EU’s decision to limit palm oil use ‘not a good solution for all parties’
KUALA LUMPUR: The European Union’s (EU) decision to ban palm oil used as biofuel has been viewed as “not a good solution for all parties”.
According to the research arm of Public Investment Bank Bhd (PublicInvest Research), the European Union lawmakers had voted to remove biodiesel made from palm oil, the highest emitting biofuels in the market today, from the list of biofuels that can count towards the renewables target in 2021.
PublicInvest Research noted that this means that drivers in the EU region will no longer be able to burn palm oil in their vehicles in the future.
As per the Malaysian Palm Oil Board’s (MPOB) statistics, the EU market accounted for 12 per cent of Malaysian palm oil exports last year and it was the biggest buyer after India.
“The decision of banning palm oil used as biofuel will not only affect the palm oil trade significantly, it will also make renewable fuels more costly as palm oil is the one of the most cost efficient vegetable oils,” the research arm said.
The EU last year proposed to ban palm oil from entering its market with its parliament passing two resolutions – to impose a single certified sustainable palm oil scheme for Europebound palm oil exports after 2020 and to phase out palm oil from the EU biofuel programme by 2021.
The resolutions were passed based on claims that palm oil producers had failed to achieve the United Nations Sustainable Development Goals, including responsible consumption, production and climate action.
Once the new legislation takes effect, PublicInvest Research estimated that Malaysian palm oil volume to EU region will be slashed by at least 50 per cent or about 800,000 to 900,000 metric tonnes (mt).
“To minimise the potential impact, Malaysian government should start looking into new export market and promote the use of palm oil in other ways.”
The research arm added that the bigger concern now is whether more countries would join the ban as it could affect the palm oil demand significantly.