Palm oil

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Palm oil is a form of edible vegetable oil obtained from the fruit of the oil palm tree. The palm fruit is the source of both palm oil (extracted from palm fruit) and palm kernel oil (extracted from the fruit seeds). In addition to being used as cooking oil and as a component of many processed foods, palm oil is used to make biodiesel. Palm oil is one of the few vegetable oils relatively high in saturated fats (such as coconut oil).

• As of 2007, Indonesia and Malaysia produce 80% of the world's palm oil. (Source: Wikipedia).
• As of 2007, the world's largest importers of palm oil are China and India[1]; The Netherlands is the largest importer of palm oil in the European Union.[2]

Contents 1 Events 2 History 3 Sustainability 3.1 Greenhouse gases (CO2) 3.2 Biodiversity 3.3 Pollution 3.4 Land degradation 3.5 Social sustainability 3.6 Species conservation 4 Technology/Science 4.1 Properties 4.2 Technology 5 Economics/Policy 6 News 7 Publications 8 Regions/Countries 9 Organizations 10 Other oil palm products 10.1 Palm oil leavings 11 References

Events

2009

• 9-10 February 2009, Jakarta, Indonesia: BiomassWorld 2009. (Themes: biomass, palm)

2008

• 19-20 August 2008, Kuala Lumpur, Malaysia: International Conference on Oil Palm Biomass 2008. (Themes: oil palm, biomass)

• 6 December 2008, London, UK: Agrofuel protest outside Greenergy, organised by Campaign Against Climate Change, Biofuelwatch and Food not Fuel. Protestors will target Greenergy, which they say are "the biggest supplier of agrofuels in the UK, using palm oil as well as soya." (Themes: climate, environment, palm oil, soy)

2007

• 5 March 2007, Paris, France: Paris International Agricultural Fair: Sustainable palm oil production: research needs.

History

Palm oil was long known of in West African states, and amongst West African peoples, and saw widespread use as a cooking oil. However, palm oil remained rare outside West Africa. During the early nineteenth century, palm oil became a highly sought-after commodity by British traders, the oil being used as industrial lubricant for the machines of Britain's ongoing Industrial Revolution, as well as forming the basis for soaps such as Palmolive. By c. 1870, palm oil constituted the primary export of West Africa. By the 1880's, cocoa became more highly sought-after, leading to the decline of the palm oil trade. (Source: Wikipedia) Palm oil was first introduced to Malaysia in 1870 as an ornamental plant and is now a leading agricultural crop. (source: MPOB)

Sustainability

• Note: The sustainability of palm oil is addressed by the Roundtable on Sustainable Palm Oil (RSPO).

Greenhouse gases (CO₂)

• Burning of forests to clear ground can cause significant air pollution and releases large quantities of CO₂. (Reference needed)

Biodiversity

• Tropical forests are often cut or burned down to create palm oil plantations, causing losses of biodiversity. (Reference needed)
• Orangutans, the only Asian great ape, which live entirely in Malaysia and Indonesia, are threatened with extinction by the rapid expansion of palm oil plantations (Source: www.plosbiology.org).

Pollution

• Large scale burning of forest to clear land for palm oil in Indonesia is causing pollution levels to climb in Southeast Asia, resulting in mounting haze-related health problems, traffic accidents, and associated economic costs. (Source:mongabay)

Land degradation

Social sustainability

• In Indonesia, land for plantations is often allegedly sold to companies without consultation or compensation for the indigineous people who are living there and whose livelihood comes from the forest¹.

Species conservation

• The rapid conversion of Indonesian rain forest into oil palm plantations is a direct threat to the survival of orangutans in the wild. Learn more here.

Technology/Science

Properties

• Oil palm is regarded as the most cost-effective vegetable oil crop, with average yields of 3.5-5.0 t of palm oil per hectare per year, making it a very efficient feedstock for conversion into biofuel. (Source: MPOB)
• Palm oil is very high in saturated fats.

