Malaysia mounts PR blitz against EU proposals to curb palm oil use

Malaysian palm oil producers have launched a high-profile media and lobbying campaign – including a pitch to German chancellor Angela Merkel – against EU proposals to exclude the commodity from the bloc's revised Renewable Energy Directive (RED).

Palm oil is blended with diesel in biodiesel so that EU member states can meet 2020 renewable energy targets in transport and heating and is a major export earner for Malaysia and neighbouring Indonesia. 

According to figures in an EU-commissioned report in 2016, as much as 45% of the EU’s palm oil imports were used in biodiesel in 2014, although the European Biodiesel Board, an industry lobby, says the figure was more like 15%.

But the crop, which also widely used in cosmetics, chemicals and food, is blamed for causing rapid deforestation and climate change, prompting EU lawmakers to propose a ban on palm oil from 2021 onwards.

The legislation has entered a critical phase and is subject to a vote and amendments in a plenary vote in the EU Parliament later this month ahead of further consideration by the EU institutions.

Unjust

According to Malaysian press reports, the campaign includes a digital advertisement to be broadcast in Europe, which the country’s palm oil producers say highlights the EU's "unjust and discriminatory campaign".

Malaysian producers say a ban threatens “to sentence 3.2 million Malaysians to a life of poverty".

“Malaysia’s Small Farmers demand the European Council reject the proposals of the European Parliament, and reaffirm Europe’s commitment to Southeast Asia, Malaysia and small palm oil farmers,” the statement from producers said.

The focus on social and economic impacts is an attempt to counter the notion that large agribusinesses in South-East Asia are by far the main beneficiaries of palm oil production. 

Palm oil has a major image problem among the general public in EU member states, partly because deforestation and the impact on species such as the orangutan.

Last month, Indonesia’s Energy and Mineral Resources Minister Ignasius Jonan said the country could retaliate against French exporters if the French government continued to push a perceived an anti-palm oil agenda.

South-East Asia are growing export markets for France, Germany and the EU as a whole, including planes made by Airbus and energy equipment such as turbines manufactured by Siemens.

France’s Total and Finland’s Neste are major producers of hydrogenated vegetable oil (HVO), a biodiesel that uses palm oil as a feedstock.

Assurances

Malaysian Minister of Trade and Plantation Datuk Seri Mah Siew Keong urged the German government to deliver on assurances he says were provided to Malaysian Prime Minister Najib by Chancellor Merkel against the imposition of any form of discrimination against palm oil.

He made the call in an opinion piece published in German business daily Handelsblatt.

The Malaysian government said many smallholders are unable to meet the main industry standard designed by the Roundtable on Sustainable Palm Oil (RSPO) because they “cannot possibly implement the complex conditions” related to accounting and labour practices.

Malaysia says its own standard, the Sustainable Palm Oil Standard (MSPO) is a “world-leading” certification that would enable smallholders to meet environmental standards.

The MSPO has not yet been recognised by the EU, which usually takes up to two years to scrutinise how these certifications measure the environmental impact of palm oil production.

Despite the participation of environmental NGOs in the RSPO, some green groups point out that certification standards have failed to prevent deforestation in areas controlled by some of RSPO members.

RSPO says around a fifth of the world’s production of palm oil is under its certification, which it defends as robust. Most of the rest of palm oil production is consumed by large developing economies that have much less stringent requirements than the EU.   

For example, China is considering whether to mandate the use of Class 5 biodiesel, which would prove an important growth market for crude palm oil.

Julia Christian, a campaigner with environmental group FERN, said an increase in demand for certified palm oil will have a knock-on effect on demand for non-certified palm oil.  

“If the EU increases global demand for palm oil by setting targets to encourage biofuel use [in the Renewable Energy Directive], the inevitable result is a global increase in deforestation —even if the EU manages to keep this “dirty” palm oil out of its own borders,” she told Energy Census.