Commission consults – but does it listen?
Last week the European Commission held a consultation on the forthcoming Renewable Energy Directive Delegated Act, which will regulate the biofuels market in the European Union from February 2019.
By design or coincidence the meeting took place at the same time the revised RED text was passed into law.
Our intel from the meeting didn’t provide any major surprises, bar one (see below). Rather, it confirms the vigour with which European rulemakers are attempting to force imported biofuels and biofuel feedstocks out of the EU market.
There were four key points to note from the Commission’s presentations.
First, as we knew, the Delegated Act will specify the criteria for high- and low- ILUC risk biofuels. The Act will also be accompanied by a Commission-authored report on how biofuels have expanded, written by the Joint Research Council (JRC). This is to deal with the particular clause in the RED text, which states that biofuels will be considered high risk if there is ‘significant expansion’ into high carbon stock areas.
Second, the Commission is still attempting to deal with ILUC in a way that is “objective, balanced and based on solid scientific evidence.” This will be difficult given the problems faced in observing ILUC. As has been pointed out several times before, ILUC can only be inferred.
Third, and this is the surprise, Member States will be able to ‘make additional distinctions’ for biofuels after the ILUC criteria have been determined by the European Commission. The process or legal instrument for this does not appear to have been determined, and it may present some tension between the Member States and Brussels.
Fourth, the JRC is going to draw heavily on its previous studies on deforestation and crop expansion, with a particular emphasis on emissions coming from particular feedstocks. This is going to present some quite tricky problems for the Commission. The JRC report from 2014, for example, notes the large differences between emissions for different countries from the same feedstocks.
This problem was raised by the delegate from Fedepalma, who stated: “The European Commission shouldn’t focus on a crop globally but look at the situation in different regions. For example, for palm oil in Columbia, there is close to no deforestation. Some here say that palm oil is responsible for deforestation, that is not true, look at the situation in the different regions”.
This presents the problem of a potentially perverse outcome. If, for example, palm oil is considered a ‘high risk’ feedstock by default with no distinction between countries, but certain producers access the RED via certification, then there is nothing to prevent any number of countries simply cutting down large tracts of forest to plant oil palm going into the future. In other words, there is no incentive for any countries to adapt their domestic laws to prevent expansion. This underlines the sheer absurdity of the ‘feedstock’ approach.
One point of contention among most representatives at the meeting was that prior to the consultation, the EU held a government-to-government meeting with ‘high level experts’ from the EU’s trading partners. FEDIOL, the EU body that represents the bloc’s vegetable oil industry wondered why no one in the industry – or even NGOs – are considered ‘high level experts’.
Indonesia tees off at the WTO; Mahathir trashes EU
The Government of Indonesia has taken the European Union to task once again at the World Trade Organization over the Renewable Energy Directive during a Technical Barriers to Trade (TBT) meeting on November 15.
Following on from its questioning at previous TBT meetings, according to Borderlex, Indonesia didn’t hold back, stating:
Can the EU unequivocally state that RED II will not be used to discriminate against palm oil to the advantage of EU home produced vegetable oils, especially rapeseed, at EU, member states and regional level? … If no action is taken by the EU to counter trade-restrictive actions at member state or regional level, does the EU acknowledge the right of Indonesian regions to likewise encourage ‘voluntary bans’ on imports of, for example, wines from Europe to Bali?
Indonesia also accused EU Member States of asking processors to keep palm methyl ester out of biofuel blends and only use its rapeseed equivalent.
At the previous TBT meeting in September, a number of palm-producing countries – Malaysia, Indonesia, Ecuador, Colombia, among others – questioned the EU’s approach on renewable policy. Indonesia again raised the UN Sustainable Development Goals and whether or how the new rules would impinge upon developing countries’ ability to meet them.
Prime Minister Mahathir also let fly at the EU during last week’s ASEAN Summit, criticising the bloc’s overall approach to palm oil. When asked about free trade and the European Union, Mahathir stated, “On the matter of free trade, I said (how) free trade but they start labelling Malaysian palm oil … That is not part of free trade.”
Iceland and Greenpeace pop RSPO’s bubble
The Iceland advertisement controversy did an extraordinary job of spiking positive media coverage of palm oil and new ‘no deforestation’ commitments coming from RSPO members. The advertisement – which was a re-badge of a Greenpeace animation — was deemed to be ‘political’ by advertising clearinghouse Clearcast, and therefore couldn’t be considered a commercial advertisement.
The advertisement underlined the ‘anti-palm’ nature of Greenpeace’s most recent ‘drop dirty palm oil’ campaign, despite Greenpeace’s protestations that it’s not ‘anti-palm oil’ and only ‘anti-deforestation’.
Iceland has doubled down. It is sticking to its guns and stating that it does not believe palm oil can be sustainably produced or procured, even with ‘no deforestation’ commitments.
There are some reasonably high stakes here. At last week’s RSPO meeting, RSPO Board Member Belinda Howell – who represents European retailers – stated that she was convinced that voting for new, stricter Principles and Criteria on deforestation and peat would mean the end of attacks on palm oil. It took less than 24 hours between the RSPO’s vote in favour and the attacks to commence.
Greenpeace, unsurprisingly, has stayed silent. The video has been re-watched and re-tweeted again and again since the media blow-up, anti-palm oil messages included.
An honest question: Wilmar and GAR worked with Greenpeace in good faith on the High Carbon Stock Approach (HCSA) and getting ‘no deforestation’ commitments through RSPO; do they have any regrets?
Popping RSPO’s bubble … continued
What was notable at last week’s RSPO meeting was that there was close to no discussion of the RED. There were some indirect mentions, namely that the incorporation of HCSA might assist palm oil to gain compliance with the RED ILUC criteria.
This sums up the divide between the world of RSPO and what’s best described as the ‘real’ world of hard laws and regulations.
RSPO – rightly or wrongly – is completely fixated on certified and non-certified palm oil. Everyone outside of RSPO, which is to say most people and particularly those in Europe, are more likely to see palm oil or palm oil-free. This is underlined by Iceland’s use of Greenpeace’s campaign material to reinforce its no-palm stance.
It’s this kind of thinking that has pushed Europe further away from having a policy that looks at the overall sustainability of palm oil and towards a policy aimed at removing palm oil from the RED altogether.
With this in mind, two questions around RSPO are as follows.
First, can the RSPO increase demand? The certified and non-certified fixation may have run its course. The EU is the only substantial market for RSPO-certified oil. That market is saturated. Uptake has levelled out for now. Producers are rightly saying that the ball is in court of the purchasers; purchasers got everything they wanted last week.
Second, can the RSPO increase supply? All the world’s major producers are part of RSPO. The barriers to entry are high, and there is an excess of certified product. Given the compliance costs, what is the business case for joining RSPO as a new major supplier? Why wouldn’t companies simply go with a national standard like MSPO?
One answer might be yes, but only if purchasers really come to the party. And when they do, they’re going to have to battle the Iceland, Greenpeace and ‘anti palm oil’ thinking all over again.