Frank Vogelgesang, Uttaya Kumar, Kalyana Sundram

This paper is born out of the desire to put into perspective the resolution on “Palm oil and the Deforestation of Rain Forests” the European Parliament (EP) passed by an overwhelming majority in April 2017 (henceforth: “the Resolution”).

What to make of the Resolution?

It calls for EU policy measures to combat deforestation in the tropics as well as the associated effects on climate change and biodiversity.

The two main recommendations contained in the Resolution are the phasing out of palm oil as feedstock for biodiesel and to switch to 100% certified sustainable palm oil, both by 2020. Malaysia is acutely aware of the environmental challenges planet earth is facing. It considers itself part of the international community that strives to mitigate greenhouse gas emissions, protect natural habitats and pursue patterns of sustainable production and consumption.

In that same spirit, Malaysia welcomes the debate the Resolution has set in motion. As the second largest palm oil producing nation worldwide we understand the need for supplying palm oil to the international markets that has been sustainably produced. We are ready to continue the considerable efforts we have taken in that regard and even reinforce those. We are ready and willing to align with the overarching goal to work towards more sustainable modes of conducting the palm oil business. It is here where we see common ground with the EP Resolution.

However, we differ in some important respects with several of the Resolution´s assumptions and implications. This paper explains in detail which those are. By way of summary:

First, as a newly industrialized country we stress the importance of rural and economic development enshrined in the sustainable development goals (SDGs) of United Nations. Palm oil is vital to the Malaysian economy. For a more detailed discussion of this, turn to Section 2.3.

Secondly, we do not accept some of the fundamental premises on which the Resolution rests. They contain several key errors, mainly for two reasons:
1) The parliamentary committees that drafted the Resolution in the process misquoted or misinterpreted parts of the research they drew upon
2) Some of the original research itself is flawed (see Section 4.2 and 4.3).

We insist that policy measures that have far-reaching consequences for the Malaysian economy (and palm oil producing countries elsewhere) must be based on objective evidence and not a limitless application of the precautionary principle, which runs counter to Article 191 of the Treaty on the Functioning of the European Union.

Therefore, Malaysia wishes to express its views regarding the two primary goals of the Resolution mentioned above. Those are:

Sustainability Certification: we emphasize that the realities of palm oil production and trade on the ground are far too complex to be covered by a single European certification scheme. In our view certification standards must be set and enforced on a national level. That is why we choose to invest heavily in building the Malaysian Sustainable Palm Oil standard (MSPO). On the other hand, we see the concerns the European Parliament has regarding transparency and clarity of different certification standards vis-a-vis the consumer. We, therefore, propose to look for ways to make standards comparable. (see Section 5.2)

Biofuels: The debate over the implications of the so-called “Globiom Report” which applied the concept of indirect land use change (ILUC) to the calculation of the overall greenhouse gas (GHG) emissions of biofuels has been going on for years without having been settled. In our view, to phase out biofuels on that basis in fact amounts to a violation of the precautionary principle.

Considering that the internal combustion engine running on fossil fuels will remain the central pillar of transport for at least another 15 to 20 years, the environmental implications of fossil fuels versus biofuels should be explored further.
It must be remembered that the overall GHG footprint of fossil fuels must consider all activities like traditional petroleum exploration and fracking as well as shale oil and gas production (the former mainly used for kerosene and diesel fuel).

A full evaluation of these factors (incidentally, oil palms undeniably have a non-trivial carbon sink potential) might lead to the conclusion that the alleged cure of abandoning biofuels is worse than the disease.

Likewise, alternative technologies like the electric motor have problems of their own. Electrical power - unlike palm oil - does not grow on trees. Instead, it is often generated by – absurdly - burning fossil fuels like coal.

To summarize: we support the environmental goals laid out in several of the international treaties Malaysia is party to, like the Paris Agreement.

However, we are concerned that the European Parliament and Commission have been misled by false assumptions to pursue a path towards these goals that leads somewhere else: to an outcome that will leave consumer and producer countries as well as the global environment worse off.

To avoid such a result Malaysia is keen to bring its century-long experience, and extensive expertise in all things palm oil to the table. Only working together will make solutions possible that are better for all stakeholders involved, including the earth's ecosystem.
9 January, 2018
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