Palm Oil – The Green Development Oil Newsletter – Issue 5, February 2010

UK Parliament Says British Aid Agency Failing Growth and Poverty Alleviation
Just as the UK Aid Department, DFID, offers millions of pound of aid to encourage developing countries to cease using forest land for agricultural production, such as Palm Oil, purportedly to reduce greenhouse gas emissions, the UK Parliament has criticized it for failing to give priority to economic growth and agricultural production.

‘Indirect Land Use Change’ on the European Union’s Agenda in 2010
The European Union is set to release in the coming year its policy on the effect of ‘indirect land use change’ (ILUC) of biofuel production. This is increasingly being viewed as an impractical concept, the primary purpose of which seems to be to increase trade barriers to imports of biofuel.

RAN Renews Pressure on Business to Join Its Campaigns Which Harm The Poor
The Rainforest Action Network (RAN) has launched yet another misleading attack as part of its program to enlist major corporations as unwitting allies in a campaign which harms the poor in South-East Asia.

Copenhagen and the ‘No Conversion’ Agenda
The Copenhagen Conference was a setback in the campaign by environmental NGOs to have ‘no conversion’ of forest land included as a condition of funding for developing nations.

UK Parliament Says British Aid Agency Failing Growth and Poverty Alleviation

Just as the UK Aid Department, DFID, offers millions of pound of aid to encourage developing countries to cease using forest land for agricultural production, such as Palm Oil, purportedly to reduce greenhouse gas emissions, the UK Parliament has criticized it for failing to give priority to economic growth and agricultural production.

The British Minister for International Development, Douglas Alexander, announced in January a five-year, £50 million partnership with Indonesia on forests, palm oil and climate change. It is part of the £1.5 billion promised by the UK at the climate change conference in Copenhagen to fund programs to reduce emissions.

The partnership includes financial incentives to induce palm oil growers to develop plantations on degraded land rather than natural forest land. This is based on two erroneous propositions.

The first is that the major cause of deforestation is commercial plantation forestry like Palm Oil. (The FAO points out around two thirds of forest clearance is by poor people). The second is that deforestation is a major source of greenhouse gas emissions. (Again, FAO data shows rates of deforestation are small and declining.)

Developing countries know this and at Copenhagen conference rejected the idea no further forest land should be converted to other purposes. They were adamant that climate change strategies must not impede economic development (See report below).

Fortunately someone else in Britain realizes this. The criticism of DFID is in the report from an inquiry by the British Parliament into global food security, “Why No Food for Thought?”

“DFID has neglected agriculture for many years with bilateral spending on agriculture programmes in Sub- Saharan Africa amounting to little more than £20 million, or 0.35% of the total DFID budget of £5.7 billion, in 2008/09. Of this just £13.7 million is spent on the Least Developed Countries (LDCs),” states the report.

It noted that “economists widely accept that a 1% increase in per capita agricultural output leads to a 1.6% increase in the income of the poorest 20% of society while the World Bank estimates that economic growth from agriculture is at least twice as effective in reducing poverty as growth in any other sector.”

It further points out DFID’s unwillingness to invest in sustainable agriculture as an economic development tool erodes efforts to meet Millennium Development Goals to reduce hunger worldwide.

Palm Oil was established in Malaysia and Indonesia as a poverty alleviating industry. It is being trialled in Africa for the same purpose. It is also a global food staple in the developing world. Forty percent of all Palm Oil in Indonesia is produced by small holders. Government regulation requires every new investor to ensure 20 percent of production is by small holders.

The new DFID policy would also restrict Palm Oil development in any developing country in the tropics in which it is advanced.

‘Indirect Land Use Change’ on the European Union’s Agenda in 2010

The European Union is set to release in the coming year its policy on the effect of ‘indirect land use change’ (ILUC) of biofuel production. This is increasingly being viewed as an impractical concept, the primary purpose of which seems to be to increase trade barriers to imports of biofuel.

