Main page content

Climate diplomacy – and not punitive phase-out – as a solution to the palm oil controversy

The EU’s decision to phase out palm oil biodiesel is likely to backfire, with negative repercussions not just on the countries concerned but also on international relations and the climate. The EU should hence invest more heavily in climate diplomacy in order to find a real solution to problems such as deforestation and wildlife loss.

As the world gears up for post-2020 climate action, two major regional blocs – the European Union (EU) and the Association of South East Asian Nations (ASEAN) – are at loggerheads on the issue of palm oil biodiesel, deemed as a “renewable” alternative to fossil fuels. At the same time, due to extensive deforestation triggered by unsustainable palm oil production in Southeast Asian countries like Malaysia and Indonesia, critical carbon sinks in the form of rainforests and peatlands have been lost. This, in addition to wildlife destruction and violation of labour laws and indigenous peoples’ rights, has received widespread criticism worldwide, thereby prompting the EU to draft measures to phase out biofuels made from palm oil by 2021.

In fact, the slash-and-burn technique used by the palm oil industry in Indonesia and Malaysia has been held responsible for recurring haze in the region, affecting not just these countries but also their neighbours like Singapore. The recent decision by “Iceland”, a supermarket chain in the United Kingdom (UK), to ban palm oil in its own brand products on the grounds that palm oil production has caused large-scale deforestation and killing of fauna (for instance, 100,000 orangutans in Borneo since 1999), has alarmed the Southeast Asian countries. 

The question of sustainability of biofuels

In the 2000s, the EU had hailed biodiesel as an environmentally viable solution that could transform the transport sector, and it has today become the second largest importer of palm oil in the world. Yet, there has always been a question mark on the feasibility and sustainability of biofuels, as their production tends to have spill-over effects on forest cover and food security. Diversion of agricultural fields to plant-based biofuels is seen as a major cause for food insecurity (global food shortage) in many parts of the world, particularly in developing countries. Similarly, as far as forest cover is concerned, the World Wildlife Fund (WWF) claims that “every hour an area of rainforest the size of 300 football fields is cleared to make way for palm oil to be grown.”

Besides, the fact that peat swamps, which cover about 250,000 square kilometres of land area in Southeast Asia, have been drained and cleared to make way for palm plantations has added to the destruction of carbon storage systems. Therefore, the switch to biofuels is fraught with dangers that could have far-reaching repercussions on the future of the planet.

Resolving tensions through climate diplomacy

By imposing curbs on palm oil, the EU may succeed in reducing demand and lower the incentives for deforestation to some extent, but a full resolution of the problem is unlikely. In fact, this is only expected to increase diplomatic tensions, with nation states choosing to opt for tit-for-tat measures, as is already happening. The Malaysian Palm Oil Association (MPOA) has lobbied the government to scuttle EU-ASEAN trade deal negotiations. This could also, in turn, further narrow the window for cooperation on environmental and climate change through climate diplomacy.  

One must also remember that as of now, biofuels will continue to be a major climate change mitigation option in most developed and developing countries, at least in the short and medium term. The international community should therefore pay attention to producing it in a sustainable manner and making it energy-efficient. One way of preventing large-scale deforestation or diversion of agricultural lands would be to grow biofuel crops on marginal lands, which are of low social, economic and cultural value, and/or have been degraded by mining, pollution, fires and other causes. Moreover, India and China are as big palm oil consumers as the EU, and hence, even if the EU weans itself off palm oil, the palm-oil producing nations will look to other buyers and may even put at risk the palm oil industry’s ongoing efforts to meet sustainability requirements and goals. Furthermore, such a move is very likely to jeopardise the livelihoods of those engaged in the industry and also the countries’ economies.

The EU could provide climate finance to palm-oil producing nations and introduce mandatory certification so that the palm oil industry in the region will be forced to comply with certain standards. Through ASEAN, the Southeast Asian nations should collectively work towards the introduction and effective implementation of a strict moratorium on forest and peatland clearance. In fact, through REDD+, in countries like Indonesia and Malaysia, “developmental gains” can be enhanced and gradually the penchant for palm oil plantations can be reduced. Under the climate diplomacy umbrella, if this climate change mitigation measure can be tied to improved forest governance, protection of indigenous rights and lesser pollution levels (haze), it can transform into a much more successful venture. Besides, any move to protect the forests should also cover other crops like soybean, which is estimated to contribute more to deforestation than palm.

Meeting of the Roundtable on Sustainable Palm Oil

There is a need to strengthen national and regional-level initiatives in Southeast Asia, such as the Roundtable for Sustainable Palm Oil (RSPO) based in Kuala Lumpur, which could put in place strict and transparent measures to curtail unsustainable practices and help integrate these countries with a sustainable trade paradigm, which is a necessity in the current age.


Disclaimer: The views expressed in this article are personal.

Dhanasree Jayaram is Assistant Professor at the Department of Geopolitics and International Relations at the Manipal Academy of Higher Education (Karnataka, India) and Research Fellow at the Earth System Governance Project.