Malaysia disproves ILUC theory as it prepares for free trade talks with the EU
Malaysia aims to be the champion of sustainable palm oil.
The prospects of an EU Malaysia free trade agreement (MEUFTA) this year was given a shot of confidence with Sweden’s Third Deputy Speaker of Parliament, Kerstin Lundgren’s support of the MEUFTA.
The prospects of an EU Malaysia free trade agreement (MEUFTA) this year was given a shot of confidence with Sweden’s Third Deputy Speaker of Parliament, Kerstin Lundgren’s support of the MEUFTA.
Malaysian Minister for Plantation and Commodities Datuk Seri Johari Abdul Ghani emphasized the importance of industry-wide compliance with sustainability:
“It is a major economic contributor to the nation, but as the world moves towards sustainability, we must take a bold action. He also reaffirmed Malaysia's commitment to preventing further deforestation for palm oil cultivation. Bernama
This level of commitment to sustainable palm oil led Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz to declare that “concerns surrounding palm oil have been successfully resolved by both parties.” NST
There are no details at this time as to how the concerns were resolved but Malaysia’s steadfast commitments to meet the EU’s Deforestation Regulations through the Malaysian Sustainable Palm Oil (MSPO) standards have been a major factor.
This self imposed rule on no further deforestation to support its palm oil industry may be pleasing to the EU but it poses a challenge to maintain palm oil’s contributions to the Malaysian economy in light of aging plantations which is expected to affect revenues as exports drop.
Challenging NGO claims against palm oil biofuels
There is a way to increase the GDP contributions of Malaysia’s palm oil industry despite the self-imposed limits on palm oil acreage. One that could benefit the European Union’s commitment to reduce emissions from its transport sectors but Malaysia would have to first remove any doubts on its ability to produce green palm-based bioenergy.
The issue of Malaysian palm-based biofuels for the EU market is at a stalemate with the WTO ruling that suggests both parties need to do better in their arguments.
Arguments on the sustainability of Malaysian biofuels aside, the European Union is set to fail its climate commitments which are heavily reliant on green hydrogen, biofuels and carbon capture and storage infrastructure.
The problem is carbon capture, storage and green hydrogen are unproven technologies.
What is proven is biofuels but Europeans have a problem with how food is being burnt for fuel if you ask Transport & Environment.
According to Transenv which favored solar energy in this report:
"Europe burns 19 million bottles of vegetable oil and 10,000 tonnes of wheat – enough for 15 million loaves of bread – every day in its cars. This puts pressure on global food prices, threatening food security."
In promoting solar energy Transport & Environment uses the food-vs-fuels argument to slyly shift attention away from the social and environmental impacts of solar energy within the life cycle of extraction to disposal.
European groups like Transenv may continue to preach wind and solar energy for renewables but the fact is these sources are not exactly reliable in Europe where the phenomenon of Dunkelflaute, can increase electricity prices and stoke political tensions.
But getting back to the food-vs-fuel argument, the Norwegian group with its anti-biofuels and pro-fossil fuels stance should note that there is no problem with food security in Europe.
According to Alessandro Ford the European Commission is less concerned about food security or sustainability than export revenue.
"Alleged concerns over “food security” have been used to justify killing the Commission’s pesticide reduction law, severely diluting nature restoration rules, excluding most factory farms from the industrial emissions directive, trying to delay anti-deforestation regulations, and converting the EU protein strategy into a “grow-animal-feed-in-Europe” program"
What Alessandro Ford wrote about in July 2024 can now be seen in the EU’s backpedaling of its green demands on European agriculture where the mandate is export, baby, export. Client Earth reported in February 2025 that:
“The Commission has decided to tear down three key pillars of the Green Deal that ensure businesses act responsibly throughout their value chain"
Just because the EU is willing to dilute its green demands of European agriculture to protect Europe's export revenues does not mean the EU will extend the same to its imports of Malaysian palm oil.
If anything, Malaysia has to up its game in proving the sustainability of its palm oil through the Malaysian Sustainable Palm Oil certification standard and back it up with a continued commitment to no deforestation for palm oil. The strength of the MSPO will be essential for Malaysia as biofuels from palm wastes and used cooking oils removes any questions on the food-vs-fuel problem.
Rubbishing ILUC for Malaysian palm oil
The strength of the MSPO will also be needed to provide dynamic evidence for Malaysia to argue against the theory of of ILUC, Indirect Land Use Change which was revived in a recent criticism of the IMO’s Global Fuel Standard by Transenv.
ILUC is a tired old theory that should be put to rest as Malaysia has disproven ILUC with sound policies and solid actions on the ground. Chartered engineer Hong Wai Onn challenged the EU’s lumping together of all palm oil as the same.
"Unjustly categorising all palm oil as high ILUC-risk
Not all palm oil production leads to high ILUC emissions. However, rather than evaluating each case individually, the EC has uniformly labelled all palm oil as high ILUC-risk. This decision is based on the absence of clear, enforceable criteria to ensure that oil palm cultivation does not contribute to deforestation or displacement of other land uses. However, this approach lacks reasonableness, as evidence suggests that many oil palm plantations, particularly in Malaysia, are converted from other land categories rather than forests.
