and unfair against hundreds of thousands of small farmers across Malaysia. Any attempts by EU President Juncker and Spitzenkandidat Timmermans to introduce discriminatory measures labelling palm oil biofuels as ‘high risk’ will have significant trade consequences, as confirmed by Malaysian Ministers and other palm oil producing countries”

The Paper was supported by the Malaysian Palm Oil Council (MPOC), and the findings confirm that there is NO scientific consensus that would support the use of ILUC factors as a basis for regulation of Palm Oil biofuels under the RED.

Key Findings of the Research:

  • It is practically impossible to establish a clear, quantifiable causality between the production of biofuel-crops and the ultimate land use change somewhere else in the world;
  • Studies illustrates how uncertain and complex ILUC modelling is: even when using the same modelling approach and overall assumptions, the ILUC effect is difficult to narrow down;
  • As a consequence of the large variation within and between models, no robust conclusions can be made about the relative ILUC effects;
  • The concept of ILUC should not be a part of such a regulation [RED]. The Delegated Act, if it attempts to base regulatory decisions on ‘high risk’ ILUC, would be outside of the current scientific consensus;
  • There is no scientific consensus about the ILUC effects of different biofuels that would support such a classification; if it is done anyways, it is likely that it does more harm than good;
  • Assigning a single ILUC factor to individual feedstocks has therefore no scientific basis.

To read the report and learn more, visit here, and see the Executive Summary below:


ILUC still unfit as a basis for regulation

The use of biofuels in Europe have been promoted at EU level through several Directives with the aim of making the transport sector more sustainable, but have also been associated with pressure on land, leading to the conversion of carbon rich land (e.g. deforestation). The concern is that biofuels may not reduce emissions as much as hoped, since they can spur increased emissions elsewhere through land use change, either directly or indirectly.

Direct land use change (DLUC) is when cropland is expanded for biofuel feedstock production, e.g. when a forest in Europe is cut down in order to grow wheat for biofuel production there. DLUC is observable and can be monitored; in case of non-compliance with rules (e.g. forest conservation rules), authorities can enforce penalties. Indirect land use change (ILUC) also describes conversion of land to cropland, but caused indirectly through displacement of production in other locations. If e.g. European wheat has been used for food production before, but is now used for bioethanol instead, this could give rise to wheat production (or the production of a substitute crop) elsewhere in the world due to increasing wheat prices. The land that may be converted to cropland for this purpose is the indirect land use change effect of the wheat-based ethanol.

While ILUC can be just as real as DLUC, it cannot be monitored in the same way. It is practically impossible to establish a clear, quantifiable causality between the production of biofuel-crops and the ultimate land use change somewhere else in the world, since the latter is influenced by a countless amount of circumstances. In the attempt to estimate the ILUC effect of biofuels anyways, complex economic models are used, which need to make assumptions regarding a large number of highly uncertain parameters as explained with some examples below.

Now in 2019, the ILUC discussion is back on the political agenda. The European Union’s recast of the Renewable Energy Directive to 2030 (RED II) includes an updated target for renewable energy used in transport of 14% with biofuels playing a major role in achieving this target. However, RED II limits the extent to which biofuels from feedstocks associated with high ILUC can contribute to the target of 14%: a Delegated Act is being prepared by the EU Commission in an attempt to determine ‘high risk’ or ‘low risk’ biofuels, based at least in part on ILUC. Biofuels associated with high ILUC may not exceed 2019 consumption levels, and are then to be phased out to zero by 2030. As of today, there is no clear definition of what high ILUC vs low ILUC risk biofuels are, but the Commission is required to set criteria for classifying this in 2019. This is the role of the Delegated Act.

While we acknowledge the overall ambition, we conclude that the concept of ILUC should not be a part of such regulation. The Delegated Act, if it attempts to base

regulatory decisions on ‘high risk’ ILUC, would be outside of the current scientific consensus. The reason is that there is no scientific consensus about the ILUC effects of different biofuels that would support such a classification; if it is done anyways, it is likely that it does more harm than good.

The ILUC effect, or ILUC factor, is a term for the estimated emissions due to indirect land use change expressed in grams of CO2 equivalents per megajoule of biofuel (g CO2 equ./MJ biofuel). A negative ILUC factor means that the production of the biofuel entails an overall net reduction in greenhouse gas emissions. Positive ILUC factors mean positive net emissions, but those can still be lower than for fossil fuels. The fossil fuel comparator as determined by the Commission in RED II for the transport sector is 94 g CO2eq/MJ;2 this means that the use of biofuels with a lower (higher) ILUC factor will entail a net decrease (increase) in emissions.


