The European Parliament passed a Renewable Energy Directive on Wednesday that would ban the use of biodiesel made from palm oil by 2021, citing the environmental damage caused by the fuel. Malaysia, a major palm oil producer, called the decision a trade barrier, and said it was a form of “crop apartheid” because the EU will still allow other oilseeds to be used for biofuels.
The measure revises a 2009 EU policy that called for an increase in biofuels as a way to reduce fossil-fuel use and limit greenhouse gas emissions. Like the Renewable Fuel Standard put into place in the United States in 2005, the legislation led to a large increase in the production of biofuels. The directive will still need to be approved by the European Parliament, the executive European Commission, and EU national governments.
Over the years, concern has grown that the policy was driving the deforestation of tropical rainforests. In Indonesia and Malaysia, which together account for some 85 percent of palm oil production, the draining of carbon-rich peat lands for oil palm plantations has resulted in the release of massive amounts of carbon dioxide into the atmosphere. A 2016 study commissioned by the European Commission found that total greenhouse gas emissions from palm oil–based biodiesel are three times higher than those from conventional diesel fuels.
Diverting food commodities toward biofuels — whether corn or sugarcane ethanol or biodiesel derived from vegetable oils — also drives up food prices, especially in food-scarce regions in the developing world. Studies by the World Bank and others found that the demand for biofuels was among the factors responsible for the food crises of 2008.
Aside from other oilseed fuels, the EU directive would allow the use of palm oil in cosmetics, soaps, candles, and food. But leaked trade industry figures from 2016 revealed that EU palm oil imports have been increasingly diverted to biodiesel in recent years — up from 8 percent of palm oil imports in 2010 to 45 percent in 2014. If the ban goes through, it would have a massive impact on exporting countries such as Indonesia, Malaysia, and Thailand.
On Thursday, Malaysia’s Plantation Industries and Commodities Minister, Datuk Seri Mah Siew Keong, called the decision “a wholly unjustified blockade against Malaysian farmers, families, and communities,” and accused the EU of practicing “a form of crop apartheid.”
Indonesian Trade Minister Enggartiasto Lukita told reporters in Jakarta that there should be fair treatment for all vegetable oils, and that Indonesia had protested the EU’s “negative campaign” on palm oil on several occasions, according to Reuters.
Mah said the European Parliament’s allegation that Malaysia’s palm oil industry harms the environment was “demonstrably false.” Malaysia, which derives some 6 percent of its GDP from palm oil exports, views the decision as an “unacceptable and protectionist trade barrier, and a breach of the EU’s World Trade Organization commitments,” he added.
“If these hate campaigns and discriminatory policy against palm oil were to go on,” Mah said, “we can also retaliate. Malaysia, Indonesia, and Thailand are collectively big purchasers of EU products.”