Palm Oil for Dummies
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Update May 04, 2023
Decoupling is Happening, So Europe Must Avoid Alienating Allies
Global tensions and disputes
For the West, it is particularly troubling to see Malaysia as the driver behind the Asian Monetary Fund. In the age of ‘decoupling,’ with Western countries and their allies attempting to avoid excessive dependence China and Russia when it comes to “strategic” matters—something that is hard to define and prone to misuse—Southeast Asia, a region with enormous growth prospects, could make up for any reduced trade with China and Russia. European Conservative
Decoupling is Happening, So Europe Must Avoid Alienating Allies
Global tensions and disputes
For the West, it is particularly troubling to see Malaysia as the driver behind the Asian Monetary Fund. In the age of ‘decoupling,’ with Western countries and their allies attempting to avoid excessive dependence China and Russia when it comes to “strategic” matters—something that is hard to define and prone to misuse—Southeast Asia, a region with enormous growth prospects, could make up for any reduced trade with China and Russia. European Conservative
Update April 10, 2023
Indonesia puts the squeeze on the EU in free trade
Indonesia's Coordinating Minister for Economic Affairs Airlangga Hartarto stated that substantial completion of the Indonesia-European Union Comprehensive Partnership Agreement (IEU-CEPA) should be expedited to utilize the economic cooperation potential between the two parties.
Palm oil has been the major problem in IEU-CEPA talks as Indonesia claims the EU's attitude towards palm oil in RED II discriminates against palm oil. The complaints on the EU's discrimination against palm oil ramped up with the EU's proposals to restrict palm oil imports under the EU's Deforestation Regulations. The IEU-CEPA has stalled with no obvious ways around the palm oil problem unless the EU dials back its discrimination against palm oil.
Will the EU back-pedal on its hostile position against palm oil for the sake of free trade?
EU free trade negotiations are not going well. It may rush through an EU-Australia deal but that is a minor deal compared to the EU-India negotiations which is stuck on India's refusal to accept EU demands.
So it is quite possible that the EU may shift its attitude towards palm oil if its change in attitude against soy is any indication. The EU-MERCOSUR negotiations which are stalled due to environmental rules in the EU's Green Deal, may yet see the EU's re-approval of soy as fit-for-purpose biofuel despite earlier decisions to ban soy-based biofuels in the EU.
An EU back dial on palm oil biofuels should be done sooner than later in order for the IEU-CEPA to continue. Failure to do so risks having the EU slide further into irrelevance in global economics as recent news shows Indonesia is looking towards friendlier trade partners.
Indonesia has just concluded the first round of negotiations with the Eurasian Economic Union (EAEU) for a free-trade agreement as part of an effort to increase exports to non-traditional markets in the Eurasian region. The economic value of the Indonesian-EAEU trade is not big by any means but this is a slap against the EU which had placed sanctions against Russian exports to "weaken" the latter.
But the bigger slap from Indonesia against the EU, may come from an Indonesian proposal for a limited free trade deal with the US for critical minerals for electric vehicles (EVs) including nickel.
Indonesia is appealing a WTO decision which favored the EU's complaint against Indonesia's restrictions on nickel exports. Meanwhile, Indonesia has noted the US's massive tax credits for EVs which will need nickel. These are the same subsidies which threatens a trade war between the US and the EU. Indonesia will clearly gain if it strikes a limited free trade agreement with the US, which makes the proposal an expert move against the EU's discrimination against palm oil.
To make it short, what these new developments in free trade negotiations shows, is that the EU is not the powerhouse it imagines itself to be. European poseurs for the environment, like Transport & Environment should scramble to contain the damage done to their reputation if the EU re-allows soy biofuels.
Original commentary follows
Indonesia puts the squeeze on the EU in free trade
Indonesia's Coordinating Minister for Economic Affairs Airlangga Hartarto stated that substantial completion of the Indonesia-European Union Comprehensive Partnership Agreement (IEU-CEPA) should be expedited to utilize the economic cooperation potential between the two parties.
Palm oil has been the major problem in IEU-CEPA talks as Indonesia claims the EU's attitude towards palm oil in RED II discriminates against palm oil. The complaints on the EU's discrimination against palm oil ramped up with the EU's proposals to restrict palm oil imports under the EU's Deforestation Regulations. The IEU-CEPA has stalled with no obvious ways around the palm oil problem unless the EU dials back its discrimination against palm oil.
Will the EU back-pedal on its hostile position against palm oil for the sake of free trade?
EU free trade negotiations are not going well. It may rush through an EU-Australia deal but that is a minor deal compared to the EU-India negotiations which is stuck on India's refusal to accept EU demands.