For example, research conducted by a team from the Department of Biological Sciences at the National University of Singapore estimates that approximately 2% of rubber plantations in Malaysia (and Indonesia) were converted to oil palm between 2014 and 2020. Moreover, data from Our World In Data indicates that logged-over forests are commonly transformed into oil palm plantations in Malaysia after 1995.
Disregarding these nuances is akin to disregarding fundamental principles of justice, such as giving the benefit of the doubt. It is unfair to assume blanket culpability without considering such complexities. Instead, palm oil should be presumed to be of low ILUC-risk until proven otherwise, for instance, through Malaysian Sustainable Palm Oil certifications verifying that the oil palm plantation was established after the deforestation cut-off date."
Having rubbished the theory of ILUC with ground actions by sticking to its no-deforestation for palm oil, the challenge for the Malaysian palm oil industry is to find new revenue sources from its palm oil wastes.
Cashing in on palm oil wastes an MEUFTA Win-Win
Malaysia has an estimated total of 5.89 million hectares of oil palm plantations that produce approximately a total of 94.7 million tonnes of oil palm biomass.
It is actively looking to convert palm oil wastes into wealth as Malaysia targets resource-poor countries like Japan and the EU. Data from the Malaysian Palm Oil Council shows that Japan took most of the palm kernel shells processed by the Malaysian palm oil industry as a feedstock for renewable energy.
But beyond the physical feedstocks for renewable energy in tree trunks and palm kernel shells for biomass lies the enormous potential for biodiesel in palm oil mill effluence (POME)
POME possesses a substantial amount of oil and grease (O&G), which can be valorised into value-added products such as biofuels or phytonutrients via oil recovery. Recovering oil loss through POME not only prevents income loss but also improves downstream treatment effectiveness. MPOB
POME as a feedstock for renewable energy was of course questioned as an advanced feedstock by Transenv. In typical fashion, Transenv listed all the problems with biofuels from industrial wastes and used cooking oils and recommended hydrogen fuel as a solution for clean transport.
A wake up call to anyone who thinks hydrogen is a solution should read the MIT explainer on hydrogen.
"Today, close to 95 percent of hydrogen production is from fossil fuels like natural gas and coal. As a result, we emit 830 million tonnes of CO2 each year to produce 74 million tonnes of hydrogen."
The failure of Transenv to include this niggly detail in promoting hydrogen as a sustainable renewable fuel should clinch the fact that Transenv is no expert on sustainable fuels. Pipedreams as peddled by Transenv have no place in the world where climate change is demanding immediate solutions like advanced biofuels.
But silencing critics of Malaysian palm-based biofuels like Transenv will require more than industry wide compliance with national laws governing its palm oil industry as Minister Johari said.
Where the first rule of sustainability is to produce only what the market needs, the buy-in of resource hungry nations like Japan, Korea or the EU will be essential to transforming Malaysia’s palm oil industry from a target of criticism into a global model of sustainability.
Published March 2025 CSPO Watch
There are no details at this time as to how the concerns were resolved but Malaysia’s steadfast commitments to meet the EU’s Deforestation Regulations through the Malaysian Sustainable Palm Oil (MSPO) standards have been a major factor.
This self imposed rule on no further deforestation to support its palm oil industry may be pleasing to the EU but it poses a challenge to maintain palm oil’s contributions to the Malaysian economy in light of aging plantations which is expected to affect revenues as exports drop.
Challenging NGO claims against palm oil biofuels
There is a way to increase the GDP contributions of Malaysia’s palm oil industry despite the self-imposed limits on palm oil acreage. One that could benefit the European Union’s commitment to reduce emissions from its transport sectors but Malaysia would have to first remove any doubts on its ability to produce green palm-based bioenergy.
The issue of Malaysian palm-based biofuels for the EU market is at a stalemate with the WTO ruling that suggests both parties need to do better in their arguments.
Arguments on the sustainability of Malaysian biofuels aside, the European Union is set to fail its climate commitments which are heavily reliant on green hydrogen, biofuels and carbon capture and storage infrastructure.
The problem is carbon capture, storage and green hydrogen are unproven technologies.
What is proven is biofuels but Europeans have a problem with how food is being burnt for fuel if you ask Transport & Environment.
According to Transenv which favored solar energy in this report:
"Europe burns 19 million bottles of vegetable oil and 10,000 tonnes of wheat – enough for 15 million loaves of bread – every day in its cars. This puts pressure on global food prices, threatening food security."
In promoting solar energy Transport & Environment uses the food-vs-fuels argument to slyly shift attention away from the social and environmental impacts of solar energy within the life cycle of extraction to disposal.
European groups like Transenv may continue to preach wind and solar energy for renewables but the fact is these sources are not exactly reliable in Europe where the phenomenon of Dunkelflaute, can increase electricity prices and stoke political tensions.
But getting back to the food-vs-fuel argument, the Norwegian group with its anti-biofuels and pro-fossil fuels stance should note that there is no problem with food security in Europe.
