Is Norway Trying to Sink Indonesia-EFTA Over Palm Oil?

Norway’s Government appears to be throwing its support behind an effort to sink the European Free Trade Area’s trade agreement with Indonesia – and palm oil is the reason.

Last week, the Norwegian Government-funded activist group, Rainforest Foundation Norway (RFN), launched a new effort (along with a report) attacking palm oil biofuels.

There are three central aspects to RFN’s attacks:

  1. The report itself
  2. The timing of the report in relation to the discussions taking place in Brussels and Geneva over the legality of the Renewable Energy Directive Delegated Act
  3. The implications for Norway’s geopolitical relationship with Indonesia, given that Norway is simultaneously a) negotiating a trade deal with Indonesia, via EFTA; and b) funding activist groups to attack Indonesia and undermine that trade deal

All of this takes place with a background of Norway’s historically hypocritical approach to environmental protection, of which more later.

The Report: Factual or Disinformation?

The report makes a key contention: that increased global biofuel demand will increase deforestation.

The report argues that a scenario in which palm-based biodiesel continues to be used will result in an additional 5 million ha of forest loss in Indonesia to 2030 – equivalent to about 5 per cent of Indonesia’s total forest area.

It bases this on an assumption that demand for vegetable oils for biofuel increases with demand for vegetable oil for food, citing demand projections in the OECD-FAO Agricultural Outlook.

However, the same OECD report has a different set of assumptions for vegetable oil for biodiesel use. It projects that global biodiesel production will actually fall – albeit marginally – between 2020 and 2028.

The assumptions that the OECD uses for its projections for food demand and biodiesel demand are different; and they are clearly laid out in the Outlook’s annex.

The reasons for the different assumptions are obvious; biodiesel is used primarily for transport, and the transport sector is going through a massive transformation when it comes to energy.

So, the claims in Rainforest Foundation’s report are based on the wrong inputs. This kind of basic error cannot be attributed to a mistake; this is an intentional attempt to distort the work of the OECD, in order to print a sensationalist anti-palm oil report.

Muddying Trade Discussions in Brussels and Geneva

Further to the errors highlighted above, the report argues that the EU’s Renewable Energy Directive (RED) – and the RED Delegated Act – should maintain its ban on imported biofuels and the use of palm oil in biofuel feedstocks. It pushes this idea one step further, calling for an additional ban on soy-based biodiesel and the use of soy as a feedstock. This is in line with what RFN and EU Parliamentary allies have advocating for over the past year.

This past fall, Palm Oil Monitor came into possession of and published a vast number of official European Union documents that clearly spell out the European Union’s deliberate and calculated strategy to keep palm oil out of the EU.

This produced a fierce response from palm oil producing countries, particularly Indonesia. The then-newly appointed Deputy Foreign Affairs Minister Mahendra Siregar sent a strongly-worded letter to outgoing EU Trade Commissioner Cecilia Malmstrom.

Minister Siregar wrote that Indonesia is negotiating with the EU ‘in good faith’ on sustainability issues, but he follows by saying: “It may well be that the EU is not able to be a genuine partner for Indonesia on environmental challenges”, citing conflicts of interest with domestic oilseed producers, and NGOs.

The RFN report has been released in time to coincide with the EU’s review of the RED and ongoing discussions at the WTO over the legality of the Delegated Act. Preliminary work has commenced on the European Commission’s reassessment of different aspects of the RED. The Rainforest Foundation Norway report is clearly targeted towards feeding into that process.

The action is also directly aimed at initiatives by airlines and the aviation industry more broadly to develop standards for biofuels for aviation.

Norway’s Disappointing Environmental Record

Norway’s record on the environment is patchy at best, and at worst, completely hypocritical. This is largely because of the country’s reliance upon oil revenues for wealth.

