The commercial production of palm oil in Malaysia has increased by over 5 million hectares of crop since 1960. This rapid expansion of the crop has lead to the destruction of the tropical rainforest in both peninsular Malaysia (West Malaysia) and Borneo Malaysia. Due to this excessive deforestation, the European Commission concluded that palm oil would stop being imported for use as a biofuel and that it should be phased out by 2030. However, it has been suggested that European domestic interests have also been a factor in the proposed ban. This has caused political tensions between Malaysia and the EU as the ban could damage Malaysia’s palm oil industry which makes up 6% of the countries economy.
Environmental impacts of palm oil plantations in Malaysia
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The rainforests of Malaysia contain a vast amount of biodiversity, particularly Borneo Malaysia where on average around three new species are discovered every month. Palm oil plantations directly threaten 193 of the world's most critically endangered animals. In addition to this, the rainforests of Borneo contain around 15,000 plants species. The destruction of the forests to make space for palm oil plantations is destroying habitats for animals and also reducing the plant diversity in Malaysia. Overall, the palm oil industry in Malaysia is not only threatening species that we know of but also undiscovered species. This loss of biodiversity is the main component that drives the media in Europe to portray palm oil in a negative way.
A prominent example of this media portrayal is the 2018 Iceland Christmas advert. The advert, which was originally a short film made by Greenpeace, shows an animated baby orangutan telling a young girl about how its home has been destroyed by the palm oil industry. The advert got a lot of attention after being banned from TV for being too political and many people who saw it were distressed after learning the impacts of the palm oil industry. This one sided portrayal of the palm oil industry, as something that is simply killing orangutans and other species, is the main way that the industry is presented to the Western world through the media. Often, the people who see this constant negative media attention directed towards palm oil, decide that it is wholly a bad thing and that it should be banned from products completely. This leads companies under a lot of pressure to stop including palm oil in their products. Many companies have since been trying to reduce or completely stop using palm oil in their products. Having complete negative attention on the palm oil industries in Europe as well as various evaluation of sustainability has led the EU to analyse whether they should ban palm oil as a biofuel.
In addition to loss of known biodiversity in Borneo, many of these plant species (35% of which can be found nowhere else in the world) are being researched for pharmacological purposes. For example, Silvestrol, an anti-cancer drug is produced by the Aglaia stellatopilosa tree and is endemic to Borneo. It’s potential use as a drug were first discovered in Sarawak, East Malaysia. There are many more species of Malaysian plants being researched for use in medicine. Deforestation in Malaysia is endangering these plant species and is limiting the potential to discover new compounds for use in medicine and other areas of opportunity such as bio-renewables. This loss of potential compounds is an argument against palm oil production that is often considered important due to the number of species of plants and animals in Borneo that are found nowhere else in the world.
Climate change due to deforestation
The deforestation of rainforests also contributes to climate change. Trees absorb carbon dioxide from the atmosphere during photosynthesis and then use it to grow. For this reason, rainforests are often referred to as ‘carbon sinks’ which means that they store more carbon than they emit. As rainforests store so much carbon, clearing rainforest for palm oil plantations results in extremely high carbon emissions. The emissions are particularly high if the ‘slash and burn’ method of deforestation is used where the tallest trees are cut and the rest of the vegetation is burned. Converting one hectare of rainforest to plantation equates to a loss of 174 tons of carbon, most of which makes it way to the air as carbon dioxide. This adds to the greenhouse gases in the atmosphere and contributes to global warming.
