Palm Oil: Fuelling Bioeconomy Controversy?

Posted in: feedstocks

The EU has deemed palm oil to be too high-risk a feedstock for biofuels production, but what are the risks and benefits associated with it?

Thanks to an extensive catalogue of uses, both nutritionally and as a feedstock for biofuel and its comparatively low price compared to competitor oils, palm oil has become ubiquitous, with a global market value of almost 100 billion US dollars. However, concerns about the environmental impacts of its cultivation particularly in relation to consequential impacts on tropical deforestation, have cast palm oil as a villain across the sectors where it sees use. These concerns are recognised, but how serious are they? and are there alternatives available if access to palm oil is increasingly restricted?

A “High Risk” Feedstock

In February of this year, the European Commission reported on its activities designed to classify crop-based biofuels according to their risk of incurring land use change, as part of the preparations for the parliamentary and EU council approval of the Revised Renewable Energy Directive (RED II). Feedstocks classed as being “high risk” are planned to be phased out by 2030, and by then will not be eligible to receive support from EU member states. Palm oil was the only feedstock classified as posing a “high risk”. This attracted an immediate backlash from major palm oil-producing nations such as Indonesia and Malaysia, who have threatened WTO action, as a significant part of these countries’ exports is accounted for by palm oil and palm oil products, of which a large percentage is exported to the EU. However, these countries face an uphill battle to demonstrate that palm oil is a sustainable option, particularly from an environmental point of view.

The rationale behind the EU’s decision takes account of several factors: indirect land-use change (ILUC), loss of biodiversity, and greenhouse gas emissions.

ILUC is a problem that plagues all biomass crops: it is a theory of unintended consequence that diversion of any food crop or arable land to industrial uses, results in the food production demand being displaced to other parts of the country or globe potentially resulting in undesirable changes in land use. It is difficult to prove when and where ILUC has taken place, and much of the analysis relies on modelling of trade flows and demand impacts. However, it is accepted in the sustainability paradigm that it does occur. This is an issue that affects all biomass crops including all vegetable oils (and thus all the alternatives to palm oil). Herein one of the key advantages of palm as a vegetable oil makes itself plain: palm oil has a much higher land use efficiency (oil output/ha of land) than other vegetable oils. For example, rapeseed requires nearly five times, and soya nearly eight times as much land to produce the same yield, according to a 2018 report by the IUCN. So why, if this is the case, is palm oil specifically considered such a problem?

In the eyes of the layperson, the issue is most commonly linked to potential impacts on biodiversity: oil palm only grows in tropical conditions, which by association is linked to the issue of native rainforest being cleared in order to make way for palm oil plantations. The media spotlight has frequently been shone on the island of Borneo in Indonesia, where much of the rainforest has been cleared, leading to fragmented orangutan populations, and a loss of biodiversity. However, palm oil is also not unique in this regard: other vegetable oils such as soybean oil are also derived from soya grown on land previously high in biodiversity (although soybean does have a much wider distribution in terms of its cultivation, not being confined to the tropics). Any deforestation to make way for cropland is going to reduce biodiversity and have a range of other detrimental impacts, although it is difficult to quantify to contribution of palm oil alone to these effects.

Preservation of biodiversity is not the primary concern behind palm oil restrictions: greenhouse gas emissions are a key consideration. Clearing any forested land results in a large release of soil carbon into the atmosphere, but some soils, with high levels of organic matter are more prolific in this regard than others. Unfortunately, tropical rainforests release particularly high levels of carbon, but a greater concern is that much of the land on which oil palm is grown was once peatland. Draining of peatland to permit cultivation results in a significant release of carbon dioxide as the carbon in the soil starts to oxidise in aerobic conditions. It is unsurprising then that the EU would want to distance itself from any feedstock grown on former peatland, and current bioenergy and biofuel policies do not provide support for any biomass feedstocks grown on peat. Whilst it should be clear that the EU does not wish to rely on crop-based biofuels for any longer than necessary (as all have effects, at differing scales), palm oil does appear to have the most severe negative impact, which is the EU’s justification for its decision to prioritise its phase-out for use in biofuel production and bioenergy generation at least.

Any land cleared that releases carbon into the atmosphere will incur a carbon debt unless it is allowed or encouraged to regenerate to its original state, but this only happens over a long a timescale (measured in decades).

Alternatives to Palm Oil

According to the aforementioned IUCN report, the most sustainable option is to continue to grow and use palm oil but to cease all further deforestation to develop plantations. However, demand will continue to increase outside of the EU, and this policy may not be a sustainable option long-term and indeed attractive to the major oil producers without some form of recompense.
Other vegetable oils used for biofuels include soya and rapeseed. Of these, only soyabean oil has a global production level approaching palm’s. The EU itself leads the global production of rapeseed, but unfortunately, production levels are not high enough to replace palm oil in the EU biofuels mix, The EU already relies heavily on imported soybean, and on imported palm oil, to meet its oil balance needs even after accounting for high domestic levels of production.

Therefore, it is not a case of simply replacing one biofuels crop with another, as all carry the threat of ILUC to a greater or lesser degree, even if they result in reduced greenhouse emissions and biodiversity loss, as production would have to dramatically increase to fill the gap left by palm oil.

The new RED II, driving EU renewable energy targets from 2020 to 2030 is quite clear on the direction the EU wishes to take: towards electrification of transport and towards development fuels and new low carbon fossil fuels to fuel hard to decarbonise transport sectors such as heavy goods vehicles and aviation. Successful introduction would over time result in a complete phase-out of not just palm oil, but all crop-based biofuels. As full electrification is some way off, the interim answer, as far as the EU is concerned, is advanced biofuels – biofuels developed utilising waste as a feedstock – which show potential for large greenhouse gas mitigation, as well as preventing waste from going to landfill. This technology also requires a significant scale-up and widening of its deployment before it will be able to fill the gap. Hopefully this will take place over the 10 years of palm oil’s phase-out.

It is clear that the risks have been weighed up and deemed too severe, and palm oil is set for phase-out. It is too early to determine what a bioeconomy without palm oil looks like, but there is plenty of scope for development. There must be: palm oil leaves a big pair of shoes to fill.

For more information:

This article was written by Bob Horton, Research Analyst at NNFCC.

You might also be interested in: