POM Insight: Delegated Act Scientific Report
The EU is attempting to do two things in the Delegated Act’s scientific report.
First, it’s trying to provide the basis for ‘low-ILUC risk’ classification of biofuels. In its previous assessments of whether low-ILUC certification was possible in 2017, its consultants referred to them as being in their infancy.
So, without any strong scientific basis, it simply seeks to use deforestation by individual commodities as a proxy for ‘high ILUC risk’.
There’s no underlining how incorrect this is. The same 2017 report pointed out that ILUC factors for palm were lower than sunflower oil.
Second, it’s trying to do something that has never been achieved, despite decades of research into deforestation and satellite imaging: perfectly align deforestation data with crop or land-use data.
There’s a reason this hasn’t been done previously: it’s a very difficult thing to do.
Nonetheless, the European Commission attempts to do this by putting together three unrelated and unharmonised sets of data on cropland expansion, cropland area and commodity-driven deforestation.
The problems can be summarised as follows:
- There’s no accurate, satellite-based figure of palm crop expansion between 2008 and 2015;
- Data for commodity-based deforestation based on satellite data does not appear to adequately disaggregate palm oil from other commodities or account for replanting;
- Lining up ‘commodity based deforestation’ data with existing cropland map datasets is novel, but requires verification.
In 2017, the EU’s consultants stated:
- Datasets on biofuel crop production must be collected, synthesized and standardized to common data formats.
- Analysis of historical information on agricultural production, trade, prices and yield, as well as land use changes may require further attendance in order to get a better understanding of the fundamental parameters that generate ILUC.
- Increased data availability and convergence of data formats and transparency, could also potentially help for validation of models and increase the use of empirical models. Satellite monitoring can support this development for different purposes, including ILUC research.
None of these things were done for the current scientific study.
This report is supposed to be informing a regulation that will have far-reaching implications for global vegetable oil markets and for millions of farmers.
The EU needs to take it more seriously.
In 2010, the LSE published a paper that described the Renewable Energy Directive as an example of ‘policy based evidence gathering’. Nearly a decade later, not much has changed.
This is an example of why the global community is losing faith in the European Commission’s policy-making capacity.
What US Soya Deal May Mean for Palm
One of the questions being thrown around in Jakarta and Kuala Lumpur since the release of the EU’s RED Delegated Act is whether there will be a ‘low ILUC risk’ certification pathway for palm oil going forward.
More attention has been given to this since the approval of the US soybean sustainability standard, which gives US soybeans easier access to the EU biodiesel market.
Our sources indicate some palm oil officials doubt the genius of the US approach here, or how it will work if it only applies to the US and not Brazil and/or Argentine soya.
Here’s the takeaway: the approval happened quickly; it was clearly a political sop to the US, which was threatening tariffs on any number of EU exports, but particularly steel products and the German automobile industry.
Now there are two questions for palm oil producers. First, is a political deal on certification achievable for palm oil? Second, what would a certification deal look like?
A deal is without doubt achievable. As stated last week, Malaysian Prime Minister Dr Mahathir Mohamad is an experienced international player. Part of this is his ability to marshal troops. This has been on display at the EU-ASEAN Summit, where the EU was rebuffed on its cooperation overtures, with Malaysian Foreign Affairs Minister Saifuddin Abdullah confirming Malaysia and other ASEAN countries won’t support upgrading EU-ASEAN to a ‘Strategic Partnership’.
But there’s also a greater political weight when Indonesia is in the room. It is the fourth-most populous country in the world, and the largest economy in ASEAN – and palm oil is its largest agricultural export. When Indonesia speaks, other countries tend to listen, particularly when supported by ASEAN’s other major economies Malaysia and Thailand.
In other words, the political leverage is there.
The deal for US soybeans as a biofuel going forward has two parts.
The first is the EU’s approval of the US soybean standard. This was clearly political. There are any number of problems with the US standard meeting the EU’s sustainability criteria. The biggest one is that it technically doesn’t certify whether land was forested before the EU’s 2008 cutoff date. That this doesn’t matter in the eyes of EU regulators speaks volumes about what they’re prepared to accept.
But this ‘deal’ only lasts until the introduction of the revised RED.
The second part is the greenlighting of soybean as being ‘low ILUC risk’ in the new Delegated Act. This relies on the idea that soybean expansion in Latin America has had a very small impact on forests. This is despite the fact that according to the EU’s data sources for the Delegated Act, commodity-based deforestation in Latin America is double that of Southeast Asia, and the increase in soybean harvested area between 2008 and 2015 is more than ten times that of palm oil.
So, is there a low-ILUC risk certification pathway for palm? The scientific report left that pathway open, where it states:
“To ensure robust and harmonised implementation, the Commission will set out further technical details regarding concrete verification and auditing approaches in an Implementing Act in line with Article 30(8) of the REDII. The Commission will adopt this implementing act by 30 June 2021 at the latest. Voluntary schemes can certify low-ILUC risk fuels, developing their own standards individually, as they do for the purpose of certifying compliance with the sustainability criteria and the Commission can recognise such schemes in line with the provisions set out in REDII”.
In other words, there are 18 months for a case to be made for low-ILUC risk palm certification. Technical data on its own will not convince the EU that the pathway should be open. Robust technical data supporting palm’s emissions savings has been in place for years – but that didn’t stop palm being locked out going forward. The political case is essential.