Malaysian minister meets EU energy commissioner on palm oil

Malaysia has brought its lobbying campaign to the heart of Brussels’ Berlaymont building in a bid to scupper the European Parliament’s proposed exclusion of palm oil in renewable energy, amid fears in member states that they could lose valuable export contracts.

The South East Asian country’s plantations minister discussed the matter this week with the EU’s energy commissioner Miguel Arias Canete ahead of Trialogue talks in early March.

This process will have to acknowledge Parliament’s concerns about palm’s oil climate impact but at the same time address governments’ fears of a trade war.

“As honest broker, the Commission will aim for a balanced agreement,” a source with the EU executive told Energy Census, adding that Trialogue discussions “will be lengthy and complex”.

Malaysia’s plantations and commodities minister Datuk Seri Mah Siew Keong visited several EU capitals this week, highlighting efforts by Malaysia to improve the sustainability of palm oil through requirements for certification on all producers by 2019, including 650,000 smallholders, and the impact of an exclusion on “impoverished farmers”.

Malaysia is expected to hold a general election later this year in which smallholders will form a major part of the electorate.

Many MEPs and green groups dismiss Malaysia’s certification efforts as a fig leaf for massive destruction of rainforests, peatlands and other biodiverse habitats that will stoke climate change, and insist the crop should have no role to play in the EU’s Renewable energy system.

According to Malaysian media reports, Spain and Italy – two major consumers of palm oil for transport fuels –  this week joined other EU countries France, the Netherlands and Sweden in opposing a discriminatory exclusion of palm oil from RED II.

This week a UK government representative was also reported by Malaysian media to have spoken out against a potential ban.

London-based media report that defence and international trade departments are particularly keen to avoid harm to lucrative export contracts with the UK’s former colony, particularly in view of the UK's withdrawal from the EU.

Indonesia, which together with Malaysia supplies 85% of the world’s palm oil, is currently in advanced negotiations with the EU about a EUR 35 billion trade deal with the fourth round of talks due to begin next week. 

According to a story by AFP this week, Indonesia has stipulated in a leaked document dated July 2017 that the European Commission needs to counteract “disinformation” against palm oil.

Trialogue discussions on RED II aren’t expected to conclude until late this year, prolonging uncertainty among refiners and biofuels producers to what extent palm oil as a feedstock would need to be replaced.

According to some estimates, up to 45% of feedstocks for biodiesel consumed in the EU are sourced from palm oil, and various biofuels lobbies disagree strongly on the extent to which advanced biofuels from crop-based residues can replace palm oil if it is excluded.