DEFINITION OF SUSTAINABILITY DAMPENS PALM OIL EXPORTS TO EUROPE

By Siti Hawa Othman

KUALA LUMPUR, Nov 28 (Bernama) -- First it was the health issue, then the
environment and now palm oil has to endure further sustainability criteria
for imports to Europe.

"The definition of sustainability is being expanded. We are going to lose
market share if we did not do anything," director-general of Malaysian Palm Oil
Board, Datuk Dr Mohd Basri Wahid, told Bernama in Brussels recently.

Basri was a member of the recent palm oil and timber delegation to Germany,
the Netherlands and Belgium headed by Minister of Plantation Industries and
Commodities, Bernard Dompok.

The mission was organised by Malaysian Palm Oil Council and Malaysian Timber
Council.

Among others, it aims to improve market access for palm oil and timber
products as well as disseminate information on efforts taken on the issue of
their sustainability.

The European Union (EU) has set a target of 20 per cent renewable energy
sources in its energy consumption by 2020 and that biofuel would account for 10
per cent of the renewable energy use in the transport sector.

Expecting a spike in demand, the EU Renewable Energy Directive has provided
a number of sustainability criteria, among them, biofuel production must have
minimum greenhouse gas (GHG) savings of 35 per cent by 2010 when compared to
fossil fuel.

The directive also said areas with high carbon stock such as peatlands or
areas with high biodiversity such as primary forest should not be used for
biofuels production.

Basri said there was also the "indirect land use change" criteria, or
"iLUC".

The "iLUC" is the unintended consequence of releasing more carbon emissions
due to land use changes induced by the expansion of crop land for biofuel
production, the phenomenon whereby producing biomass at one location,
rainforests are destroyed at another.

The directive requires the European Commission to prepare a report by 2010
on the issue of iLUC, reviewing the impact that biofuels have, either directly
or via displacement, on land use change and associated GHG emissions.

"They are going into iLUC without proper studies," said Basri, lamenting how
palm oil was earlier subjected to one-sided view on its default value with
regard to GHG savings.

He said under the EU calculations, palm oil has carbon emission savings of
19 per cent and soyabean 31 per cent, both below the 35 per cent threshold which
showed some political manipulation.

"We provide our data but they don't. My researchers have gone to Brussels
but they (the EU) never disclose (their data). They have the final say," he
said.

It was reported that the GHG savings for rapeseed was 38 per cent, sunflower
51 per cent and sugar cane ethanol 71 per cent.

Basri said as the EU's GHG savings target would gradually be increased from
35 to 60 per cent by 2017, it was critical for Malaysian producers to trap the
methane at the mills which would show a much higher GHG savings.

He said the government has provided a RM1.2 billion soft loan and it was up
to the industry to take it up to improve their processes.

"If there is this lackadaisical attitude, don't blame us. The government has

done its part with the money and now it is up to the private sector," he said.

Basri said Malaysia has also cooperated with Indonesia by forming
sub-working groups to discuss common strategy with regard to the EU directive.

It was understood the sustainability criteria had been perceived by the
palm oil industry in both countries as trade barriers, especially designed
against palm oil.

He said the EU was singing the same tune in wanting to make sure that the
production of palm oil was sustainable and after this, they would have to think
of something else.

"While the recent palm oil mission saw some understanding by the ministers
of the countries concerned, they still had to listen to the non-governmental
organisations," he said.

Basri said for example, one of the ministers he met was convinced that palm
oil production was sustainable but it would be a great task to convince all
the other 26 states within the EU.

He said, however, there were people who understood the situation and hoped
that Malaysian companies could enjoy incentives from EU government after
certifying palm oil was sustainable.
-- BERNAMA