Striking a balance in the palm oil debate

1st November 2010

Striking a balance in the palm oil debate

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The environmental impact of palm oil is a subject that has stirred considerable interest and opinion in recent years. Rory Padfield and Sune Hansen attempt to provide some much-needed balance and perspective to recent debates.

The ever-increasing global thirst for vegetable oil can be regarded as one of the greatest environmental challenges of the 21st Century; interest has intensified with the prospect of biofuels.

Palm oil has risen to become the dominant player on the vegetable oil market - and the main recipient of environmental scrutiny.

But balance is rarely found in current debate where too often there is unscientific and excessive hyperbole. Malaysia, which is one of the biggest producers, has found that moving towards a less polarised version of the palm oil narrative to one based more on scientific evidence is more likely to lead to a sustainable outcome.

In 2008, world consumption of vegetable oils was estimated at 132 million tonnes, the largest contributor being palm oil (39 million tonnes) followed by soyabean oil (38 million tonnes).

World production of palm oil derived biodiesel is expected to rise and Malaysia has aspirations to take advantage of this emerging market; production capacity of biodiesel could reach six million tonnes in Malaysia in the future.

However, more recent scrutiny over palm oil production has brought a number of negative perceptions to the surface.

Run a quick straw poll with friends and colleagues on the topic of palm oil and you are likely to be inundated with predominantly negative comments: ‘deforestation', ‘environmental destruction', and ‘biodiversity losses' are some of the expected responses.

Although palm oil has been grown on a large scale for well over 50 years, it appears negative perceptions have gathered pace in recent years.

Driven predominantly by a number of high-profile NGO campaigns and increased media coverage, palm oil seems to be perceived alongside the likes of GM crops and nuclear technology as one of the latest in a line of environmental scare stories.

So how well founded are the negative perceptions of palm oil? Let's start with the claims of deforestation and biodiversity losses. There is no doubt that both have occurred in Malaysia and that this is partially due to the growth of palm oil plantations.

Latest reports suggest orangutan numbers have declined by 50 per cent since the mid 1980s, the number of remaining Sumatran rhinos in Malaysia and Indonesia are as low as 250 and during the period 2000 to 2007, Malaysia lost an average of 140,200 hectares - 0.65 per cent of its forest area - per year.

But these impacts are also attributable to other development activities such as logging, urbanisation and other crops. But given the vast scale of palm oil plantations in Malaysia, estimated at 13.7 per cent of total land area, the palm oil industry must take some responsibility for the documented environmental destruction.

The related impacts on climate change, from the damage and loss of ‘carbon sinks' and subsequent release of carbon dioxide from deforestation to the planting on peat lands, is a fact the palm oil industry cannot - or should not - deny.

Encouragingly, the Malaysian Government has banned the conversion of primary forest and peatland into palm oil plantations and is, in collaboration with various NGOs, striving to provide wildlife corridors between patches of forest isolated by palm oil plantations.

Plus points

Examining why palm oil has grown so rapidly over such a short period of time points towards some of the lesser known benefits. Most importantly, palm oil yields by far exceed those of other vegetable oils making it the most efficient oil crop on the market. Figures from 2009 show that the average oil palm yield is 4.25 tonnes/hectare/year which compares extremely favourably against rapeseed (1.3), sunflower (0.46) and soyabean (0.4). Furthermore palm oil plantations often double as grazing areas for cattle.

A point often overlooked is the ‘opportunity cost' of replacing palm oil; in other words, assuming the global demand for oil and fats remains the same, what would be the cost - environmental or other - of replacing palm oil with another oil crop?

Meeting global demand for oils and fats by replacing palm oil with an alternative oil crop would lead to a much greater area of land than is currently required. Such expansions are likely to lead to deforestation elsewhere in the world.

Recent research suggests that palm oil is environmentally preferable to other oils assuming that new oil palm plantations are not replacing primary forest or peat land. The conclusions can, however, go both ways depending on assumptions and data sources.

A call must therefore be made for scientifically and internationally recognised databases for environmental palm oil data.

The ‘economic development versus resource use' dilemma also casts a different light on the debate. The Malaysian Government has made a commitment to maintain 50 per cent of its primary rainforests; this lies in stark contrast to many developed countries where significantly fewer natural woodlands remain. Moreover, the industry employs close to one million people making it the second largest employer after the government.

Unsurprisingly, the Malaysian palm oil industry is less than happy with the apparent double standards held by many European views in this argument: why should emerging economies compromise their growth by not making use of their natural resources when developed countries did not? When urban and rural poverty is still an everyday reality for many, it is hard not to feel sympathy with the Malaysian position for continued economic growth and prosperity.

In terms of the documented deforestation and biodiversity losses, the Malaysian authorities and palm oil sector have shown a willingness to engage in the broader sustainability agenda. Alongside stand alone efforts such as the creation of the Malaysian Palm Oil Wildlife Fund, an initiative to pay for the protection of wildlife habitats and biodiversity, Malaysia is heavily involved in the Roundtable for Sustainable Palm Oil (RSPO).

The RSPO is made up of a range of palm oil stakeholders, including NGOs such as WWF, with a goal to develop and implement global standards for sustainable palm oil. Malaysia has actively supported this process as demonstrated by the growing number of palm oil growers and processors achieving certification. Sadly, there is a general unwillingness amongst palm oil importers to pay the slight increase in cost that inevitably applies when production is being made sustainable and so unsustainable palm oil is still preferred by most European importers.

Environmental improvements

Despite the initiatives taken, there are still measures the industry can take to improve the environmental profile of palm oil. Methane capture from the anaerobic digestion of palm oil mill effluent with subsequent energy recovery and state-of-the-art recycling of solid wastes is scarcely practised at the moment, although it is gaining momentum.

Adopting methane capture and recycling with greater vigour is likely to lead to greater acceptance into the European biofuels market and, crucially, help achieve the increasingly stringent GHG performance indicators in the European Renewable Energy Directive.

Unless there is a dramatic turnaround in the global oil and fats market, rising demand for palm oil will continue into the future.

Placing an embargo or an outright ban in Europe is unlikely to stem global production given that non-EU countries make up nearly 80 per cent of export destinations for Malaysian palm oil. And sourcing and producing an alternative to palm oil may have just as many undesirable environmental impacts.

A possible way forward is to help support the palm oil industry achieve high levels of sustainability through more sensible debate in the middle ground. Currently, there is a tendency for polarised discussions, moving from one extreme view to the other.

This is not helpful in breeding trust and confidence between those with opposing and supporting views. With respect to certain associated environmental impacts, the palm oil sector has taken to a path of denial rather than engaging in scientific and academic dialogue. Greater transparency of palm oil impacts through academic studies might be a better approach.

Furthermore, instead of focusing solely on campaigning against palm oil, opposing NGOs could focus on ensuring the growth in sustainable palm oil whilst pressurising importers to choose certified sustainable palm oil. It is also important to remember that the Malaysian palm oil sector is carefully poised and needs to be wary not to drive planters to countries where there is far less scrutiny over operations.

Open and honest discussions between stakeholders may support this improved approach. Similar to the objectives of the RSPO, collaboration between stakeholders could help achieve common research agendas and methodologies, identify which areas of sustainability need to be addressed, and what can be done to achieve this.

The hydropower sector is an example of where collaboration between stakeholders is having a positive outcome. A recent multi-stakeholder initiative has brought together hundreds of hydropower stakeholders with radically opposing views to contribute constructively towards the establishment of guidelines for sustainable hydropower.

The time has come for a similar initiative in the palm oil sector, one that drives forward an agreed agenda for sustainable palm oil.

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