Leaked RED II internal letter triggers uproar over IEU-CEPA talks
On Oct. 22, Palm Oil Monitor released a leaked internal letter written by European Union (EU) Trade Director General Jean-Luc Demarty addressed to Energy Director General Dominique Ristori. Demarty stated wrote that the 2018 EU Renewable Energy Directive (RED II) proposed by the European Parliament (EP) was problematic because the exclusion of palm oil-based biofuel in RED II violated non-discrimination obligations under Article I and III of the General Agreement on Tariffs and Trade (GATT). He also said that the assertion made by the EP on palm oil’s negative environmental impact was built upon dubious scientific evidence.1
The leaked letter caused an uproar in Indonesia. Deputy Foreign Minister Mahendra Siregar responded by sending an official letter to EU Trade Commissioner Cecilia Malmström, condemning the EU’s inconsistency toward palm oil as expressed in the document.2
In a surprise move, Indonesian Oil Palm Association (GAPKI) secretary-general Kanya Lakhsmi recommended that the Indonesian government suspend all negotiations related to palm oil in the Indonesia-European Union Comprehensive Economic Partnership Agreement (IEU-CEPA) because of the leaked letter, so that negotiations as a whole — which would benefit other sectors such as textiles and apparels — could continue as scheduled.3 In response to GAPKI’s recommendation, Foreign Minister Retno LP Marsudi made a public statement, stating palm oil would be negotiated in IEU-CEPA talks, despite the tight deadline set by President Joko “Jokowi” Widodo to conclude the agreement by 2020.4 The EU Delegation to Indonesia, Michael Bucki, declined to comment on the leaked letter.
Following the release of the letter, Indonesia seems ready to bring the case to the World Trade Organization (WTO).5 However, Malaysia has declined to join Indonesia. Malaysian Prime Minister Mahathir Mohamad said his government would not bring this issue to the WTO.
“Until we find very positive discrimination, we will not act,” Mahathir said at a press conference after launching the Malaysian Palm Oil Board’s (MPOB) International Palm Oil Congress and Exhibition (PIPOC 2019). Mahathir also stated that the strategy of disseminating accurate information regarding sustainable palm oil still worked well.6
Rather than pursue direct confrontation, the Malaysian government prefers to improve the sustainability credential of the country’s palm oil through mandatory Malaysian Sustainable Palm Oil (MSPO) certification. Up to date, 72.6 percent of 448 Malaysian palm oil mills are MSPO certified, and palm oil mills that fail to get MSPO certification by next year will have their license revoked.7
RED II is a revision of the EU’s 2009 Renewable Energy Directive (RED I), which required the EU to fulfill at least 20 percent of its total energy need and 10 percent of each country member transport fuels with renewables by 2020. Under RED II, which has been in force since December 2018, the minimum renewable energy consumption shares has been raised to 32 percent for total energy and to 14 percent to road and rail transport, and the targets should be met by 2030.8
RED II also introduces a stricter sustainability criteria, specifically on the calculation rules of greenhouse gases (GHG) emission values. For example, RED II introduces the land-use, land-use change and forestry (LULUCF) criteria for biofuels, bioliquids and biomass fuels in Paragraph 7 of Article 29.9 The LULUCF criteria will put Indonesia at a disadvantage to other palm oil producing nations due to the country’s poor track record in preventing widespread forest fires.
Besides adding the LULUCF criteria, RED II also changes the GHG emissions calculation for vegetable oil-based diesel. The most striking changes occur for palm oil biodiesel, specifically on palm oil biodiesel produced using the methane capture method at oil mills. Under RED II, the calculated GHG emissions for methane capture palm oil biodiesel increases to 51.6, from 37 under RED I. The new calculation changes palm oil biodiesel’s status from one of the cleanest alternatives for rapeseed, sunflower and soybean biodiesels.
Total GHG values for biofuel and bioliquid for cultivation, processing, transport and distribution in g CO2eq/MJ
|
Biofuel and bioliquid production pathway |
RED I |
RED II |
||
|
Typical GHG emissions |
Default GHG emissions |
Typical GHG emissions |
Default GHG emissions |
|
|
Sugar cane ethanol |
24.0 |
24.0 |
28.1 |
28.6 |
|
Rape seed biodiesel |
46.0 |
52.0 |
45.5 |
50.1 |
|
Sunflower biodiesel |
35.0 |
41.0 |
40.0 |
44.7 |
|
Soybean biodiesel |
50.0 |
58.0 |
42.2 |
47.0 |
|
Palm oil biodiesel (open effluent pond) |
54.0 |
68.0 |
63.5 |
75.7 |
|
Palm oil biodiesel (methane capture at oil mill) |
32.0 |
37.0 |
46.3 |
51.6 |
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