Palm Oil in BioFuels: EU Trying to Prevent Another Trade War

In a bid to appease both the palm oil producers and the environmentalists, the European Union set new criteria for the use of palm oil in biofuels.

Palm oil producers lobby to defend its future:

Malaysia, Columbia, and Indonesia are the biggest producers of this vegetable oil and accounts for nearly 90% of the global supply. They are lobbying in Brussels to make sure it remains in the European market. They have decided to challenge the bill passed by the EU through consultations and if that fails, they are likely to approach the WTO. The Council of Palm Oil Producing countries has challenged the bill calling it scientifically flawed and argued that the EU is targeting only palm oil leaving aside other vegetable oils which are riskier for the environment. The council warned that the discriminatory measures taken to curb the palm oil shipments will be retaliated if not withdrawn.

After the EU environmental campaign, the prices of this oil has dropped by 15%. In the wake of this bill, Malaysia has decided to stop its oil plantation expansion. Meanwhile, Indonesia said that the restrictions on palm oil will setback the country in its fight against poverty and that the EU had to find a different solution which benefits everyone involved.

What is in the EU bill?

Though the exact details of the regulation are yet to be known, the draft version that was released for input mentioned palm oil as unsustainable but also mentioned about exemption including the use of palm oil as a biofuel. The EU allowed the commission to set criteria for palm oil so that it still needs the green goals and yet be used as diesel. It also mentioned about phasing out by 2030.

The commission in its statement said, “With today’s decision the member states will still be able to use and import fuels in the category of high ILUC-risk biofuels, but they will not be able to include these volumes when calculating the extent to which they have fulfilled their renewable targets. Climate change is a serious concern for Europeans, and the commission is increasing efforts to reduce greenhouse gas emissions.”

The European Union in an effort to prevent global warming has put in place measures to reduce the greenhouse gases which are the major cause for climate change. However, it is also doing a balancing act of not triggering a trade war with the palm oil producing Asian countries.

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