AreaEuropean Union

Commodity GroupBiofuels

CommodityBiodiesel feedstock

Date01/03/2019

Policy CategoryRenewable energy

Policy InstrumentBiofuel policy

DescriptionReleased draft criteria for identifying biofuel feedstock that carry high indirect land-use change (ILUC) risks, and determined that oil palm cultivation causes significant deforestation – a measure implying that as of 2030, palm oil-based biodiesel would no longer count towards meeting the EU’s green fuel consumption targets. The measures remained subject to final approval by the European Parliament and Council.

NotesLinked to recent legislation on the EU’s renewable energy policy after 2020 (see MPPU Aug.’18), in February, the European Commission released its proposed criteria for identifying biofuel feedstock that carry high indirect land-use change (ILUC) risks, meaning that cultivation entails significant expansion into land with high carbon stock levels. In its draft regulation, which will be finalized after a four-week public consultation period, the Commission has determined that – different from soybean, rapeseed and sunflowerseed – oil palm cultivation causes significant deforestation. Consequently, from 2030, palm oil-based biodiesel would no longer count towards meeting the EU’s green fuel targets. Consumption of palm oil-based biodiesel would be frozen at each EU country’s 2019 level, while the fuel’s gradual phase-out would begin in 2023. The Commission’s proposal allows for three exemptions: i) palm oil production that is accompanied by yield intensification and avoids expansion onto non-agricultural land, ii) palm oil production that entails cultivation of food and feed crops on unused or severely degraded land, and iii) palm oil produced by smallholders – which all would be classified as low ILUC-risk feedstock. The proposal met with strong opposition from palm oil producing countries, whereas environmental NGOs questioned both the proposed criteria and the rationale behind the exemptions. Reportedly, the Council of Palm Oil Producing Countries (CPOPC), which comprises Colombia, Indonesia and Malaysia, is planning to jointly challenge the proposed legislation through bilateral consultations and within WTO and ASEAN. The EU is the world’s second largest importer of palm oil, with about half of the bloc’s purchases being used for biodiesel production.