So it is quite possible that the EU may shift its attitude towards palm oil if its change in attitude against soy is any indication. The EU-MERCOSUR negotiations which are stalled due to environmental rules in the EU's Green Deal, may yet see the EU's re-approval of soy as fit-for-purpose biofuel despite earlier decisions to ban soy-based biofuels in the EU.
An EU back dial on palm oil biofuels should be done sooner than later in order for the IEU-CEPA to continue. Failure to do so risks having the EU slide further into irrelevance in global economics as recent news shows Indonesia is looking towards friendlier trade partners.
Indonesia has just concluded the first round of negotiations with the Eurasian Economic Union (EAEU) for a free-trade agreement as part of an effort to increase exports to non-traditional markets in the Eurasian region. The economic value of the Indonesian-EAEU trade is not big by any means but this is a slap against the EU which had placed sanctions against Russian exports to "weaken" the latter.
But the bigger slap from Indonesia against the EU, may come from an Indonesian proposal for a limited free trade deal with the US for critical minerals for electric vehicles (EVs) including nickel.
Indonesia is appealing a WTO decision which favored the EU's complaint against Indonesia's restrictions on nickel exports. Meanwhile, Indonesia has noted the US's massive tax credits for EVs which will need nickel. These are the same subsidies which threatens a trade war between the US and the EU. Indonesia will clearly gain if it strikes a limited free trade agreement with the US, which makes the proposal an expert move against the EU's discrimination against palm oil.
To make it short, what these new developments in free trade negotiations shows, is that the EU is not the powerhouse it imagines itself to be. European poseurs for the environment, like Transport & Environment should scramble to contain the damage done to their reputation if the EU re-allows soy biofuels.
Original commentary follows
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- Palm oil is not the only industry that affects forests in producing countries
- Global economies do not revolve around Europe
Its quite astounding how a group like Transport & Environment (T&E) attracts funding when it makes flat-earth assumptions about transport and energy for Europe.
In its latest opinion on biofuels for European transport, T&E chucked up an opinion that throws its reputation into some serious doubt. The opinion criticized the European Commission for potentially back-pedaling the Commission’s position on soy based biofuels.
Quoting the drivel from Transport & Environment:
2. Results
If the Commission would agree to an immediate phase-out of soy and palm oil in EU biofuels, a volume of 4.5 million tonnes of palm oil and 1.1 million tonnes of soy oil - currently used in the EU production of biofuels - would be released to the global market. This would remove the incentive for new expansion for the cultivation of these crops, amounting to 3.1 million ha. With 41% of such expansion recently overlapping with forests and peatlands in the case of palm and 9% in the case of soy, this could save over 630,000 hectares of forests and peatlands from being converted into soy fields and palm oil plantations.
3. Methodology
Our modelling is based on the assumption that phasing-out both palm and soy biodiesel would restrain the growth in global demand and therefore reduce the need for expansion of soy and palm into new areas, including into high carbon stock areas. In this case, we estimated the deforestation savings based on current palm and soy use in Europe’s biofuels, average yield factors and the of expansion into high carbon stock areas (e.g. rainforests and peatlands) for palm and soy.
The methodology used and its results are jaw dropping in how puerile they are. So here’s a short lesson on palm oil and the European Union.
- The EU’s ban on palm oil biofuels will have “very limited impact” on the Indonesian economy or its environment according to experts. It is a frivolous assumption that 3.1 million hectares of crop expansion would be saved.
It is basic knowledge that palm oil producing countries like Indonesia or Malaysia, are involved in more economic activities than simply “palm oil.” These countries could stop palm oil expansion today but the threats to biodiverse areas are no different from countries covered by Erin Blakemore for the Washington Post.
“…mines, oil and gas, or energy-related infrastructure — all of which are associated with pollution, habitat destruction and other hazards to wildlife. Biodiversity hot spots such as Brazil and central Africa are at particular risk for future development.”
- Transport & Environment quotes a High ILUC study by Guidehouse which completely ignores the development needs of tropical countries where High Carbon Stock areas are found in abundance due to the late development of tropical countries. This approach is discriminatory and creates prejudices which no one needs in 2023. While the Guidehouse report is blinkered towards land use for crops, the more important set of data for global sustainability is Indonesia’s GDP in the same time period. GDP per capita for Indonesia in 2008 was 2,144.39 USD. In 2019, GDP per capita for Indonesia was 4,151.23 USD. This has improved the quality of lives for the average Indonesian but since this is of no importance to Transport & Environment or Guidehouse, let’s say the EU goes ahead and bans palm oil for biofuels as planned. There’s no saving of “630,000 hectares of forests and peatlands from being converted into soy fields and palm oil plantations” simply because…
The World Does Not Revolve Around the EU
The EU has a bigheaded ego which threatens the global fight against climate change.
The Union’s imaginary influence is well exemplified by its sanctions against Russian oil exports which was supposed to deflate Russia’s war against the Ukraine. The rest of the world has just shown that sanctions by the EU has little influence over what happens outside the Union.