In addition to deforestation contributing to carbon emissions, the drainage of peatland for palm oil plantations is also a large contributor to carbon emissions. About 6.46% of the total land area of Malaysia is tropical peatland forest which is a dual ecosystem of both rainforest and peatland. When this tropical peatland is cleared for palm oil plantations, it has to be drained because the water saturated peat could prevent proper root penetration and respiration. If the peatland is drained and the water table kept at between 50-70cm, then the palm oil trees can thrive. This is due to the majority of their roots being found in the upper 50cm of soil. Peatland contains approximately 10% organic material and 90% water. When the water is drained, it exposes the carbon in the soil to aerobic conditions which leads to the decomposition of peat and the release of carbon dioxide into the atmosphere. In addition to this, the peat becomes dry when drained and the dry, exposed peatland becomes highly flammable. The fires also burn underground and are therefore very difficult to extinguish. In 2009, 40% of the fires in Peninsular Malaysia, Borneo, Sumatra and Java were detected in peatland. These fires not only contribute greatly to carbon dioxide emissions but also to the ‘South-East Asian Haze’ which is a large scale, fire-related pollution issue in South-East Asia. The ‘Haze’ can lead to both short and long term health problems for people as well as affecting countries economically by harming agricultural industries as well as the tourism sector. This damage to the agricultural industries as well as the tourism sector leads to a decrease in the money entering Malaysia’s economy. Therefore, while the palm oil industry contributes significantly to Malaysia’s economy, the consequences of the environmental impacts have the potential to damage it further. This is especially true as climate change is leading to an increase in drastic weather conditions and so occurrences such as the ‘South-East Asian Haze’ could harm Malaysia's economy a lot more in the future.
With climate change being a large-scale world wide problem right now, there is a lot of focus on cutting down on activities that contribute to greenhouse gas emissions. Therefore, deforestation and the cultivation of palm oil is something that is being scrutinised by governments across the world - particularly the EU.
The proposed palm oil ban in the EU
‘Biofuels are liquid or gaseous transport fuels such as biodiesel and bioethanol, which are made from biomass.’ As biofuels are renewable alternative to fossil fuels, the EU aims to have 10% of all transport fuels coming from biofuels by 2020. However, the biofuels used must meet the sustainability criteria set. As biofuels are produced by biomass, when producing biofuels, they are often grown on agricultural land. This land still needs to be used to grow food crops and so it can lead to an extension of agricultural land in a process known as indirect land use change (ILUC). This indirect land use change can lead to deforestation and the release of carbon dioxide so that ultimately, using a certain biofuel may not reduce carbon emissions compared to fossil fuels. For this reason, to meet the European Union's sustainability criteria, limits must be set on using high ILUC-biofuels.
Palm oil has been identified as being one of the worst high ILUC-biofuels and is, on average, three times as worse for the climate than fossil fuel. For this reason, the EU has decided to phase out palm oil as a biofuel by 2030. The idea is that this will help to reduce carbon emissions and therefore climate change. When a biofuel is classed as a high ILUC fuel, then there are often more negative impacts of its use than positive. As rainforest is often cleared to grow oil palm trees, the indirect land use change is very high. Therefore, palm oil is among the biofuels that are planned to be phased out of EU biofuels by 2030.
Potential impacts of a palm oil ban in the EU
While the EU are planning on banning palm oil due to its negative environmental impacts, phasing out palm oil as a biofuel may not actually reduce the deforestation in Malaysia due to the palm oil industry. Most of the palm oil that the EU imports is certified by the roundtable on sustainable palm oil. Being certified means that growers have to commit to a set of principles. These principles are described as follows:
Commitment to transparency
Compliance with applicable laws and regulations
Commitment to long-term economic and financial viability
Use of appropriate best practices by growers and millers
Environmental responsibility and conservation of natural resources and biodiversity
Responsible consideration of employees, and of individuals and communities affected by growers and mills
Responsible development of new plantings
Commitment to continuous improvement in key areas of activity
If a company agrees with and sticks to these policies then they become certified by the RSPO and deemed producers of ‘sustainable palm oil’. Having these regulations means that there is a control on companies by how much they can expand their plantations by as well as being held accountable for any practices that negatively affect the environment beyond that which is agreed.
