Clearing the Air

Our forceful defence of Malaysian palm oil is starting to bear fruit.

I RECENTLY completed a mission to the United States. While there, I learned of new allies who have contributed to the defence of palm oil and who wish our nation and our people well. But I also learned that many American officials are misinformed about the Malaysian economy and our country’s commitment to both economic growth and environmental protection.

Malaysia is in the process of harnessing the significant potential for palm biomass. Next generation biofuels, bio-chemicals, and consumer goods will satisfy growing domestic and international demand for high quality, clean, sustainable products.

In addition to helping consumers, the industry will help Malaysia’s job market, too. The boom in palm oil will create hundreds of thousands of additional jobs over the next generation. The average salary of 161,000 low-income independent smallholders will improve by 47% by 2020.

Despite these beneficial trends, the United States’ Environmental Protection Agency (EPA) implemented rules designed to punish palm oil. The agency says its rule is designed to protect the global environment. But the EPA is operating under false beliefs about palm oil. We reject the EPA’s decision and are defending our interests accordingly. Meanwhile, a number of notable American thought leaders have recognised the ramifications of the EPA’s actions.

Malaysia is the world’s second largest producer of palm oil. The palm oil boom will create hundreds of thousands of jobs and is a key resource to alleviate poverty in the country.

The EPA ascribes greenhouse gas (GHG) savings of 17% to palm oil, thus putting palm-derived biodiesel below the acceptable threshold for trade in the US market. But the Malaysian Palm Oil Board has found GHG savings of 60.4% when produced without methane capture (the same type the EPA assessed), and as high as 74.7% when produced with methane capture. And in a submission to the EPA, Dr Robert Shapiro, former Undersecretary of Commerce under President Clinton, says that “without incorporating the highly-speculative values for the emissions associated with indirect land use changes, the two palm oil-based fuels would produce substantially lower GHG emissions,” of between 58% and 64%.

Dr Shapiro’s conclusion noted that the EPA’s decision was based on a significant misunderstanding of the Malaysian palm oil industry. The agency overlooked the enormous productivity and sustainability gains we have made over the last decade. It also ignored the significant future gains we expect to make.

The EPA’s decision to reject the use of palm oil follows earlier efforts in Europe to shield its domestic biodiesel industry from foreign competition. European regulators also distorted palm oil’s greenhouse gas (GHG) savings reductions. Their rejection of Malaysia’s long-term development strategy and research and development are an affront to Malaysia’s commitment to a sustainable, high-income economy by 2020.

The EPA ignores the fact that oil palm is an agricultural crop planted on legitimate agricultural land. While the US aspires to plant trees to reforest their abandoned and non-viable land, Malaysia has been planting oil palm and rubber trees on most of its agricultural land. As a result, the oil palm plantation is a large net carbon sink, absorbing more carbon and removing emissions resulting from deforestation and land use change, as evidenced by our national data submitted to the UNFC.

Kenneth Adelman, former US Ambassador to the UN under President Reagan, recently criticised the EPA’s decision and noted it undermines years of co-operative relations between the US and Malaysia.

Adelman says “the administration’s decision to deny palm oil biofuels equal treatment with US biofuels unfairly restricts those imports and directly undermines the laudable intent of the grand strategy to foster open markets in the Asian Pacific region”, such as through the Trans-Pacific Partnership.

And as efforts to protect their domestic industries, both the US and EU rules likely run afoul of World Trade Organization prohibitions against non-tariff barriers to trade. In addition to violating widely recognised trade norms, the moves undermine the good-spirited cooperation and strategic partnership that Malaysia holds with her Western trading partners.

Too often, bureaucrats in the environment ministries in Europe and the United States are following the guidance and rhetoric of Western environmental NGOs (WENGOs). These WENGOs have waged a long publicity campaign against our nation. They distort facts and have no regard for the jobs and livelihoods their campaigns are designed to eliminate, nor the negative effect these efforts have on the industry’s conservation efforts.

David Juday, the agricultural advisor to a former US vice-president, notes that there is no scientific basis for palm oil’s exclusion and that the EPA’s decision will significantly distort international trade.

Juday says it is a negative move for all involved as it is neither in the interest of the US – where it will impose more costly biodiesel sources on US consumers while harming the US’s trade balance – as well as domestic producers and the international community.

Thanks in part to our forceful defence of Malaysian palm oil in Washington, and the contribution of notable Americans who know the importance of agriculture to economic growth, the EPA recently hit the pause button. Having invited all stakeholders, including producers in South-East Asia, to submit comments to the agency, they have now extended their deadline for comments for a second time to the end of April. A good sign that our education effort is working.

We will continue to defend our nation’s growth strategy and the dignity of our industry. If we cannot encourage a change of heart in Washington, it may be time to review our participation in important initiatives that the US seeks here in Asia. After all, the US has discriminated against one of Malaysia’s top export products and a key resource to alleviate poverty in Malaysia. No one should be permitted to damage the future of clean, safe, low-cost biomass, a future that promises a better tomorrow for consumers and workers alike.

> Tan Sri Dr Yusof Basiron is CEO of the Malaysian Palm Oil Council. For more information or comments, e-mail yusof@mpoc.org.my.

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