The Oil Palm The Oil Palm

ILUC: Who is in Favour and Why?

In our previous blog, the Oil Palm looked into the ongoing preparations from the European Commission to determine which biofuels are “risky”, and therefore should be restricted. Indirect Land Use Change (ILUC) criteria as well as High Carbon Stock (HCS) will be part of the calculation that determines which biofuels are “risky”. But that is not all.

The European Commission has raised concerns about the use of ILUC: this stems from the previous attempts to introduce ILUC into EU biofuels policy, when experts in the European Commission understood that ILUC simply was not reliable enough to be used as a basis for regulation. This is the diplomatic description: less diplomatic would be to describe it bluntly as junk science.

ILUC is not only a problem for Palm Oil: the domestic European oilseed industry has some reticence about it as well. Rapeseed biofuels do not come out well from GHG emissions calculations, including those related to ILUC.

The European Commission knows that using those criteria would not be sufficient to justify discrimination against Palm Oil (which is the ultimate political objective for the EU, clearly stated by Members of the European Parliament). The ruse to square this circle is the “Deforestation Criteria”.

The “Deforestation Criteria” is the real danger to Palm Oil, and this is how the EU will bring in the new disguised ban on Palm Oil.

Who is in favour of this approach? NGOs remain strongly supportive of ILUC; European industry remains opposed. European groups that are quasi supporters of Palm Oil are supportive. As indicated above, the European Commission is rethinking its position on ILUC as it doesn’t want to harm its domestic oilseed producers and biofuel industry.

Can everyone, then, agree on the “Deforestation Criteria”? The European Commission Directorate General for Energy, who oversaw the negotiations of the Renewable Energy Directive, has the lead in working on the “Deforestation Criteria”. It will very likely receive input from the Directorate General for Environment, that has been pressured in the last couple of months by Members of the European Parliament, to regulate Palm Oil.

Since 2017, the European Parliament voted 9 times against Palm Oil, on various reports and regulations such as the own initiative report on Palm Oil and Deforestation by Communist MEP Katerina Konecna, and the report by Green MEP Heidi Hautala on Forests.

Green MEP Bas Eickhout and others, vigorously fought to have the Palm Oil ban be part of the final RED text, only to see the Commission and Council withdraw it from the final text in June 2018. The political objective of MEPs is simple: to ban Palm Oil from Europe. If ILUC achieves this, they will support it. If ILUC is replaced by “Deforestation Criteria”, they will support that too, as long as it achieves their political objective.

EU Member States are divided. For example, France, a major rapeseed producer but also an important trade partner for Malaysia, positioned itself against the Palm Oil biofuels ban during the RED Trilogue negotiations. France would surely oppose ILUC (to protect its own farmers) – but would they risk angering Malaysia and Indonesia by supporting the “Deforestation Criteria”? Other large countries, notably Italy and Spain, face similar questions.

Central and Eastern European Member States – mainly Hungary and Poland – are supported by a strong and well-funded rapeseed industry lobbying, and were supportive of the Palm Oil ban. There is little doubt that they will push for an anti-Palm Oil “Deforestation Criteria” (but, once again, they are unlikely to support outright ILUC factors that could harm their own biofuel industries).

Domestic rapeseed industries across Europe are following the ILUC/HCS debate with strong interest. They know that any ILUC/HCS criteria imposed upon them could be detrimental to their declining market relevance. In the alternative, ILUC/HCS criteria imposed on the Palm Oil industry is their saving grace.

So, is anyone still lobbying hard for ILUC? Brussels based Green NGO Transport & Environment (T&E) has long been lobbying the European Parliament to ban Palm Oil. The radical NGO launched a campaign before the revision of the RED calling the EU to act against Palm Oil based biofuels, and is one of several NGOs to have long supported ILUC. They are likely to once again set themselves up as the centre of the anti-Palm Oil civil society lobby in Brussels. Pro-ILUC, but also pro”Deforestation Criteria”.

How will the process work? The Commission is to work on a Delegated Act that will set the criteria aimed at determining which biofuels are “risky”. The Commission is evaluating how to leverage ILUC/HCS calculations within this Delegated Act: and what would be the parameters and methodology of any “Deforestation Criteria”. This process is done behind closed doors, but reportedly, an Expert Committee – led by Christian Leffler, Deputy Secretary-General of the European External Action Service (EEAS) and invitations were sent out to both Malaysia and Indonesia to take part in it. Delegates from the EU are set to travel the week of 22 October to Malaysia.  It remains to be seen whether this is a serious committee, or just more European political trickery aimed at hoodwinking the Palm Oil producing countries into ceasing and desisting any campaigning against the “Deforestation Criteria”.

Malaysian Minister of Primary Industries Ms. Teresa Kok was recently in Brussels to meet with officials and declared in a recent interview that “the whole policy on ILUC is very damaging to our palm oil sector”.

This follows a statement by the Council of Palm Oil Producing Countries (CPOPC) warning Europe about this approach and noting that “while CPOPC considers that the scientific community of palm oil producing countries should engage with the Commission, the Governments in the developing world should be fearful of being drawn into acknowledging, accepting or offering legitimacy to the ILUC scheme within the RED II”.

This leaves the European Commission with 5 months to prepare the text of the “Deforestation Criteria”. How will it integrate ILUC/HCS – given that even the Commission knows that these approaches are effectively “junk science”? Perhaps ILUC will become less prominent, and perhaps there is now a strong movement amongst the various European opponents of Palm Oil – that the “Deforestation Criteria” is the best way for them to honour the Parliament’s stated political objective of banning Palm Oil biofuels from Europe.