Research reveals impacts of palm oil in Southeast Asia, proposes reform of EU biofuel policy

Press release: 16 October 2012

SEI research presented at European Development Days shows that as production has soared to meet global demand, driven in part by the EU’s Renewable Energy Directive, communities have been harmed by the large plantations’ practices. EU policies should be revised to ensure sustainability.

The European Union’s Renewable Energy Directive (EU-RED) has set a target of meeting 10% of the European transport sector’s energy needs with renewable energy by 2020. In practice, this has meant an increase in the use of biodiesel, which accounts for over three-quarters of EU biofuels consumption.

Palm oil grown in tropical countries is one of the main sources of biodiesel, and producing palm oil for global commodity markets has been an attractive economic-development pathway for some countries – most notably Indonesia and Malaysia, which together produce 90% of the world’s palm oil.

Yet new field research from SEI, published in a policy brief and presented at European Development Days (EDD) in Brussels 16-17 October, shows that local communities have paid a steep price for this biofuels boom. Interviews with villagers in Central Kalimantan, for example, a very poor Indonesian province with large-scale palm oil production, show the plantations have harmed the local environment and people’s livelihoods.

The reported impacts include deforestation; water pollution from run-off, pesticides, and dumping of palm-oil mill effluent and other waste; a decline in fish stocks and aquatic plants, and redirected water flows. Plantations also dry out adjacent community land, which lowers water tables, dries out wells, and forces people to give up traditional rice farming.

“These are serious issues that require urgent attention from the public and private sectors alike,” says Maria Osbeck, an SEI research fellow who is presenting the research at EDD with Johan L. Kuylenstierna, SEI’s executive director. “Our research shows appropriate regulations exist, but for various reasons – lack of capacity, political conflicts, corruption – government officials aren’t enforcing them. That means lower compliance costs for producers and cheaper biodiesel for the EU, but at local people’s expense.”

The EU Renewable Energy Directive and the palm oil industry
Another new SEI policy brief shows how improving the EU-RED – which is currently under revision – can help increase the sustainability of Europe’s biofuels use and make a positive impact on local livelihoods.

As currently formulated, the EU-RED’s “Sustainability Criteria” focus on greenhouse gas emissions and preventing deforestation, making no attempt to regulate for sustainable management of land and water resources in biofuels production outside the EU. It remains optional for member states to monitor such impacts. Nor does the EU-RED include social and/or economic criteria related to impacts on local livelihoods. This approach is justified by reference to the free trade principles of the World Trade Organization (WTO) and to the risk of legal liability if the EU were found to promote protectionism.

Although the EU does encourage national authorities and companies in producer countries to implement voluntary certification schemes that adhere to the Sustainability Criteria, SEI researchers argue that these do not, on their own, adequately represent the interests of local people in producer countries.

“Not only are the schemes voluntary, but the spirit of the EU-RED is as a climate mitigation policy, which tends to promote centralized schemes and sideline those that take into account a wider range of local impacts,” says Rasmus Kløcker Larsen, an SEI research fellow who coordinated the EU-RED analysis.

“The EU-RED is also not aligned with the EU’s ‘policy coherence for development’ agenda, which says that development cooperation objectives should be taken into account in all sectoral policies,” Larsen adds. “In that context, the severe impacts of palm oil cultivation on livelihoods, water resources, land management and ecosystem services ought to stimulate immediate action in the European Parliament and in Member States.”

The researchers put forward a range of ways in which the EU can revise its biofuels policies to promote sustainable production of palm oil in Southeast Asia. They include stricter and mandatory criteria for water resource and land use management in the EU-RED, as well as prioritizing more robust sustainability standards, such as those of the Roundtable on Sustainable Palm Oil (RSPO), which could be embedded them into trade agreements and also incorporated into businesses’ corporate social responsibility policies.

In addition, the policy brief recommends aligning the EU-RED with the “policy coherence for development” agenda; incorporating the United Nations principle of “free, prior and informed consent” into the EU-RED, and strengthening traceability and transparency in the audit trail, to reward governments and companies that follow formal requirements and actively promote espoused sustainable water and land management strategies.

The new policy briefs are available on the SEI website:
- The Oil Palm Sector: Community Grievances and Water Governance in Central Kalimantan, Indonesia.
- How the EU Can Revise its Biofuel Policies to Promote 'Sustainable' Palm Oil Cultivation in Southeast Asia.

Along with the biofuels presentation, SEI Executive Director Johan L. Kuylenstierna will participate in a panel discussion on Wednesday: “Post-Rio+20: which strategy for sustainable and inclusive growth?”
To learn more about European Development Days, visit eudevdays.eu.

For more information, please contact:
Maria Osbeck – Research Fellow, at European Development Days (only journalists at EDD)
maria.osbeck@sei-international.org  + 46 7 3460 4649

Anna Löfdahl – Press and Communications Adviser, Stockholm Environment Institute (European media)
anna.lofdahl@sei-international.org  +46 7 3686 4522

Marion Davis – Communications Manager, SEI U.S. Center (all other countries)
marion.davis@sei-international.org  +1 617 245 0895

About the Stockholm Environment Institute
The Stockholm Environment Institute (SEI) is an international nonprofit research organization that has been engaged in environment and development issues at the local, national, regional and global policy levels for more than 20 years. Its goal is to bring about change for sustainable development by bridging science and policy. SEI has seven centres worldwide, in Stockholm; Oxford and York, U.K.; the United States; Bangkok, Thailand; Dar es Salaam, Tanzania; and Tallinn, Estonia. The research described here was done by SEI staff based in Stockholm and Bangkok.
www.sei-international.org

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