Palm Oil Monitor Weekly Update – 6th November 2019

The RED Review has already begun

The implementation of the Renewable Energy Directive (RED) hasn’t commenced in earnest, but the European Commission has already begun its review of Indirect Land Use Change (ILUC) and relevant data.

The RED itself states that the Commission will undertake a review of the RED in 2021, with a possible review of the methodology in 2023.

However, in the middle of July the Commission announced the tender for Support for the Implementation of the Provisions on ILUC Set out in the Renewable Energy Directive.”

The tender closed at the end of August. It is yet to be awarded, but it will be completed after three years.

This is important for several reasons.

First, the Commission – and particularly its Directorate-General for Energy – understands that the indirect land use data, criteria and methodology is weak. If it was strong, it would not need to award a EUR3.6 million (nearly MYR 17 million or IDR 60 billion) contract to support it and prop it up.

Second, given the general lack of knowledge on ILUC, this study will become something of a benchmark, not just for the RED, but also for the forthcoming Action Plan on Deforestation.

Here are our key takeaways from the tender itself.


ILUC is treated as settled 

The work is split up into two parts. The first is a review of expansion into HCS areas, and associated emissions, “including the small holders provision” in the Delegated Act. The second is the “the applicability of the methodology for low ILUC-risk biofuels and bioliquids from actual plantations in 3 different geographical areas.”

One of the key problems with ILUC since it was first coined is that it cannot be observed; it can only be modelled. This is something that the EU itself has conceded.

Despite this, there’s now a shift in the language in the tender: ILUC is effectively being treated as though it is settled. It is understood that there are ‘risks’ of ILUC, but these are entirely dependent on the modelling that is used.

The tender moves the debate – and the research — to crop expansion on high carbon stock (HCS) areas.

The EU is effectively asking the researchers to maintain the unproven assertion that expansion of a single crop on HCS areas results in indirect land use change in other parts of the world. More than that, the Commission is seeking an amortization period of 20 years, i.e. they are seeking to potentially link historical expansion with future ILUC – as well as “emissions from fires connected to the land use change”. It is worth noting in this context that this review does not cover North America, or Russia, where wildfires have razed vast areas of land throughout 2019, including in Russia’s northern Boreal forests, the largest in the world.


Stakeholders are given short shrift

Stakeholders – particularly from developing countries – are given short shrift. Stakeholder consultation for the two studies reads as follows:

“The contractor will organise a stakeholder event with experts from Member States, industry, certification bodies and academia/NGOs to discuss the preliminary findings. Stakeholders should also be allowed to submit comments in writing. The workshop shall be organized in Brussels and target around 80 stakeholders and experts, identified by the contractor. The final list of participants will be agreed with the Commission services … Travel and accommodations expenses will be at the charge of the stakeholders and experts. No translation will be made available and the language and background papers of the workshop will be in English. The approximate duration of the expert workshops will be one day.”

Note the following: stakeholders should be allowed (not must be allowed) to submit comments. In addition, the Commission is in a position to completely stack these events with those agreeing to everything about ILUC and HCS expansion that the EU has already published.

In other words, the Commission is giving developing countries exporting palm oil – realistically – a few hours of their time to contribute to this study that is going to impact ASEAN’s largest agricultural export. And virtually no opportunity to the African French speaking stakeholders. This is a shame.

Researchers should be careful here with how they treat producer countries. The last thing they would need is a lack of cooperation from producer country governments for in-country activities (see below). A boycott of any activity, for example, would be embarrassing and undermine the study.  They or the Commission should consider additional consultation sessions with exporting country delegations.


What are the pilot studies testing?

The ‘ILUC applicability’ study calls for the testing of low-risk ILUC criteria and certification for three oil crops, one sugar crop and one starch crop. The areas are to be in the EU, Latin America and Southeast Asia, but not in Africa.

This is notable politically for its lack of inclusion of the US, which is the largest soybean producer. This reinforces the notion that the deal between the US and EU on soybean sustainability is untouchable, and that relationships with the US are more important than growth in the ASEAN region.

But the technical question is what they are testing and measuring?

One of the key tests for international standards and objectivity is whether quantities and qualities can actually be measured. Given that ILUC cannot be observed – only modelled – we’re still questioning how this can happen.

The pilot studies are supposed to test the ‘additionality’ of certain feedstocks that be certified as low ILUC risk.  The criteria for large palm growers from existing plantations are that they meet financial additionality, sustainable criteria and additional feedstock (i.e. productivity gains). This will be difficult – but not impossible — for many large plantations to meet, particularly financial additionality. Whether it’s financially viable is another question.

But on degraded land – which is easily identifiable – only sustainability and additional feedstock criteria will need to be met. But will it be even possible to test degraded land criteria? It’s important to note that although criteria have been developed, no indicators have been developed. And in order to test the criteria, indicators need to be developed. This is standards basics.


The EU objective: Policy-based evidence 

The EU is putting together what can only be described as basic data and methods when it comes to RED and the ILUC. The Delegated Act ‘scientific study’ was hastily drawn up and flawed on a number of levels. The support work here – the criteria and the generation of the HCS expansion data – should have been sealed in the final version of the Delegated Act itself.

Producer countries should be considering how they will respond to what the EU is producing. It’s reasonably clear that the Commission wants only the bare minimum when it comes consultation and values their input very little.

But in our view, producer countries should be considering undertaking studies into:

  • HCS expansion data and global deforestation data;
  • Continued debunking of indirect land use change, particularly when it comes to fires;
  • Critiquing the Commission’s approach to developing a ‘standard’ for low-risk ILUC certification;
  • Pressuring the Commission for greater input into the study;
  • Bilateral cooperation on parallel studies;
  • Raising the issue with the EU at appropriate international forums.

There is so little credible scientific material out there on any of these subjects. Producer countries need to be careful that the Commission doesn’t simply fill that void.