If the EU were to stop importing palm oil for biofuel, then the prices for palm oil are likely to decrease. If this were to happen, then there would be an increase in palm oil exports going to countries outside of the EU. Therefore, a ban wouldn’t necessarily decrease the rates of deforestation and palm oil production in Malaysia. In addition to this, while the EU imports palm oil certified by the RSPO, many other markets do not. This means that palm oil producers who are certified will lose their market while other producers who are not certified could increase their markets. This would mean that producers who are not required to stick to certain environmental or social principles may expand the production of their palm oil which is deemed unsustainable. Therefore, it could be argued that the EU banning palm oil as a biofuel will not reduce negative environmental impacts but will indirectly increase deforestation and the production of unsustainable palm oil.
If the EU bans palm oil as a biofuel, then other biofuels, such as rapeseed or sunflower, will need to fill the gap in the market. 21.5 million tonnes of rapeseed oil is produced in the EU every year and 60% of the total crop grown in Europe is used as a biofuel. Banning palm oil as a biofuel in the EU is likely to increase the production of rapeseed oil and other oils grown in Europe. This increase in production could lead to an increase in the indirect land use change in Europe as rapeseed oil farms expand. This could lead to increased deforestation within European countries. In addition to this, palm oil crops produce on average 3.3 tons of oil per hectare of land whereas crops such as rapeseed and sunflower produce on average 0.7 tons of oil per hectare of land. This shows that the palm oil crop is more efficient at producing oils than other alternatives such as rapeseed. Therefore, for the EU to produce enough rapeseed, or other alternative oils, to fill the gap left after banning palm oil, more land will be needed to produce the same volume of oil. As the EU’s main reason behind banning palm oil was to reduce deforestation and ILUC, having to expand their own land to produce alternative biofuels may be counterproductive.
Impacts of the ban on Malaysian people
A palm oil ban from the EU is likely to have a negative social impact on the people in Malaysia. There are about 650,000 small hold farmers in Malaysia who grow palm oil on a small-scale level. In the 1980’s the government’s land authority, FELDA (The Federal Land Development Authority ), gave rural families 10 acres of land in order to harvest palm oil. This was done to try and pull families out of poverty in Malaysia. Since these small hold farmers are producing palm oil on only 10 acres of land, they are not having the same negative environmental impact as large industrial companies. As mentioned previously, a palm oil ban from the EU may not reduce the production of palm oil, so these families will still be harvesting the palm oil crops. However, the reduced imports to the EU is likely to decrease the price of palm oil as it becomes less desired as a product. This would have a negative financial impact on the small hold farmers who will be selling their crop for less money despite the costs of production remaining the same. Therefore, the EU ban could be punishing small hold farmers despite the fact they they are not contributing to the Indirect Land Use Change in Malaysia. This factor is a major contributor in the backlash that Malaysian people have shown towards the palm oil ban.
Political tensions
The proposed EU ban on palm oil has caused political tensions with Malaysia and other palm oil-producing countries arguing against the palm oil ban and the EU itself. In Malaysia, the palm oil industry directly employs over 600,000 people and contributes about RM 53 billion (USD 16.8 Billion) to the economy.
Negative social impacts of the palm oil industry
In addition to the palm oil industry having negative environmental impacts, there are also negative effects on the indigenous people of Malaysia as well as labour exploitation within the industry.
In the rainforests of Malaysia, indigenous people live who depend on the forest to survive and to sustain their traditional ways of life. Orang Asli are the indigneous people of peninsular Malaysia and around 200,000 Orang Asli live there. These people hunt in the forests as well as finding food, medicine and other materials there. Many tribes and indigneous people have seen their land sold off for palm oil plantations over the years. These people argue that their land has been taken by force and that the expansion of palm oil plantations is a direct threat to their lives.
Aswell as the palm oil industry threatening indigenous peoples lifestyles, there has been accusations of exploitative labour practices in Malaysian palm oil companies.
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