The Oil Palm

New Report Concludes EU Would Be Wrong to Pursue ILUC Policy

Policy would have consequences for economy, consumers and for the EU’s Environmental Goals

A new report, released this month in Brussels by Copenhagen Economics, demonstrates existing conflicts of opinion within the EU on the validity of integrating additional sustainability criteria, such as an indirect land use change (ILUC) factor, in to EU legislation relating to the promotion of biofuels.

The European Parliament has requested that by July the Commission produce an ILUC impact assessment and possible policy options but this has been delayed due to internal disagreements. In the meantime the Commission has accepted seven biofuels certification schemes that qualify biofuels as meeting the existing sustainability targets set out by the Renewable Energy Directive (RED). Despite the Commissioner for Energy, Gunter Oettinger, publically acknowledging that ILUC cannot be measured, the Commission continues to look at policy options based on the ‘precautionary principle’ and despite evidence produced by Copenhagen Economics that “…the current lack of scientific evidence is still not mature enough to be used as the basis of new European legislation.” Some MEPs are calling for the Commission to go even further and develop carbon default values for different biofuels crops.

The Copenhagen Economics’ report considers this policy model, and finds it to be deeply flawed. Based on analysis of available studies on indirect land use change the authors conclude that it is impossible to calculate the difference in emissions resulting from land use change between biofuels crops. Therefore any policy built around carbon default numbers would be arbitrary and would likely trigger WTO disputes.

While EU institutions continue to debate among themselves – and with EU-supported non-governmental organizations, it is increasingly clear that their objective is to design a policy that further discriminates against Malaysian palm oil with a view to restricting entry in to the European biofuels market. But as this report points out, if Europe were to rely on imports of biofuel derived from palm oil to a greater extent, it would be to the benefit of Member States and consumers by significantly reducing the cost of reaching environmental targets and at the same time support millions of jobs in the developing world.

It is also important to consider that palm oil’s greatest handicap in this debate is due to its superiority among oilseeds. As the most efficient vegetable oilseed, it has made Malaysia a leading producer of vegetable oils, an important ingredient in peoples’ daily diets. And thanks to land efficiency, Malaysia is capable of producing significant quantities while also retaining its status as a leader in conservation.

That the EU should seek to vilify the industry speaks volumes not to their claims, but to our competitive advantage over EU oilseeds. For the sake of consumers, the EU’s low-carbon ambitions and Malaysian consumers, it is important that the debate surrounding ILUC not be used to justify protectionist trade barriers.

The full report can be read here.