  • Since the 1970s, the total contribution of Statoil, the Norwegian state-owned oil company, to Norway’s economy has been around USD1.7 trillion;
  • Statoil is almost entirely responsible for the coffers of Norway’s sovereign wealth fund, which has been a key player in calling for divestment from palm oil operations;
  • The Government of Norway still holds 67 per cent – two thirds – of Statoil’s stock. It continues to be the largest shareholder and continues to benefit from the company’s oil revenues;
  • Statoil is a major contributor to climate change; one NGO estimates that Statoil has been responsible for around 0.5 per cent of global fossil fuel emissions over the past 30 years.

Moreover, an investigation by the Financial Times exposes this duplicitous public policy. Last year the Norwegian authorities approved a plan that would allow millions of tonnes of industrial waste to be dumped into Forde fjord in Norway.  Further to this, Norway also opened up new areas of Norway’s natural habitats for fossil fuel development . This is not in line with Norway’s supposed ‘planet friendly’ approach, and undermines Norway’s credibility as a player in the public policy debate over environmental protection=.

Moreover, Norway made its wealth by selling fossil fuels and causing climate change. Yet no NGOs or MEPs have criticised Statoil – in which the Norwegian government has a 60% stake – as a major contributor to climate change.

Will RFN and other Norwegian NGOs never criticize their paymasters; is it only less developed countries that are in their crosshairs?

RFN’s Funders: Norwegian Government

Rainforest Foundation Norway receives significant funding from the Norwegian Ministry of Foreign Affairs, and the Norwegian Agency for Development Cooperation (NORAD), Norway’s aid agency. In some years funding has exceeded USD20 million.

Moreover, NORAD together with the Norwegian Ministry of Climate and Environment, provided up to €750,000 to Transport & Environment (T&E), an organization in Brussels that discredits palm oil and soy, in a bid to protect the EU’s domestic oilseeds industry.

And NORAD also funded activities by former US Congressman turned environmental lobbyist-warrior, Henry Waxman, , which appeared to be responsible for a major anti-palm oil media campaign last year, aimed specifically at palm oil renewables in the US, in a secret bid to unduly influence the U.S public policy, specifically during the Obama days.

This falls in line with bigger plans from Norway to discredit palm oil. The sovereign wealth fund – Norwegian Pension Fund – has routinely announced divestment strategies from palm oil-related companies.

Let’s be clear: to date, neither the Norwegian Government nor NORAD have disavowed this report. Until that happens, the facts are clear: this report was undertaken with the consent of the Norwegian Government.

Geopolitical Implications

The current biofuel spat between Indonesia and the EU has expanded to other countries. The Indonesia-EFTA CEPA trade deal has been threatened with a possible referendum action in Switzerland.

The RFN report is only adding to that problem. Funding of RFN’s activity therefore threatens the future of the IE-EFTA CEPA: why would the Norwegian government fund activities that threaten Indonesia’s exports to other countries?

Could it be a protectionist move to enable Norwegian business to fill the void in this market? It has been reported, since about 18 months ago, that reportedly Norway was planning to boost its biofuels blend levels to 20%, which would represent a potential market for Norwegian producers.

Looking Ahead

Indonesia – like many other countries in the region – is currently reeling from the COVID-19 crisis. This report by RFN was launched just as Indonesian authorities were coming to grips with a massive outbreak. There is no doubt that the pandemic will have a significant impact on Indonesia, which is still a developing country. RFN and NORAD should reconsider what they think ‘development assistance’ is during a pandemic; and Indonesian lawmakers should reconsider how long they should tolerate Norway’s hypocrisy.

Norway has a position of “do as I say, not as I do” when it comes to protecting the environment. They are asking less-developed countries to make sacrifices that Norway is not willing to make itself. They are funding NGOs to attack palm producing countries, to avoid scrutiny of Norway’s own environmental destruction.

If Norway is serious and committed to helping Indonesia and other palm oil producing countries then the Norwegian Government should:

  • Oppose any discriminatory measures against palm oil, instead of funding anti-palm oil activists;
  • Participate in programs to help palm oil small farmers;
  • Have the Norwegian Ambassador to Jakarta, Mr. Vegard Kaale, clarify Norway’s position on palm oil;
  • Publicly commit to supporting the Indonesia – EFTA CEPA deal, and reject the position of RFN and other NGOs