Is the EU Planning a Disguised Ban on Palm Oil under RED?

The EU’s Trilogue negotiation process is about finding a compromise: that’s how it works. The current Trilogues over the Renewable Energy Directive (RED) are no different. The EU negotiators effectively face two opposing positions on the issue of Palm Oil. The EU Parliament wants to ban it entirely; and the Commission and Council reject that ban.

If common sense prevails, the ban will be dropped altogether. That is WTO-compliant, non-protectionist, helps the EU’s trade strategy, and gives more choice to EU renewable energy users and consumers – and most importantly assists oil palm farmers around the world.

However, common sense is rarely the forte of the EU Parliament. Are the other parts of the EU able to find a way forward?

They’ve made one attempt already in the form of a re-brand. Brussels tried to re-brand the ban on Palm Oil in the media as a “Subsidy Cap”. This was an attempt to convince producing countries that a discriminatory market barrier is not that bad. Yeah, right.

The EU’s Embassy in Indonesia tried this as well: it actually released a document claiming that no trade barriers or discriminatory legislation towards Palm Oil exist.

The EU’s Embassy in Malaysia tried as well when they stated, “The EP has not voted in favour of a ban of palm oil-based biodiesel. Instead it has voted in favour of excluding biofuels produced from palm oil from being accounted towards the EU Renewable Energy targets. This would by no means limit the amount of biofuels from palm oil that can be produced or imported and consumed in the EU.”

Small farmers know a ban when we see one. How do we know the ban on Palm Oil is a ban (and not a “subsidy cap”)? We know because the EU Parliament – which first proposed the ban – said it was a ban.

Here’s the official EU Parliament press release: “MEPs vote to ban palm oil in biofuels from 2021”

Virtually the only reason biofuels are used in the European Union in such volumes is because the law – the RED – mandates the use of renewable fuels.

Palm Oil can be and is legally used as a feedstock for biofuel under the RED because it meets the EU’s criteria.  Removing Palm Oil from the RED is an effective ban. It kills demand for Palm Oil renewables in the EU. To suggest otherwise is misleading.

This attempt to find a middle ground failed. What’s next?

The EU will likely try for a ‘Disguised Ban’ on Palm Oil: it won’t call out Palm Oil, but will introduce new, tougher criteria to lock Palm Oil out of the EU (in effect, achieving the same result as the outright ban).

Such a ‘Disguised Ban’ may introduce some form of Indirect Land Use Change (ILUC) or additional sustainability criteria.  We don’t know; however, look for something to come out soon, perhaps ahead of the next Trilogue on 17th May.

Such a disguised ban would be pleasing for many in Brussels, especially the MEPs and the Commission can say to its ASEAN partners, ‘See? We stopped the ban.’

Not so fast.