Technology

Economics/Policy

• Some researchers have suggested that anything above $55 a barrel makes palm oil-based biodiesel a commercially viable option. (Reference needed)

• Most active biodiesel plants are heavily subsidized by the government and may not be sustainable in a truly competitive market. (Reference needed)

• In 2007, some members of the European Parliament have called for a ban on palm oil biodiesel due to increasing sustainability concerns (see articles below).

• Ultimately, tropical forests may provide greater value -- economic and otherwise -- in their undisturbed state, rather than when converted to palm oil plantations.
  • A December 2008 study in Conservation Letters, "Economic benefits of standing forests in highland areas of Borneo: quantification and policy impacts", reported on a "rapid assessment of the benefits of standing forests in the highlands of Borneo" and "document[ed] how the results were used to influence the Indonesian government's policy on oil palm plantations in the highlands of Borneo.[3]

News

2009

• The good oil on KFC lobby effort, 28 June 2009 by The Northern Star: "The Palm Oil Action Group has congratulated the fast-food company (KFC) on its decision to stop using the controversial oil." The group is now "calling on other companies, including Woolworths, to come on board as well."
  • "...about 50 orangutans [are] killed each week as a result of palm oil operations...."'Palm oil expansion is also linked to a host of other important issues including climate change, illegal clearing of forests, water pollution, and the displacement of local indigenous populations.'"

• Significant rise in RSPO-certified palm oil in EU, 26 June 2009 by Commodity Online: "The volume of RSPO-certified sustainable palm oil imported in European Union markets have increased significantly as producers in South East Asia comply with the Roundtable on Sustainable Palm Oil, the multi-stakeholder association working to make all palm oil production sustainable. The equivalent of more than one third of all palm oil imported into the EU could now be sold as ‘sustainable’..."
  • "RSPO rules and audits on the ground guarantee that social and environmental standards were met during the production of certified sustainable palm oil. For example, producers need to protect the habitats of endangered species and no new primary forests can be cut for oil palm plantations. The rights of local communities, smallholders and workers have to be respected as well..."

• Brazilian miner Vale signs $500M palm oil deal in the Amazon, 25 June 2009 by Mongabay.com: "Vale, the world's largest miner of iron ore, has signed a $500 million joint venture with Biopalma da Amazonia to produce 160,000 metric tons of palm oil-based biodiesel per year....Vale says the deal will save $150 million in fuel costs starting in 2014, with palm oil biodiesel replacing up to 20 percent of diesel consumption in the company's northern operations. The biodiesel will be produced from oil palm plantations in the Amazon state of Pará."
  • "environmentalists...fear palm oil production could soon become a major driver of deforestation in the region. Cultivation of oil palm is a leading cause of forest loss across Southeast Asia, but has yet to be widely planted in the Brazilian Amazon, where deforestation is mostly driven directly by conversion for cattle pasture expansion and indirectly by expansion of industrial agriculture, including soy."

• CIFOR Study on Oil Palm Plantations Identifies Research Needs on Biofuels and Carbon Impacts, 11 June 2009 by Climate-L.org: "The Center for International Forestry Research (CIFOR)...has published a study on the impacts and research needs with regard to oil palm plantations, covering, among other issues, the impacts of increased cultivation for biofuel production."
  • "The study titled “The Impacts and Opportunities of Oil Palm in Southeast Asia: What Do We Know and What Do We Need to Know?”(PDF file) examines the current state of knowledge and research needs with respect to global trends in oil palm production and their impact on the environment and livelihoods, including impacts on deforestation and greenhouse gas (GHG) emissions. With regard to biofuel production, the study concludes: the current expansion of palm oil production in Indonesia and Malaysia is driven primarily by increased demand for food oil and to a lesser extent by demand for biofuels; and the short-term costs of palm oil as carbon saving fuel greatly outweigh the benefits."[4]

• The world's top 15 listed palm oil planters, 9 June 2009 by Reuters: Information on the "15 largest listed palm planters, ranked by market value....mostly located in Indonesia and Malaysia".
  • Statistics provided on "plantation holdings are in hectares and include both cultivated and uncultivated land".

