Palm Oil Monitor – Weekly Update 9th July 2018

EURT Roundup

The RSPO European Roundtable (EURT) was recently held in Paris after weeks of lengthy debate around palm in Europe as part of the Renewable Energy Directive.

Although the proposed ban on palm oil biofuels in the Renewable Energy Directive has now been removed, it’s reasonably clear that NGOs and activists in Europe are well-prepared for the next round of policy battles that have emerged from the revised RED text.

Here are our key takeaways from the meeting.

HCS might become a new flashpoint

The compromise RED text indicated that indirect land use change (ILUC) and high carbon stock (HCS) forests will likely have their scope and definitions shifted.

ILUC has always been a contentious point among policymakers. However, MEPs also called for HCS to be redefined under the RED. The existing definition in the RED is from 2008, based on the FAO definition and is quite broad.

It was set well before Greenpeace, TFT and Golden Agri Resources established a new definition in 2010, which then led to the “HCS Approach”, which is a landscape approach that also includes social criteria. We’re going to call this the “Greenpeace Approach.” The threshold for HCS is somewhere between scrub and young regenerating forest, with no well-defined figure to distinguish the two. This is what the Greenpeace-backed HCS Steering Group refers to as ‘no deforestation in practice’ in its HCS Toolkit. And this is what MEPs are pushing.

RSPO is currently reviewing its principles and criteria and there is a proposal to have the Greenpeace Approach used in the new proposed ‘no deforestation’ requirement. This will be voted on in November and apply to any new developments after that date, if accepted.

In other words, there is a push to have Greenpeace’s HCS Approach accepted in both RSPO and in EU regulations. Pressure will mount for either or both to accept the tougher definition.

Greenpeace gets Wilmar, but is that all?

Greenpeace went after Wilmar in a big way at the EURT. The NGO accused Wilmar – which has been one of the poster-children for no deforestation policies – of clearing several thousand hectares of forest in Kalimantan, Papua and Sumatra.

More specifically, the claims are against Gama, a company that has familial links to the Wilmar conglomerate, and that the land was cleared following Wilmar’s adoption of HCSA and its no deforestation, no peat, no exploitation policies.

The company’s commitments were made in 2014; part of that was a ‘deforestation free’ supply agreement with Unilever, the world’s largest palm buyer.

Wilmar founder Martua Sitorus has announced he is standing down as CEO of Wilmar as a result of the report.

This is a big step, but not entirely surprising. This is a story about the world’s largest trader and buyer of the world’s most consumed edible oil. Unilever’s decision to go with Wilmar was based on Unilever CEO Paul Polman’s bigger position on sustainability. The stakes are high for him, too.

Greenpeace will try to capitalise on this further; they will likely state that this is why the Greenpeace HCS Approach is required.

Are national targets the next big battle?

Under the RED compromise, national targets for lower feed- or food-based crops can be set by EU member state governments.

The push for these national targets may already have started, with two policy proposals using the EURT as a backdrop.

First, Le JDD, a weekly French newspaper, ran a conveniently timed article on France’s ‘National Strategy to Combat Deforestation’ (SNDI).

Last year French Environment Minister Nicolas Hulot said that his government would publish the SNDI by March of this year.

According to the article, environmental groups are expecting bigger commitments on biofuels.

Second, the signatories to the ‘Amsterdam Declaration’ met following the EURT meeting in Paris. The Amsterdam Declaration was signed in 2015 by Denmark, Germany, Italy, the Netherlands, Norway and the United Kingdom. Their objective was 100 per cent sustainable palm oil going into Europe by 2020, alongside a ‘zero deforestation’ commitment.

As with the pressure on the French Government’s SNDI, there will be growing pressure on the Amsterdam Declaration countries to set a lower limit for crop-based renewable energy consumption going forward.

 

EU Parliament and UK Updates

MEPs, Commission, Indonesia push back against palm oil bans

Chair of the EU-ASEAN delegation, German MEP Werner Langen, has pushed back against the myriad proposals to have trade restrictions placed on palm oil.

In a lengthy letter to MEPs written last week, he described palm oil as a ‘vital commodity.’

Langen’s criticisms of the actions of his fellow MEPs are myriad, including its potential impact on poverty reduction efforts among smallholders in Indonesia – he points out that around 16 million people in the region are dependent on palm oil for employment.

At the same time, Vincent Guérend, the EU ambassador to Indonesia, said in a statement that the compromise “will not single out, nor ban palm oil … The EU is and remains the most open market for Indonesian palm oil.”

However, one of Langen’s biggest criticisms is this: it will jeopardise EU-ASEAN relations, noting the threats of retaliation coming from Malaysia and Indonesia. This is of critical importance, particularly for Germany, which is trying to expand its export markets for goods and services around the world. Palm oil is also a critical input into food manufacturing in Germany.

Langen supports the RED compromise text, as long as it is WTO compliant. Clearly he understands that it’s not just palm oil exports that at stake.

But the Commission – and the Ambassador — also need to be careful. Tying palm oil to HCS risks will single it out and create a de facto ban.

Indonesia is acutely aware of this. Indonesian Minister for Maritime Affairs Luhut Pandjaitan has laid out their push back. He has planned a meeting in August between oil palm smallholders, the EU and the UN that will examine EU actions in the context of the UN Sustainable Development Goals (SDGs), followed by another meeting in September where the EU policy’s impact on poverty reduction will be examined. Both will feed into the UN climate meeting at the end of the year.

Is the UK washing its hands?

The UK’s Secretary of State for Business, Energy and Industrial Strategy Greg Clark has responded to a letter from the Ambassadors of Malaysia, Indonesia, Thailand, Honduras and Columbia, which was penned in early May.

The original letter – addressed to Boris Johnston – expressed concern that the UK-based MEPs were voting in favour of the palm oil ban.

The response is simple: it simply rehashes what is contained in the compromise text and suggests that the respective Ambassadors get in touch with Brussels.

It is somewhat understandable that the UK government doesn’t want to deal with a problem that Brussels has created. However, the UK has pushed a Brussels-like position by signing on to the Amsterdam Declaration.

The UK has talked about a FTA with Malaysia post-Brexit; at some point it will realise that  improved market access for palm oil is non-negotiable.

DEVE Committee votes on deforestation

The European Parliament’s DEVE Committee almost unanimously supported the report on deforestation and forests in developing countries last week. This was to be expected.

During the Parliamentary session, MEP Heidi Hautala, the key sponsor of the bill, expressed relief that this would finally mean that the Commission and the EU more broadly would commence implementation of the EU Action Plan on Deforestation.

As we’ve noted previously, one of the supporting opinions on the report came from Katerina Konecna, a vigorous opponent of palm oil in the European Parliament and in other forums.

Arguably the oddest thing Konecna has said in this debate is around smallholders. She told the Guardian that she understands the plight of smallholders, but “these smallholders are a slice of big national and international corporations who are responsible for deforestation.” That’s rubbish, and the MEP knows it.

The DEVE is tasked with international development – which includes reducing poverty – but it has just supported a report attacking proven successful tools for poverty reduction (i.e. palm oil and other smallholder agriculture). That irony appears to have been lost on Europe’s Parliamentarians.

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