Thursday, 10 March 2011

Green investment? Not so much. The Palm oil case.


Deforestation of peat forests in Sarawak, Malaysian Borneo. Source: Flickr

One issue concerning me is the unsustainable use of palm oil. Now I am all for alternatives to dirty fuels such as oil, coal and gas, but I have to object when it comes to first-generation biofuel replacements.

First generation biofuels (biodesiel, biogas, syngas) are derived from starches and sugars, vegatable oils and animal fats. As they are readily available and infrastructure for their cultivation already exists, production costs are low. However, they can displace existing crops from valuable food-growing land (an analysis of the 2009 US DoA figures suggested biofuels account for 1/4 of US grain crops, that could be used to feed those in need) and cause food staples to increase on the global market.

Commodities that are demand driven are highly volatile and as the price at the pump for crude oil is increasing, there has been a surge in investment in biofuels such as soy and palm with the Financial times having said that New Britain Palm Oil investment was up 54% last year. More integrated into global markets than ever before, the influence of subsidies and government incentives for biofuels could prove harmful in future market speculation; a result that could have caused the 2008 global food crisis.

Yet, considered a viable solution to emissions reductions, the European commissions Renewable Energy Directive (RED) allows the use of palm oil in transport fuel and although documents state that they ban member states from sourcing fuel from grasslands, wetlands and forests (that sequester carbon), it doesn't apply to habitats changed before Jan 2008. The EC, in trying to protect its target, has also issued revised standards that would give palm plantations the same status as natural forests.

With the UK requiring 13% of petrol and diesel to comprise of biofuels by 2020 under the Renewable Transport Fuels Obligation and with fuel companies lacking transparency over their sourcing (Times Online), biofuels have been aiding the depletion of rainforests. These regions are most suited to palm oil production, as it is the cheapest biofuel and labour costs are low.

Palm oil can only be grown in tropical climates in Asian countries, West Africa and the Amazon. All high in diversity and endemic species, loss of primary and secondary forests has devastating consequences. It is estimated that about 90% of an areas flora and fauna are lost when it is converted to monoculture plantations and according to Danielsen et al (Conservation Biology), it would take 75-93 years for benefits to the climate to outweigh the detrimental effects caused by forest conversion. Moreover, the Palm Oil Council of Malaysia (MPOC) have often been less than willing to divulge information on the impact of biofuel cultivation and often falsely claimed that palm oil plantations can host a comparable diversity of wildlife to native forests (The Guardian).  

The Roundtable on Sustainable Palm Oil (RSPO) was established to create standards that could be universally applied on the production and use of palm. However, many companies have failed to comply and palm oil is still sourced unsustainably. Huge subsidies are also limiting commitment to sustainable sourcing and reducing investment in alternatives such as second and third-generation biofuels (i.e. algae, gribbles and grass cuttings). 

The debate is further complicated by the fact that many assume palm oil is needed to bring people out of poverty and the emphasis on enigmatic species that are threatened with extinction due to forest conversion conflicts with basic human rights (Adam Smith Institute). However, as this video shows, this is not the case. Farmers are totally powerless and face poor yields, land-use conflict and human rights abuses. Assymetries between poor local businesses and rich multinationals are further exacerbating poverty as vested interests are driving investment in this lucrative market.

As a result, a £7.4 billion joint venture between Shell and Brazilan (sugar cane) biofuel producer Cosan (Green buisness?) may lead to a monopoly over other oil giants, causing marginalisation of farmland and a further shift from food staples. Biofuel monocropping reduces biodiversity and degrades water quality, hitting the poor and marginal the hardest. ActionAid believe these kind of reckless investments could lead to another 100m hungry by 2020 and food prices could rise by an additional 76% and 600 million extra people could go hungry.

Looking to alternatives is needed but shifting are dependency from one oil to another may not be the best laid plans. Many debate that biofuels sometimes generate more emissions than conventional fuels due to forest conversion and cultivation methods. The growth of palm oil plantations on peatlands, for example, is a ticking time bomb as they contain vast stores of carbon (The Guardian). Further upsetting this balance to produce a fuel that will not solve our growing demand for oil seems a bit silly so let us stop incentivising biofuels. Growth can still be generated in the developing world through commodity trading and ethical investment, but not as far as first-generation biofuels are concerned. Lets focus on putting food on the table first!


We live in an apparently democratic state, so our opinion should count. Object against biofuel production and the use of palm oil in consumer goods. A little effort goes a long way.