According to Alessandro Ford the European Commission is less concerned about food security or sustainability than export revenue.
"Alleged concerns over “food security” have been used to justify killing the Commission’s pesticide reduction law, severely diluting nature restoration rules, excluding most factory farms from the industrial emissions directive, trying to delay anti-deforestation regulations, and converting the EU protein strategy into a “grow-animal-feed-in-Europe” program"
What Alessandro Ford wrote about in July 2024 can now be seen in the EU’s backpedaling of its green demands on European agriculture where the mandate is export, baby, export. Client Earth reported in February 2025 that:
“The Commission has decided to tear down three key pillars of the Green Deal that ensure businesses act responsibly throughout their value chain"
Just because the EU is willing to dilute its green demands of European agriculture to protect Europe's export revenues does not mean the EU will extend the same to its imports of Malaysian palm oil.
If anything, Malaysia has to up its game in proving the sustainability of its palm oil through the Malaysian Sustainable Palm Oil certification standard and back it up with a continued commitment to no deforestation for palm oil. The strength of the MSPO will be essential for Malaysia as biofuels from palm wastes and used cooking oils removes any questions on the food-vs-fuel problem.
Rubbishing ILUC for Malaysian palm oil
The strength of the MSPO will also be needed to provide dynamic evidence for Malaysia to argue against the theory of of ILUC, Indirect Land Use Change which was revived in a recent criticism of the IMO’s Global Fuel Standard by Transenv.
ILUC is a tired old theory that should be put to rest as Malaysia has disproven ILUC with sound policies and solid actions on the ground. Chartered engineer Hong Wai Onn challenged the EU’s lumping together of all palm oil as the same.
"Unjustly categorising all palm oil as high ILUC-risk
Not all palm oil production leads to high ILUC emissions. However, rather than evaluating each case individually, the EC has uniformly labelled all palm oil as high ILUC-risk. This decision is based on the absence of clear, enforceable criteria to ensure that oil palm cultivation does not contribute to deforestation or displacement of other land uses. However, this approach lacks reasonableness, as evidence suggests that many oil palm plantations, particularly in Malaysia, are converted from other land categories rather than forests.
For example, research conducted by a team from the Department of Biological Sciences at the National University of Singapore estimates that approximately 2% of rubber plantations in Malaysia (and Indonesia) were converted to oil palm between 2014 and 2020. Moreover, data from Our World In Data indicates that logged-over forests are commonly transformed into oil palm plantations in Malaysia after 1995.
Disregarding these nuances is akin to disregarding fundamental principles of justice, such as giving the benefit of the doubt. It is unfair to assume blanket culpability without considering such complexities. Instead, palm oil should be presumed to be of low ILUC-risk until proven otherwise, for instance, through Malaysian Sustainable Palm Oil certifications verifying that the oil palm plantation was established after the deforestation cut-off date."
Having rubbished the theory of ILUC with ground actions by sticking to its no-deforestation for palm oil, the challenge for the Malaysian palm oil industry is to find new revenue sources from its palm oil wastes.
Cashing in on palm oil wastes an MEUFTA Win-Win
Malaysia has an estimated total of 5.89 million hectares of oil palm plantations that produce approximately a total of 94.7 million tonnes of oil palm biomass.
It is actively looking to convert palm oil wastes into wealth as Malaysia targets resource-poor countries like Japan and the EU. Data from the Malaysian Palm Oil Council shows that Japan took most of the palm kernel shells processed by the Malaysian palm oil industry as a feedstock for renewable energy.
But beyond the physical feedstocks for renewable energy in tree trunks and palm kernel shells for biomass lies the enormous potential for biodiesel in palm oil mill effluence (POME)
POME possesses a substantial amount of oil and grease (O&G), which can be valorised into value-added products such as biofuels or phytonutrients via oil recovery. Recovering oil loss through POME not only prevents income loss but also improves downstream treatment effectiveness. MPOB
POME as a feedstock for renewable energy was of course questioned as an advanced feedstock by Transenv. In typical fashion, Transenv listed all the problems with biofuels from industrial wastes and used cooking oils and recommended hydrogen fuel as a solution for clean transport.
A wake up call to anyone who thinks hydrogen is a solution should read the MIT explainer on hydrogen.
"Today, close to 95 percent of hydrogen production is from fossil fuels like natural gas and coal. As a result, we emit 830 million tonnes of CO2 each year to produce 74 million tonnes of hydrogen."
The failure of Transenv to include this niggly detail in promoting hydrogen as a sustainable renewable fuel should clinch the fact that Transenv is no expert on sustainable fuels. Pipedreams as peddled by Transenv have no place in the world where climate change is demanding immediate solutions like advanced biofuels.
But silencing critics of Malaysian palm-based biofuels like Transenv will require more than industry wide compliance with national laws governing its palm oil industry as Minister Johari said.
Where the first rule of sustainability is to produce only what the market needs, the buy-in of resource hungry nations like Japan, Korea or the EU will be essential to transforming Malaysia’s palm oil industry from a target of criticism into a global model of sustainability.
Published March 2025 CSPO Watch