Indeed, we are currently far away from a consensus about the ILUC effect of different biofuels. The researchers’ attempts to model the ILUC effects of biofuel production have resulted in estimates that vary enormously and do not allow for any robust conclusions. The predicted ILUC factor across models for wheat-based bioethanol for example ranges from -79 to 329 g CO2 equ./MJ biofuel, see Figure 1. This means that its ILUC effect lies somewhere between an emission reduction by 184% and an emission increase by 250% compared to using fossil fuel. The other feedstocks feature similarly large ranges in estimates. It becomes clear that no meaningful conclusions can be drawn from estimates with such variation.

Substantial variation can be observed not only between, but even within models. A study from 20153 for example yields ILUC factors between -20 and 175 for sugar cane, and between 10 and over 400

for soybean. This illustrates how uncertain and complex ILUC modelling is: even when using the same modelling approach and overall assumptions, the ILUC effect is difficult to narrow down.

As a consequence of the large variation within and between models, no robust conclusions can be made about the relative ILUC effects. There is no clear consensus regarding the relative ranking of feedstocks in terms of ILUC effects. A study by OECD4 for example estimates rape seed-based biodiesel to have a lower ILUC effect than wheat- and maize based bioethanol, while other studies5 come to the exact opposite result.

This large variance in ILUC estimates is not a surprise. The results will vary depending on which modelling approach is taken, and which assumptions are made.6 To arrive at an ILUC estimate, the model needs to go through several steps, all of which contain new assumptions and uncertainties. An example is whether and how by-products of biofuel feedstock production are included in the model. By-products are parts of the harvest that cannot be used for biofuels, but for other purposes, typically for animal feeding, e.g. soy bean and rape seed cakes.7 Different studies reveal that when by-products are taken into account it may reduce the estimated land requirement by approximately 23–94 per cent.8 If taken into account, the approach of doing so matters, too. An increase in rape seed biofuel production for example can lead to a net expansion or net reduction in cropland, just based on different assumptions in the models regarding the market response to the by-product of rape seed production.9 Overall, we observe that the ILUC effect will differ case by case depending on a wide range of circumstances, of which the feedstock is just one small component. Assigning a single ILUC factor to individual feedstocks has therefore no scientific basis.




2 See European Commission (2017), Annex V part C, point 19

3 IIASA et al. 2015, Annex V.2 Sensitivity and uncertainty analysis, detailed results per scenario, page 225ff, and Wageningen

et al. 2017, table 9. This study applies the GLOBIOM model.

4 OECD 2009 as discussed in JRC 2010

5 E.g. IIASA et al. 2015

6 While all assumptions are within reasonable.

7 Wageningen et al. (2017) page 76

8 DG Energy 2010, page 15

9 See chapter 2.2

The Oil Palm The Oil Palm

ICYMI: Malaysian Foreign Minister Sends Strong Message to EU About Proposed Ban on Palm Oil

Foreign Minister Saifuddin Abdullah confirms potential WTO challenge

Malaysian Foreign Minister Saifuddin Abdullah, the country’s top diplomat, chastised Europe’s discriminatory tactics to ban palm oil biofuels from the Renewable Energy Directive (RED), as part of a bigger EU wide campaign to exclude palm oil from the EU market, in an interview with Bloomberg this week.

Minister Saifuddin Abdullah warns that the Malaysian Government is preparing for a long battle against the EU and will not hesitate to resort to trade retaliatory measures against EU products. A first warning was sent recently, when Foreign Minister Saifuddin Abdullah and his ASEAN colleagues did not support upgrading the EU-ASEAN Partnership to a “Strategic Partnership” last month during the ASEAN-EU Summit in Brussels.

Bloomberg writes:

“There is a real lobby against palm oil and it’s even likely that palm may eventually be excluded from any product or biodiesel sold in Europe, foreign minister Saifuddin Abdullah said in an interview on Tuesday.

“Several European countries are sympathetic toward Malaysia’s plight and the government is hopeful that it can win the battle for palm oil if the EU dispute is brought to the World Trade Organization, he said.

“For now, palm oil remains a key reason behind an impasse on trade agreements between the EU and the Association of Southeast Asian Nations, Saifuddin said. At a recent meeting in Brussels, ASEAN postponed a pact that would raise EU’s status to become a strategic dialogue partner, he said”