The European Parliament sparked protests across Indonesia and Malaysia last year when it proposed banning the use of palm oil for biofuel from 2021 onward under amendments to the European Renewable Energy Directive (REDII). Malaysian Prime Minister Najib Razak and Indonesian President Joko Widodo each lambasted the proposal as “discriminatory” because it singled out palm oil and ignored the homegrown sunflower and rapeseed oils. The issue became so heated that the European Union issued a statement explaining the nonbinding nature of parliamentary resolutions within the European System.
Early this morning, however, negotiators from Parliament, the European Commission, and The Council of Europe agreed on the terms of a legally-binding EU-wide target of 32% renewables and a complete phase-out of palm oil use in transportation by 2030, or a decade later than the Parliamentary proposal.
The compromise came after each of the three governing bodies submitted a separate draft proposal over the last year. The Parliament wanted a 35% share and an end to all palm oil in the transport sector from 2021 onward, while the Council and Commission each favored a 27% share with a gradual reduction in the use of palm oil in biofuels.
The text must still be formally approved by the European Parliament and European Council, and member states will have 18 months to transpose the new directive into national law
Palm Oil and the Economics of Deforestation
Demand for palm oil has more than quadrupled in the last quarter century, and it’s now used in everything from non-dairy creamers and toothpaste to biofuels. It’s growth has been an economic boon to countries like Indonesia and Malaysia, which together produce more than 80 percent of the world’s supply, but at a devastating costs to forests.
Palm oil is one of Malaysia’s largest exports, and the European Union is one of the largest buyers.
For years, the EU has supported agricultural growth in Malaysia and Indonesia, with a particular interest in palm oil development. It is with this influence that the oil palm has become so deeply rooted into the economies of these countries.