The Oil Palm The Oil Palm

EU Commission Response Changes Little for Palm Oil Producers

The European Commission has responded to the European Parliament’s outlandish resolution on palm oil. The Commission is the EU’s executive arm, and is responsible for proposing all EU laws: so their opinion matters.

That doesn’t mean that the Commission is all-powerful. It is just a small part of the EU and its decision-making processes. The Parliament, the European Council and member governments are the wielders of real political power at the end of the day. Although the Commission and the Parliament will often find themselves at odds, the Commission is generally a reliable barometer of bureaucratic thinking in Brussels. The situation in Paris, Rome or The Hague is often radically different. These nuances are important when considering that the Commission’s response will have limited impact on the existing anti-palm oil efforts underway throughout Europe.

So what are the key takeaways?

Some bad ideas are still intact: sustainable finance

On the one hand, the Commission is taking a sensible line on trade. It has effectively rebuffed the worst and least-informed ideas put forward by the Parliament on differentiated tariff codes for certified palm oil, proposing new tariff codes for certified palm oil, and the idea of a ‘no deforestation guarantee’ in trade agreements.

On the other hand, the MEPs’ thinking on sustainable finance for palm oil investments is very much intact – and quite explicitly supported – by the Commission. Think also of the fact that the Commission – like everyone else in Brussels – hasn’t denounced the resolution’s egregious error of stating that ’40 per cent of global deforestation’ is caused by palm oil.

Good ideas aren’t acknowledged: MSPO

Arguably the best idea that Malaysia has pursued in relation to palm oil over recent years has been the development and implementation of the Malaysian Sustainable Palm Oil standard (MSPO). But the virtues of MSPO aren’t mentioned once. In the MEP resolution, voluntary certification schemes are roundly criticised; it states that certification should be replaced by a single EU-based certification. However, the Commission’s response hasn’t been to laud voluntary standards; it states that they can be built upon. More to the point, however, the response does not state how important national standards such as MSPO are given that they are developed under national and international rules for standard setting with the backing of national governments. In the case of MSPO much of the standard relies upon existing regulations. If the Commission is genuine about wanting to work with producer country governments, it might consider offering more support for what those countries are doing, when they are attacked by the EU Parliament.

Bad ideas get worse: RED

The Renewable Energy Directive has consistently been a thorn in the side of palm oil producers. The Commission has admitted that its plans for the current RED revision (due for a vote in the EU Parliament in only a few weeks) are a significant threat to the use of palm oil as a feedstock for biodiesel. The Commission has proposed that the share of food-based biodiesel in the EU’s renewable target be almost halved by 2030 and that member states can arbitrarily lower the use of biodiesel from oil crops because of indirect land use change. European rapeseed producers will never have been so happy. The Parliament resolution wanted the demise of palm-based biodiesel going into the EU. The Commission’s actions in RED, and confirmed in this response, are aimed to deliver exactly this outcome.

This is not a panacea for palm in the EU

The MEP Resolution was radical, and the Commission response has rebuffed some of these ideas – including the idea of a single certification scheme. But it is a mistake to think that this is the end and that these ideas are off the table.

For example, the idea of a single certification scheme for palm oil going into the EU will likely continue to be promoted by influential MEPs, and other key stakeholders. It may not maintain traction within the Commission, but the idea of setting sustainability criteria that some certification schemes will fit under – as per RED certification – will remain and could be expanded to new areas, such as food imports.

The Commission document doesn’t change the fact that member state governments and legislators (such as those in France), along with NGOs and MEPs, still want palm oil out of the European Union. Importantly, this coalition does have the political will (and muscle) to make that happen. In recent years, palm oil’s position in the EU has been eroded due to legislation imposed by the Parliament and Member States – including RED, food labelling rules, proposed taxes, etc. This recent history teaches us that warm words – whether from the Commission or elsewhere – do not prevent harmful legislation from passing. As we’ve seen plenty of times in the EU it is political will – not facts – that make all the difference.