In March the EU is expected to release a methodology for estimating greenhouse gas emissions from indirect land use change “ILUC.” A report on land-use change, as well as a final methodology for calculating the impact of ILUC on the carbon footprint of biofuel production is expected by the end of the year.

Environmental activists contend that diversion of Palm Oil, a food staple, to biofuel creates demand for conversion of more land to agricultural production. This further conversion of land, especially if it is forest, they argue, will generate even more greenhouse gases.

The contention is that if that occurs, any emissions generated from the flow on of that indirect activity should be added to the direct emissions generated to calculate the carbon footprint of the direct activity. The clear aim is to demonstrate a larger carbon footrprint of the first activity.

The existing EU Biofuel Directive already discriminates against imports of cheaper and more efficient biofuels from developing countries by ascribing a carbon rating which is already higher than that set for more expensive and less efficient rapeseed. It is the only biofuel produced in the EU. Incorporating the effect of ILUC would create an even higher bar against imports of biofuel into the EU.

Scientists contend there is no technical basis which justifies the existing carbon footprint rating for imported biofuels. Developing countries wrote to the European Commission in December inviting it to explain the basis for the calculations. Trade officials in those countries see this as another disguised trade barrier. (World Growth predicts this measure will ultimately be overturned by a challenge in the WTO unless the EU changes it.)

The numbers for the general claim that food production is being seriously compromised also do not make a strong case, as research by World Growth this year will show.

Finally, the ILUC concept is also flawed. Every activity has an indirect effect. Where is the line drawn? It will be nearly impossible to establish practical and effective regulation if it is based on such an easily adjustable baseline.

Not surprisingly, a recent study by French environmental consultancy, BeCitizen, found that there is a significant lack of policy consensus on ILUC methodology. The result is that assessments of emissions from ILUC vary greatly.

The lack of solid data and methodology means that ILUC is at best unworkable and at worst a scheme to further restrict imports of biofuel from developing countries.

RAN Renews Pressure on Business to Join Its Campaigns Which Harm The Poor

The Rainforest Action Network (RAN) has launched yet another misleading attack as part of its program to enlist major corporations as unwitting allies in a campaign which harms the poor in South-East Asia.

RAN recently launched an attack against American companies Cargill and General Mills accusing them are ‘destroying rain forests’ and ‘causing climate change’ because they use Palm Oil in their products.

Protestors recently unveiled a banner reading “Warning: General Mills Destroys Rainforests” outside General Mills’ headquarters. General Mills produces a range of food products sold in the United States including Cheerios, Betty Crocker and Haagen-Dazs.

These claims are highly misleading and grossly exaggerate the key drivers of deforestation in South-East Asia. RAN fails to make any mention of the people across Malaysia, Indonesia and Papua New Guinea that rely on palm oil to find a way out of poverty.

RAN recently pressured Gucci to cease sourcing paper from Indonesia for its forest carry bags.

It is clear from this latest action that RAN is running a campaign which is based on the premise that peopled do not have a right to a life without poverty.

Copenhagen and the ‘No Conversion’ Agenda

The Copenhagen Conference was a setback in the campaign by environmental NGOs to have ‘no conversion’ of forest land included as a condition for climate change funding for developing nations.

A number of developed nations as well as the World Bank pushed to include ‘no conversion’ as a condition of funding climate change-related forestry strategies in the Copenhagen negotiations. In UN jargon this is known as “REDD” (reducing emissions from deforestation and forest degradation).

The concept sounds unexceptionable, except it is a vehicle to restrict plantation agro-forestry like Palm Oil. While donors and industrialized nations continue to talk about “REDD” as if it is a reality, the concept remains unadopted by the United Nations and does not represent an agreed approach on how to proceed.

REDD negotiations still have a long way to go before any agreement is reached.

Expect environmental activities and some industrialized agencies in donor countries to seek to have “no conversion” which is misleading described as a “safeguard”, set as a principle into the UNFCCC negotiating text as negotiators prepare during the year for the next Climate Change conference in Mexico City in December 2010.

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