Green Development Oil Newsletter – Issue 22, August 2012

Bio-diesel study: European rapeseed fails to meet EU sustainability requirements

A recent study indicates that the EU’s renewable energy strategy is helping boost European rapeseed growers; despite analysis showing that the crop is unlikely to meet EU sustainability requirements.

Under the EU’s Renewable Energy Directive (RED), biofuels are recognised if greenhouse gas emissions (GHG) during their production and use are less than 35% of those emitted during the production and use of conventional fossil fuels. If biofuels meet this threshold, they can be classified as ‘sustainable’, and therefore eligible for the EU’s mandatory blending scheme.

Biofuel made from European grown rapeseed crops meet this threshold. According to the RED analysis, typical greenhouse gas emissions savings for rapeseed oil is 45%.

The inclusion of biofuel came much to the relief of European rapeseed producers. According to the FAO, Europe production accounted for almost 40% of all rapeseed produced in 2010. Certainly rapeseed growers have prospered from inclusions under the directive. This has driven speculation that political pressure – rather than strict scientific analysis – justified rapeseed biodiesel’s greenhouse gas savings. It has been noted that rapeseeds largest competitors such as lower-cost palm oil did not meet requirements under EU analysis.

But the new study suggests that rapeseed does not in fact meet RED requirements. It found that under most scenarios, rapeseed biodiesel did not reach the 35% threshold required by the EU Directive for being considered as sustainable biofuel. In the standard scenario, the authors calculated a GHG emissions saving value of less than 30%; far below the 35% threshold.

The results from the study indicate that the ‘sustainability’ of rapeseed biodiesel, as recognised by RED, “is at best very questionable and in most scenarios simply unjustifiable”.

The study also challenged the transparency of the EU Commission, who did the original analysis of GHG savings across a range of biofuels.  According to the authors, the EU refused to release all its data, driving speculation that data on rapeseed oil’s GHG savings was deliberately over-stated.

According to news reports, the authors have suggested that EU biofuels policy is closer to ‘industrial policy’ which excludes imports of competing biofuels in order to support European industry.


Conservation endeavors under question

Scientists have questioned the effectiveness of current policies for orangutan conservation, finding that despite considerable funding there has been little advancement in the cause. The recent findings undercut NGO campaigns accusing the palm oil industry of being a leading driver of orangutan deaths.

A new study from the New York Academy of Sciences has found that “there has been frustratingly little progress” in the protection and conservation of the orangutan.  The authors argue that while attention has focused on oil palm plantations as the primary cause of the loss of orangutan habitat, only approximately five per cent of orangutan habitat had been converted for oil palm in the last ten years during the greatest expansion of oil palm plantations in South-East Asia.

The authors of the study state that it is “dangerous” to focus on only one cause of orangutan loss and ignore other proximate causes such as hunting and poor local enforcement of laws.  The authors state that “singling out a particular industry as the main culprit in this process ignores the contribution from others and is unlikely to lead to lasting solutions.” The authors further argue that conservation should not be seen as a “black-and-white” issue, where conservation is measured only in the amount of land protected.

According to the scientists, conservation must be considered in terms of the ‘ecological flexibility’ of a species and address the underlying considerations of land use change, including poverty, poor planning practices and local customs to ensure that protection of the species is the primary consideration – rather than the current practice of focusing predominately on avoiding deforestation.

At the same time, recent photographic evidence indicates that some large mammal species such as South American jaguars may be capable of coexisting with oil palm plantations. The photographic evidence prompted a leading conservation group to state “that plantations can be part of a landscape mosaic that jaguars will use”, and suggests that some mammal populations are better adapted at living with oil palm plantations than previously thought.


Unilever’s own Palm Oil ‘Greenwash’

Unilever has announced that it is advancing its commitment to source only RSPO certified palm oil by three years.  Yet it does not use the certified palm oil it buys and recently pushed back to 2020 its commitment to use only certified palm oil.  ‘Greenwash’ can be puzzling.