• Rainforest conservation more profitable than palm oil production, 5 June 2009 by redOrbit.com: "...paying to reduce rainforest carbon emissions could actually amount to more income than initiatives to use the deforested land for palm oil production."

• Neste picks palm oil for diesel output, 4 June 2009 by Business Times: "NESTE Oil Corp has chosen palm oil as its main raw material for producing renewable diesel production units called NExBTL as palm oil is the most sustainable and competitive raw material because of its availability, price and greenhouse gas balance."

• Indonesia needs $4b to avert deforestation, 4 June 2009 by The Jakarta Post: "...Indonesian deforestation could be averted if international communities grant US$4 billion until 2012 to finance the livelihood of local peoples and stop forest conversions....The Forestry Ministry said the money would be used to address the main causes of deforestation prior to the implementation of the reducing emissions from deforestation and degradation (REDD) mechanism."
  • "Many have criticized the Indonesian government for its failure to combat high rates of deforestation, which have risen to over one million hectares per year."
  • "Indonesia has about 120 million hectares of rainforest – the third-largest on the planet after Brazil and Congo."
  • "...illegal logging [can] be seen from the expansion of oil palm estates in protected areas and conservation forests in the country....local administrations still [award] licenses for forest conversion, including for plantations."

• CPO Producers Say Green Efforts Not Paying Off, 31 May 2009 by JakartaGlobe: "While many palm oil plantations and farmers are struggling to get certificates proving their palm oil is produced in a sustainable manner, others that have the certificates are complaining that buyers in Europe don’t want to buy their products because they are too expensive."
  • "When the first batch of RSPO-certified palm oil arrived in Europe in November 2008, the company involved, Malaysia-based United Plantations, was accused by environmental organizations Greenpeace and Wetlands International of not actually meeting the RSPO’s requirements...Greenpeace maintains that the roundtable’s system fails to adequately address issues like deforestation, peatland clearance and other land-related conflicts."
  • "The EU is in the process of requiring all palm oil producers to certify both crude palm oil and derivative products. Companies that do not obtain certification by 2010 will not be allowed to sell to EU countries."

• "Green" palm planters struggling to find buyers, 30 May 2009 by Alibaba.com: "JAKARTA, May 27 - Palm oil planters in the world's top two producers Indonesia and Malaysia are struggling to find buyers for their eco-friendly palm oil...threatening to slow momentum."
  • "Under fire from green groups and some Western consumers, the palm oil industry established the Roundtable on Sustainable Palm Oil (RSPO) in 2004 to develop an ethical certification system that includes commitments to preserve rainforests and wildlife."
  • "...the industry had so far sold only 15,000 tonnes of certified green palm oil since the first shipment last November while output might have reached around 600,000 tonnes."
  • "The issue of 'green' palm remains contentious and some conservation groups argue that the current voluntary rules are not effective in protecting the environment."

• Palm oil could scuttle forest carbon plan: experts, 29 May 2009 by Reuters: "Carbon credits derived from a fledgling forest conservation scheme for developing nations will struggle to compete with palm oil as an investment...”
  • "...REDD allows developing countries to raise potentially billions of dollars in carbon credits in exchange for conserving and rehabilitating forests...However, profits from palm oil plantations could, in some cases, out-compete revenue from selling REDD credits…"
  • "...REDD credits arising from 10,000 hectares (25,000 acres) of conserved forest sold over a 30-year period -- where payments were front-loaded so that most of the money was delivered within the first eight years -- could fetch about $118 million if those credits could be used to meet emissions obligations for rich nations."
  • "The same credits would fetch only $14 million if their purchase was voluntary...'Whereas high-yield palm oil would get about $96 million'..."

