A forum was held by the Institute for Democracy and Economic Affairs (IDEAS) on 4th July, titled, “Navigating the Palm Oil Debate”. The event featured presentations and a panel discussion between German and Malaysian officials on the environmental sustainability of palm oil, the EU’s action against palm oil for biofuels, and the future of the oil crop market.
The panel included Dr. Christoph Hoffman, German Member of Parliament, Dr. Ruslan Abdullah, Director of Science and Environment at the Malaysian Palm Oil Council (MPOC), Chew Jit Seng, CEO of the Malaysian Palm Oil Certification Council (MPOCC), and Bakhtiar Talhah, COO of the Roundtable on Sustainable Palm Oil (RSPO).
Earlier this year, the European Commission adopted a Delegated Commission for the second Renewable Energy Directive (RED II) which articulated standards for determining high “indirect land-use change” (ILUC) risk oil crops. Subsidies for the use of these crops in producing biofuels are set to be phased out by 2030, and palm oil was the only crop determined to meet the EU’s risk threshold.
The delegated act has elicited claims of discrimination and politicization from Malaysia and Indonesia, where over 85% of global palm oil is produced. In contrast, the EU cites the significance of swift and meaningful policy action in the face of an intensifying environmental crisis. IDEAS’ forum sought to give platform to multiple sides of the debate and to contextualize palm oil within the broader EU-ASEAN economic relationship.
Dr. Hoffman, a member of the Free Democratic Party (FDP) and a trained forester, could not speak on behalf of the European Parliament but emphasized the unsustainability and urgency of global deforestation and agricultural habits. Deforestation, Dr. Hoffman explained, is an inevitable aspect of national development. Germany’s forest cover has dropped from 60-70% to 32%, and Hoffman commended Malaysia’s commitment to maintain 50% forest cover.
“I think it’s important to look at the global scale,” Dr. Hoffman said. “We cannot afford to lose any more rainforests.”
Dr. Ruslan of the MPOC agreed that there must be controls on deforestation but pointed out that land for oil palm agriculture in Malaysia has been capped at 6.5 million ha with 5.85 million ha already existing. “They label the entire palm oil market as being unsustainable, and I think this is unfair,” Ruslan said.
Both MPOCC sand RSPO have been integral in the push for more sustainably-sourced palm oil in Malaysia, overseeing certification bodies that monitor and regulate the production of the crop. The representatives from these organizations highlighted the significant environmental progress achieved in the past two decades.
“We have done a lot of good work which is not really publicized,” Mr. Chew said. MPOCC oversees the Malaysian Sustainable Palm Oil (MSPO) certification, set to become mandatory for Malaysian growers by the end of 2019. Mr. Chew explained the challenges of obtaining broad compliance from independent smallholders, though he said the transition is encouraged by a growing international demand for sustainability driven by major multinational companies.
Mr. Bakhtiar agreed with the necessity of corporate participation but added that the conversation around sustainability should also be placed within a local context.
“The world is bigger than just Europe, and sustainability, we have to do it for ourselves,” Bakhtiar said. “I know the narrative now is what can we do to appease the Europeans; actually what we could be telling ourselves is we are doing this for Malaysians. We Malaysians deserve clean water, we don’t want the effluent from plantations to go into our water supply.”
According to Dr. Ruslan, Malaysia produced 19.5 million tonnes of crude palm oil in 2018, and about 800,000 tonnes were exported to Europe for use in biofuel. Although only 0.04% of Malaysia’s annual palm oil is implicated in Europe’s phasing out, Ruslan argued that public perception is the larger battle. Perception, Ruslan thought, is based more on emotion than on fact, making it difficult to influence or predict.
“The European Union has always been considered as the trendsetter in world policy,” Ruslan said. “So countries like China and India may not be looking at sustainability now, but eventually they will have to follow.” Currently, India, China, and the EU make up the 3 largest import markets for palm oil.
Hoffman agreed that it can be hard to overcome public hysteria as a politician, though he was optimistic that the EU and ASEAN could and should find a way forward.
“Maybe this crisis is a chance to get on a road where we can work together,” Hoffman said. “Reforestation on the one hand… free trade on the other.”