EU Parliament Unfazed by Trade Fight over Palm Biofuel Phase-Out

by Hans Nicholas Jong (Mongabay.com/Eco-Business) A European member of parliament says the bloc isn’t concerned about threats by Indonesia and Malaysia to file a trade complaint over an EU policy to phase out palm oil-based biofuels by 2030. The two Southeast Asian countries have denounced the EU policy as discriminatory. -- The European Parliament will proceed with phasing out palm oil-based biofuel by 2030 despite threats of retaliatory action by Indonesia and Malaysia, the world’s biggest producers of the ubiquitous vegetable oil.

The policy was adopted earlier this year to curb the use of crops that cause deforestation in transportation fuel, over concerns that their production contributes to global carbon emissions and thus exacerbates climate change. But both Indonesia and Malaysia have warned of restricting European imports and other trade reprisals should the phase-out go ahead.

Eickhout (Bas Eickhout, a Dutch member of the European Parliament) said the policy was aimed at preventing unsustainable palm oil from being labeled as a renewable energy source.

EU member states will still be able to import and use palm oil-based biodiesel, but it will no longer be considered a renewable fuel, hence won’t be for the attendant subsidies.

Indonesia and Malaysia, which together supply about 85 per cent of the world’s palm oil, say they will jointly challenge the EU policy through the WTO’s dispute settlement body and other avenues, calling the decision a form of discrimination.

He also acknowledged efforts by Indonesia and Malaysia to address environmental concerns over the production of palm oil and improve its global reputation.

Indonesian President Widodo last year declared a moratorium on the issuance of new permits for oil palm plantations, while Malaysia is mulling a cap on the country’s total palm oil estate at 60,000 square kilometers (23,200 square miles), an area just 2.5 per cent larger than currently planted.

“What we see is there are now policies, changes in policies are putting in place,” Eickhout said. “I think that’s a good development. But we still have to look at the fact that there’s still a huge deforestation for palm oil purposes.”

He cited the spate of forest fires currently raging across large swaths of Indonesia, in what’s become the worst fire and haze season since 2015. Much of the fires were started to clear land for plantations, primarily oil palms. READ MORE