• Sustainability criteria must be science based, verifiable and WTO-compatible (Malaysian Minister of Plantation Industries and Commodities), 25 February 2009, by the World Refining Association: Malaysia's Minister of Plantation Industries and Commodities, the Hon. Datuk Peter Chin Fah Kui, stated in an interview that “We urge the EU to ensure that its sustainability scheme does not discriminate against third country producers and that the criteria used are science based, verifiable and WTO-compatible".
  • "One of the biggest concerns in the use of biofuels is its impact on food security [...]. As far as the Malaysian Government is concerned, the local mandate B5 if fully implemented will require only 500,000 tonnes annually or a mere 3% of our national production of CPO [Crude Palm Oil]. In fact, 90% of Malaysian palm oil is used for traditional applications such as foodstuffs and oleochemicals (soap and cosmetics), while only a small fraction is destined for biofuel production."
  • "We are engaging countries such as the EU and USA that are coming up with legislations which impose sustainability criteria on our palm and biofuel products. This includes the EU Directive on Renewable Energy."

• Indonesia reopens peatland to palm oil plantation, 18 February 2009 by The Guardian: "Indonesia today acknowledged it had quietly lifted a year-long freeze on the use of peat land for palm oil plantations, fuelling fears of a rise in greenhouse gas emissions."
  • "Environmental groups had pressed the government to maintain the ban but Indonesia's agriculture ministry said tighter controls for issuing new permits for growing palm oil on peat land had been set after a study during the past year."
  • "To grow palm oil, the peat land that must be cleared and drained, releasing millions of tonnes of CO2 into the atmosphere. The oil is a major export product and is used in numerous foods, soaps, washing powders and as a feedstock for biofuels."
  • "Indonesia is the world's leading palm oil producer and has planted palm estates of 7.1m hectares, with smallholders accounting for about 35 percent. Palm oil generated exports revenue of £7.64bn in 2008."[5]

• The cost of the biofuel boom on Indonesia's forests, 21 January 2009 by The Guardian: "A flurry of scientific field work and environmental reports have linked the spread of oil palm plantations in Indonesia to the decimation of rain forests, increased conflict between logging and oil palm interests and rural and indigenous people, and massive CO₂ emissions through logging, burning, and the draining of carbon-rich peat lands. And most of the trouble, as I learned on a recent visit, is playing out in the Indonesian lowland rain forests on Sumatra and Borneo, an ecosystem long regarded as a global hotspot for rare and endemic species — but perhaps not for much longer."
  • "According to Indonesia's own figures, 9.4 million acres of forest have been planted with oil palm since 1996, an area larger than New Hampshire and Connecticut combined. That works out to 2,000 acres a day, or about one football field a minute....Only Malaysia, which has less at stake biologically, produces more."
  • "The week [the author] visited Sumatra, Greenpeace activists aboard the Rainbow Warrior were blockading a shipment of palm oil off its coast. A banner tied to the ship's mast read: 'Palm Oil Kills Forests and Climate.'"[6]

2008

• Biofuels standards challenged by new report on Malaysian Palm Oil , 8 October 2008 by Friends of the Earth UK: "Malaysian palm oil is finding its way into British petrol tanks despite concerns about its carbon balance and the rainforest being destroyed to produce it - according to a new report by Friends of the Earth international."
  • "The UK Renewable Fuels Agency (RFA) has reported that Malaysian palm oil being used for fuel in the UK meets a 'qualifying environmental standard', but Friends of the Earth's research reveals it is far from green."
  • The FOE report finds that Sarawak state in Malaysia "plans to more than double its 2007 levels of oil palm acreage by 2010....at the expense of tropical forests" and that "companies regularly practice open burning on carbon rich peat soils releasing millions of tonnes of greenhouse gases into the atmosphere".[7]
  • See the report Malaysian Palm Oil: Green Gold or Green Wash?