Unilever recently launched a communications campaign based on their latest commitment to use 100 per cent traceable sustainably sourced palm oil by 2020.  What they left out was the previous commitment to source only RSPO certified palm oil by 2015.

Palm oil producers have criticized Unilever consistently inside the RSPO governing body for failing to take up more certified palm oil and pass the benefits back to producers.  Unilever has made clear there is little consumer demand for products containing only certified palm oil in Western markets and the cost of setting up separate supply lines is too high.

So how does it extricate itself from this spot?  It has purchased large quantities of “Green Palm” certificates that it can use on its product, but still keep the palm oil unused.  In fact, of all the certified palm oil produced, half is sitting in stock unused.

Unilever had been criticized by environmental NGOs for not doing more.  A number still are unhappy with its position.  But WWF seems content.

Green Palm certificates effectively allow the certificate holder to access markets that are restricted to products which meet WWF’s sustainability standards. Under this arrangement, companies that can afford to buy certificates win; companies that cannot are left behind. But it is not immediately clear what direct environmental benefits Green Palm certificate assure.

Unilever evidently has not been kept up to date by environmental groups like WWF, who have bound their oil palm strategies into their global strategies to halt forestry. They still rely on data that misleadingly inflates the role of deforestation in greenhouse gas emissions.

Unilever recently stated that deforestation causes 20 percent of greenhouse gas emissions.  Evidently no one there reads Science magazine.  A recent issue showed peer reviewers had confirmed new research by Winrock International, a highly reputable US forestry advisory, that showed emissions from deforestation were no more than 10 percent and could be as low as five if the sequestration of carbon by plantations and regrowth forests were taken into account.

These numbers were revealed in 2010, leading the ecological advisor to the magazine Nature to opine this puts an end to the case that deforestation is important in the climate change debate.

Groups like WWF quietly continued to assert higher, erroneous numbers for emissions.  They have featured regularly in the communications campaign against the industry which it has been running.  The silence following the release of Science magazine is deafening.  Clearly Unilever did not hear it.

Let’s hope the company takes more care preparing its annual reports on performance.


Conservationist show disinterest in joining Malaysian Conservation Programs

The Malaysian palm oil industry established a program to co-fund projects and studies on wildlife, biodiversity and environmental conservation. Malaysian companies are willing participants, but NGOs who complain most that biodiversity is not being conserved generally are not.

The Government put in place a series of laws which provide significant protection to flora and fauna across Malaysia, including the recognition of the orangutan as a protected species.

The Malaysian palm oil industry launched the Malaysian Palm Oil Council Wildlife Conservation Fund (MPOWCF) in 2006 with initial funding of RM 20 million from government and industry.

The MPOWCF also accepts contributions from independent donors and matches those donations ringgit for ringgit.  Private companies, such as Sime Darby, have also provided millions towards orangutan conservation efforts.

The politicization of the debate over biodiversity protection in Malaysia was underlined recently when the Malaysian Government announced a plan to spend nearly $16 million to lease two baby pandas from China for ten years.  The aim of the scheme is to enhance conservation and local tourism.

Conservationists complained the money should have been given to NGOs.  One complained in an open letter to the Malaysian Government about the process of allocating funding for conservation, arguing that little comes to them.

“Protection of biodiversity” has become something of a catch cry. Research by World Growth shows that most campaigns to achieve this goal entail arguments for establishing conservation areas. But conservation areas have been associated with detrimental development effects, including displacement of indigenous communities; as well as marked failures to achieve conservation outputs. Meanwhile, the research by environmental experts shows that the primary need is to improve quality and effectiveness of management of reserves.

The debate about protection of biodiversity in Southeast Asia has been politicized by the anti-forestry campaign.  As noted in another item, the rate of deforestation and carbon emissions has been significantly overstated.

Furthermore, recent statements by eminent scientist Dr Glen Reynolds reasserts that primary forest is not cut down for oil palm plantations in Malaysia and that environmental NGO’s targeting of orangutans for conservation was without scientific merit.

