Indonesia and Malaysia, the world’s No. 1 and No. 2 palm oil producers, are seeking legal advice from the World Trade Organization to ensure that European Union renewable energy rules do not harm palm oil use for biodiesel, ministers said.
Malaysia and Indonesia are keen to export biofuels to Europe, the world’s leading producer and consumer of biodiesel, but palm biodiesel’s use has been limited, partly due to green campaign pressure.
Environmentalists say the rapidly growing palm oil sector is not only responsible for the loss of vast areas of tropical forests that soak up carbon dioxide, the main greenhouse gas, but emits warming gases during processing.
Indonesia and Malaysia have agreed to consult with the World Trade Organization on the European Union Directive on Renewable Energy to make sure that the policy does not discriminate against palm oil, Indonesian Agriculture Minister Suswono said.
“This is to ensure that palm oil used for biofuel purposes is not disadvantaged by unfair standards and requirements,” Suswono told reporters.
Under the renewable energy directive, the European Union will impose this year a target to only accept biodiesel that can reduce CO2 emissions by at least 35 percent versus fossil fuel, which risks cutting out palm oil which the E.U. considers to save only 19 percent.
Malaysian Commodities Minister Bernard Dompok said the two countries have not yet filed a case with WTO.
The EU account for about 70 percent of global biodiesel production and between 80 and 85 per cent of worldwide consumption. Biodiesel is made from vegetable oils such as rapeseed and palm oil. (Reuters)