France vs Palm Oil …Again

Every year since 2012, France’s Socialist Party politicians – often supported by the government – have attempted to bring in a tax on palm oil products. The most recent move was defeated in July 2016, thanks to a robust response by producer countries.

However, the lawmakers have since announced two plans of action. They want to re-examine taxation on all vegetable oils; and to draw up sustainability criteria for the production of vegetable oils and other commodities.

The second proposal will be led by the newly-established Sustainability Criteria Commission. It will be of particular interest to palm oil producers, who have been down a similar path before.

When the European Union (EU) introduced the Renewable Energy Directive (RED) about seven years ago, sustainability criteria were included to ensure that the biofuels in use had been produced based on ‘environmental’ standards – even though these were clearly prone to politicisation and protectionism.

The RED scheme was a boon for biofuel producers, both in Europe and elsewhere. However, better-value imports (notably palm oil) claimed a substantial share of this new market. European producers then looked for strategies to keep out imported biofuels.

They came up with multiple methods to fix the sustainability criteria in ways that disadvantaged palm oil:

• ‘Default values’ were set for estimated greenhouse gas (GHG) savings, although these evidently favoured domestic oils.

   

• Producers worked with protectionist politicians to remove palm oil products from approved lists.

   

• They also supported the introduction of Indirect Land-use Change criteria. This was a complex way of exaggerating the emissions count of biofuels, based on numbers that were arbitrary and unprovable. In the end, the EU rejected the plan as being simply unworkable.

Inherent weaknesses

The RED precedent has taken on fresh relevance today because of the French proposal to impose new sustainability criteria for vegetable oils that will allow the same protectionist, anti-palm oil traps to be set.

The criteria are expected to cover more than just GHG emissions savings. These are likely to encompass forest conversion, biodiversity, land use, social and political concerns, farming and conservation methods, supply chain traceability and economic factors.

It is generally understood that the more vague the terms of reference, the more politicised the outcome will be. On this basis, it is worth noting that the terms of reference for the Sustainability Criteria Commission appear to be non-existent.

The Commission’s membership is also puzzling. Its members have impressive credentials in terms of administration and politics, and long careers in related fields such as agriculture and environmental policy.