In a report from the UK government this month on sustainable palm oil progress, its Department for Environment, Food and Rural Affairs (DEFRA) wrote: “There is no one definition of sustainable palm oil.”
This has left a situation whereby sector players can define what sustainability means for them.
As the report pointed out, this differed from the energy and transport sectors, for which sustainability was legally defined in the EU Renewable Energy Directive and Fuel Quality Directive.
“Other sectors are free to use their own definitions,” said DEFRA.
But if legal clarity is possible on an EU-level for palm as a biofuel, why isn’t it possible for palm oil as a food ingredient?
After all palm oil made up just 5% of all biofuel used from supplier members of the UK Petroleum Industry Association (UKPIA). Meanwhile palm oil is the world’s most used vegetable oil, with India, China, Indonesia and Europe the main consumers.
The Renewable Energy Directive sets out sustainability criteria for all biofuels produced or consumed in the EU.
The main criteria states:
- To be considered sustainable, biofuels must achieve greenhouse gas savings of at least 35% in comparison to fossil fuels. This savings requirement rises to 50% in 2017 and to 60% in 2018 but only for new production plants. All life cycle emissions are taken into account when calculating greenhouse gas savings. This includes emissions from cultivation, processing, and transport.
- Biofuels cannot be grown in areas converted from land with previously high carbon stock such as wetlands or forests.
- Biofuels cannot be produced from raw materials obtained from land with high biodiversity such as primary forests or highly biodiverse grasslands.
Debate this definition if you must – but at least it sets a unified standard.
Legally, palm oil for food does not have to be produced sustainably, but an increasing number of food companies are choosing to source certified sustainable palm oil (CSPO), most commonly through the certification body the Roundtable on Sustainable Palm Oil (RSPO).
Spoilt for choice?
RSPO’s definition is negotiated by its members, which include retailers, suppliers, governments and environmental NGOs.
But this in itself fragments into three definitions – identity preserved, segregated and mass balance – depending on the level of traceability back to plantation or mill or whether it is mixed in with regular non-certified oil.
On top of this companies have the opportunity to use the RSPO-backed book and claim system ‘GreenPalm’, which is essentially like carbon credits for the palm industry.
In this case companies couldn’t claim CSPO status for the ingredient, but they could still bare a nice GreenPalm logo on pack and governments like the UK are counting these certificates within its ‘100% sustainable’ target.
RSPO also builds in some room for ‘national interpretations’.
Failing to set sustainability in legal stone means too many unsustainable options lie open to European food firms.
It’s not that RSPO isn’t strict enough – although environmental NGOs like GreenPeace have argued this on contentious points like peat land – but it is a voluntary scheme and like any voluntary scheme it can only go so far.
It’s a valuable step in the right direction, as are government and company pledges to go 100% sustainable, of which there have been many in Europe.
Need for law
But it is laws that change societies.
RSPO-certified palm oil accounts for about 18% of the world's supply - but about 50% of that cannot be sold as certified and is therefore traded as normal 'uncertified' oil with a lower price tag to match.
The Malaysian government claims it previously set aside 50 million Malaysian ringgits (€12.17m) to help smallholders gain RSPO certification, but take up of the scheme was poor.
If they can’t guarantee a sale at certified price why would these smallholders take the pains to get certified in the first place?
A legal requirement in Europe would put real pressure on European manufacturers to buy CSPO and offer stability to these certified growers and incentives for those who haven't yet made the move.
We have seen this already with the food information to consumers (FIC) regulation, which lifted the lid on vegetable oil labelling and forced manufacturers to state the exact source.
Teaching an old dog new tricks
It is clear of course why this might be more challenging for the edible palm oil sector than for biofuels.
Biofuel is a relatively new industry founded for its sustainable credentials, while the first commercial-scale plantation for palm in food and cosmetics was founded back in 1917.
It’s easier to get off on the right foot than it is to teach an old dog new tricks.
Margins are already set, supply chains in full flow. Going sustainable is a difficult disruption for a big company, it’s fair to say.
Difficult but not impossible though, particularly for the European region where there is greater price elasticity for food products unlike regions such as India.
Legislation like the energy sector's would add the impetus needed to transform the palm oil industry.
Then it would be up to the manufacturers and consumers to absorb the price difference, because afterall you get what you pay for.