Conservation efforts are most effective when governments and civil society work in tandem.  NGOs would be better served by recognising and embracing the efforts of the Malaysian Government and industry rather than criticising valid conservation efforts.


Greenpeace turns to ‘Greenmailing’ India

Greenpeace has launched their latest ‘Greenmail’ campaign, this time focused on the world’s largest palm oil market – India. The recent report claims to pose “a severe risk to [Indian companies’] brands”, and attacks the reputation of India’s largest palm oil based on misinformation and exaggerated figures.

The report, ‘Frying the Forest’, claims that major Indian palm oil consumers are purchasing palm oil from Indonesian companies accused of clearing forests and peatland. The claims are tenuous.  The tactic is familiar.

Greenpeace’s efforts to threaten Indian companies with brand ‘risk’ are a clear attempt to pressure Indian companies to comply with Greenpeace ‘sustainability’ standards; and boycott palm oil producers which Greenpeace deem to be ‘unsustainable’.

The Greenpeace report relies on claims which have been disproved and discredited. Greenpeace assert that 17 per cent of greenhouse gas emissions are caused by deforestation, and that Indonesia is the third largest emitter of greenhouse gases.  According to US consultancy Winrock International, deforestation accounts for between 2 and 5 per cent of emissions once sequestration is taken into account.

The release of the latest report signals the start of the double edged campaign by Greenpeace and WWF to coerce Indian companies into joining the Roundtable on Sustainable Palm Oil (RSPO).  It is a classic ‘good cop/bad cop’ strategy that has been a NGO campaign staple.  Greenpeace – the ‘bad cop’ – directly target corporate reputations, while WWF – the ‘good cop’ – provide a ‘business friendly’ response to Greenpeace’s threats through RSPO.

The tactic has worked in the past. Former targets such as Unilever and Nestle adopted NGO sustainability demands following high profile media campaigns. Their brands are now linked to RSPO.

RSPO is currently struggling to break into the Chinese and Indian markets – some of the largest palm oil consumers in the world.  The intervention of Greenpeace is an indication of the importance of these markets to the success of RSPO.  The question is now whether the companies targeted by Greenpeace will fall for this familiar tactic or take their own path?


WWF promoting Chinese demand for CSPO

WWF are advancing their sustainability agenda in China by attempting to drum up demand for certified sustainable palm oil (CSPO). The ENGO recently co-hosted a forum on sustainable palm oil in Chinese supply-chains.

The forum was reportedly attended by range of government, industry, and NGO representatives.  According to a media release, the function served to “highlighted the efforts of RSPO to promote the production and consumption of sustainable palm oil”.

WWF understand that unless demand for CSPO increases, RSPO will remain a niche certification scheme, relevant only to limited numbers of wealthy consumers in European and North American markets. Creating demand for CSPO in the Chinese market is key target for WWF.

WWF released a report this year pressuring Chinese companies to commit to sourcing RSPO certified palm oil. WWF are coy about their campaign strategy, repeatedly vowing to “transform commodity markets” by pressuring companies to adopt their endorsed sustainability standards as part of corporate procurement policies.

China is the second largest importer of palm oil in the world, importing over 12% of global production in 2011, and the world’s third largest consumer of palm oil. As a massive palm oil consumer and importer, any increase in Chinese demand for CSPO could substantially improve the viability of the RSPO certification scheme.

But developing countries – including China – are largely unwilling to commit to procurement policies that harm their economic development, and in particular the economic bottom-line of businesses that drive economic growth.

According to a former Secretary General of RSPO and WWF advisor, there is little demand for CSPO coming from China, as well as “a very low level of awareness of RSPO and CSPO from Chinese buyers.” Subsequently, Chinese companies have shown little interest in RSPO, with only several Chinese companies applying for RSPO membership; and reportedly very limited uptake of CSPO. The fact is that Chinese companies do not have a convincing commercial case to source certified palm oil.

WWF’s recent foray into China reflects a struggling attempt to improve the viability of their certification agenda. But market-based certification schemes should be driven by consumer demand, not ENGO campaign pressure that could ultimately have a damaging effect on economic development.

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