A similar development is taking place with Malaysia, whose biggest buyers are India and China, looking to develop emerging markets in the Middle East.
But the biggest blow to the EU’s ego will come from Indonesia which happens to be the world’s biggest producer AND consumer of palm oil. An oversupply of palm oil, which completely destroys any theories of ILUC impact on palm oil expansion in Indonesia, has seen Indonesia push its biodiesel blend to 40% just to use up the over-supply.
Like some petulant child who refuses to believe the earth is round, Transport & Environment continues to utter sentences like this convoluted line.
“To scrap the limit would give a major incentive to import even more used cooking oil, potentially even animal fats, taking it away from other markets and industries that also need them to decarbonise,” Barbara Smailagić, fuels policy officer at T&E, told EURACTIV.
The EU would fail abysmally, to meet its zero emissions targets if used cooking oils are removed from its climate change toolbox.
Besides failing its own climate change plans, the EU would shift biodiversity loss with a ban on palm oil as the IUCN wrote.
The most damning condemnation of the EU’s ban on palm oil biofuels came from the World Economic Forum which wrote:
“While palm oil is controversial from a sustainability perspective, the EU’s plans to ban its use in biofuels by 2030 is part of the problem.
The fight against climate change is a global imperative best solved through collaboration - but rather than working together, the EU’s ban threatens our best weapons against climate change: cooperation and global solidarity.”
Between the childish blabber of Transport & Environment and the opinions of the IUCN and WEF, there is still time for the EU to rethink its position on palm oil-based biofuels to prevent failure to meet its ambitions to decarbonise the transport sector.
Published April, 2023. CSPO Watch
Update April 03, 2023
CNBC Indonesia reported that "Assisted by China and Saudi Arabia, CPO prices are rising again"
CPO's strengthening today continues the last push up in prices. Throughout the week, CPO was able to carve a brilliant performance supported by strong competition from vegetable oils and lower production expectations.
Positive sentiment seems to be enveloping CPO. On Sunday (2/3/2023), Malaysia signed a memorandum of understanding with a trade association supported by the Chinese government to increase palm oil trade and cooperation.
CNBC Indonesia reported that "Assisted by China and Saudi Arabia, CPO prices are rising again"
CPO's strengthening today continues the last push up in prices. Throughout the week, CPO was able to carve a brilliant performance supported by strong competition from vegetable oils and lower production expectations.
Positive sentiment seems to be enveloping CPO. On Sunday (2/3/2023), Malaysia signed a memorandum of understanding with a trade association supported by the Chinese government to increase palm oil trade and cooperation.
Update April 02, 2023
Malaysia, China ink partnership to stabilise palm oil supply chain
According to the news report from Channel News Asia
KUALA LUMPUR: Malaysia said on Sunday (Apr 2) it has signed a memorandum of understanding with a China government-backed trade association to enhance palm oil trade and cooperation.
The Malaysian Palm Oil Board said its partnership with the China Chamber of Commerce of Import and Export of Foodstuffs, Native Produce and Animal By-Products will help Malaysia regain market share in the world's most populous country.
This is part of the massive trade deal announced this week with the signing of 19 MoUs between businesses in China and Malaysia.
While Transport & Environment was frantically thumbing out messages in the corner these past years, oblivious to the EU's loss of influence, China's investments into sustainable biofuels in Malaysia continued to pour in. New projects between China and Malaysia to develop biofuel and biojet fuels threaten to reduce the EU's influence further.
Transport & Environment can continue to utter childish demands on the EU's need for more bioenergy but that will not stop the decline of the EU and its irrelevance in Asia. There's hope yet as European leaders are suddenly falling over each other to get to China.
Malaysia, China ink partnership to stabilise palm oil supply chain
According to the news report from Channel News Asia
KUALA LUMPUR: Malaysia said on Sunday (Apr 2) it has signed a memorandum of understanding with a China government-backed trade association to enhance palm oil trade and cooperation.
The Malaysian Palm Oil Board said its partnership with the China Chamber of Commerce of Import and Export of Foodstuffs, Native Produce and Animal By-Products will help Malaysia regain market share in the world's most populous country.
This is part of the massive trade deal announced this week with the signing of 19 MoUs between businesses in China and Malaysia.
While Transport & Environment was frantically thumbing out messages in the corner these past years, oblivious to the EU's loss of influence, China's investments into sustainable biofuels in Malaysia continued to pour in. New projects between China and Malaysia to develop biofuel and biojet fuels threaten to reduce the EU's influence further.
Transport & Environment can continue to utter childish demands on the EU's need for more bioenergy but that will not stop the decline of the EU and its irrelevance in Asia. There's hope yet as European leaders are suddenly falling over each other to get to China.
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