• First GreenPalm Certificates Traded, 4 September 2008. In its newsletter, Greenpalm announced that "just hours after the first GreenPalm certificates were offered for sale on our website (...), a bid of $50 per certificate, was received and accepted. Further bids have subsequently been made.
  The purchaser of the first GreenPalm certificates will now be able to prove that their business, or brand, supports the production of sustainable palm oil.
  The producer of that palm oil, the first in our scheme to be successfully audited against the new and rigorous Roundtable on Sustainable Palm Oil (RSPO) audit, has earned a worthwhile premium for producing palm oil sustainably."

• Malaysia, Indonesia to cooperate on biofuels, 5 August 2008 by Reuters: "Malaysia and Indonesia will cooperate in a biofuel development program, and may use the same biofuel specifications and amount of blending, Malaysia's commodities minister said on Tuesday."
  • "Indonesia and Malaysia, the world's top two palm oil producers, together account for more than 80 percent of the world's crude palm oil output."[8]

• Indonesia adopts stringent "green" palm oil standard, May 7 2008 by Reuters. "Indonesia, the world's biggest palm oil producer, plans to take firm measures aimed at ensuring palm oil firms meet stringent standards before labeling their products as eco-friendly, an industry watchdog said on Wednesday."

• Malaysia reviews proposed biofuel policy amid rising palm oil prices, 12 February 2008, International Herald Tribune: "Malaysia is reviewing plans for mandatory blending of palm oil and diesel for biofuel after prices of the commodity more than doubled in two years".
  • "Crude palm oil prices have soared to more than 3,000 ringgit (US$928; €638) a metric ton from about 1,400 ringgit a ton since the National Biofuel Policy was formulated in 2006".
  • "Officials have said that oilseeds, jathropha and palm biomass are being explored as cheaper alternatives to palm oil in making biofuels."[9]

• Biofuels and banquets put pressure on stocks of palm oil, 9 January 2008 by the Times Online, reported that "The Malaysian Government has been forced to release emergency stocks of palm oil to break a wave of panic-buying after cooking oil prices soared. The crisis has prompted palm oil rationing in a country that is one of the world’s largest producers."

2007

• "Australia's largest biodiesel plant puts production on hold" from Biofuels International, 14 December 2007. As prices for palm oil have doubled within the past twelve months, the Australian company Natural Fuel Ltd. has put "production on standby at the country's largest biodiesel plant, pending lower feedstock prices."

• Malaysia May Revoke Biofuel Permits as Palm Oil Rises, 11 December 2007, by Bloomberg: "Malaysia, the second-biggest palm oil producer, may revoke some licenses to produce biofuel from the commodity...as the surging price of the raw material makes the fuel too expensive to make, a minister said." The minister also noted that one of Malaysia's four biodiesel manufacturing plants may close in the face of increased prices for the feedstock, which has risen some 55 percent in the past year.[10]

• Dutch to deny palm subsidies until green levels met, 10 December 2007: "The Netherlands warned...it will not renew subsidies for palm-based biofuel until global producers meet its environmental requirements." The Netherlands reportedly will "mandate stringent criteria to help limit environmental damage" under its green energy subsidy system in 2008. Environment Minister Jacqueline Cramer was quoted as saying that "Until the problems are solved, there will be no subsidy for palm oil....It makes no sense to use palm oil for bio-energy purposes while the carbon dioxide produced is more than what we are actually trying to save, particularly when you cut down peatforests."

• Analysts uncertain about palm oil price outlook, 25 September 2007 from Biopact [11]. Differing opinions on the future price of palm oil and growth in production result from factors such as uncertainty over US subsidies and demand.

• Pumps to go all-bio-diesel, 11 June 2007 from the Bangkok Post. Thailand will mandate B2 (2% biodiesel blend) across the entire country from April 2008. That will be increased to B5 in the near future, as the country moves ahead with its plan to have 20% renewable fuels by 2012. Most of the biodiesel will be made from palm oil.

• A who's who of Indonesian biofuel, 22 May 2007, from Asia Times Online. Many of the companies that are now investing heavily in Indonesia's biodiesel industry are the sames ones that "incurred and defaulted on huge foreign debts in the wake of the 1997-98 Asian financial crisis. Few fully repaid their debts and today they still dominate the country's logging, wood-processing and pulp industries. Several also have highly suspect environmental records."

• Surging crude palm oil prices: Malaysian biodiesel plans in jeopardy, 25 April 2007 by AFP in the Daily Times (Pakistan), reports that "Surging crude palm oil prices have put a dent in Malaysian ventures to manufacture biodiesel, with licencees dragging their feet to set up factories."

• Thailand may import palm oil for biodiesel 18 March 2007, from Greencarcongress.com. Thailand may allow imports of palm oil for biodiesel production, as domestic production may not be sufficient. Thailand is considering a mandatory B5 blend for diesel.

2006

• Comparing the Effect of Palm and Jatropha Biodiesel in a Diesel Engine November 3, 2006, from greencarcongress.com. "Researchers at Indonesia’s Institut Teknologi Bandung have compared the effects and performance of biodiesel fuels derived from two different feedstocks of importance to that country —- palm oil and jatropha —- in a direct-injection diesel engine."

• Burning of Indonesian forests is causing widespread pollution. But it's done to grow crops for environment-friendly -- and lucrative -- biofuels18 October, 2006 from MSNBC.

• MEPs, MPs urge caution in use of biofuels; call for ban on use of palm oil 18 October, 2006 from Low Carbon Vehicle Partnership.

• European MPs call for ban on use of palm oil for biofuels 23 October, 2006 from Biopact. Members of the EU Parliament called for a ban on biodiesel made from palm oil, because the crop is responsible for enormous environmental damage in South-East Asia and elsewhere.

• Nippon Oil, Toyota and Petronas to develop Palm-oil biodiesel 23 October, 2006 from Biopact.

Publications

See books, reports, scientific papers, position papers and websites for additional useful resources.

• Exploring arboreal ant community composition and co-occurrence patterns in plantations of oil palm Elaeis guineensis in Borneo and Peninsular Malaysia, by Martin Pfeiffer, Ho Cheng Tuck and Teh Chong Lay, Ecography, February 2008

• Oil Palm Research in Context: Identifying the Need for Biodiversity Assessment., by Turner EC, Snaddon JL, Fayle TM and Foster WA, PLOS ONE February 2008
• Towards better practice in smallholder palm oil production (pdf) by Sonja Vermeulen and Nathalie Goad, International Institute for Environment and Development (IIED), July 2006.
• The oil for ape scandal: How palm oil is threatening the orangutan - Sumatran Orangutan Society
• Green and Renewable Fuel from Palm Oil - Malaysian Palm Oil Board
• Gearing towards Malaysian Biodiesel Standards - Malaysian Palm Oil Board.

Regions/Countries

Look here for more detailed information on a specific country's or region's policies, organizations and industry.

• Producers: Africa; Southeast Asia: Indonesia, Malaysia
• Consumers: China, European Union, Japan, The Netherlands

Organizations

• Roundtable on Sustainable Palm Oil

Other oil palm products

Palm oil leavings

• China Clean Energy outlines plan to expand biodiesel capacity using palm oil leavings as a feedstock (go to story) - 18 December 2006 from Biofuel Review.
  • "what does China Clean Energy refer to when it talks about palm oil 'leavings'?" - 16 December 2006 blog entry from biopact.com.

References

1. Promised Land - Palm Oil and Land Acquisition in Indonesia: Implications for Local Communities and Indigenous Peoples by Marcus Colchester, Norman Jiwan, Andiko, Martua Sirait, Asep Yunan Firdaus, A. Surambo, Herbert Pane; Forest Peoples Programme, Perkumpulan Sawit Watch, HuMA and the World Agroforestry Centre, 2006. "An intensive, multi-disciplinary study of the legal and institutional processes of land acquisition for oil palm plantings in Indonesia with a focus on the rights of local communities and indigenous peoples."

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