The European Council in March 2006 directed the European Commission to prepare a directive for renewable energy, in an effort to:

1.    combat climate change, and
2.    ensure security of energy supply

In January 2008, the Commission unveiled its Renewable Energy Directive, proposing a binding 20% target for renewable energy in total energy consumption in the EU by 2020 and a binding 10% renewable energy target for transport.

Speaking at the 2nd International Palm Oil Trade Fair and Seminar held in Kuala Lumpur recently, Ilmari Lastikka of Neste Oil Corp. pointed out that the directive contained strict sustainability criteria for bio-fuels with a requirement for greenhouse gas savings of 35% to 60% when compared with fossil fuels.

 The proposals essentially set out clear guidelines for the:
1.    prevention of the loss of high biodiversity land,
2.    prevention of the loss of high carbon stock land
3.    compliance of environmentally friendly agricultural practices, and
4.    certain social criteria relating to labor rights
The directive is currently under review by the European Council and the European Parliament.

Says Lastikka:  “Neste Oil’s proprietary technology for producing NExBTL renewable diesel can potentially use a wide range of raw material feedstocks. In the near-term, vegetable oil sourced from palm oil is among the most widely and commercially available”  He observed that “palm oil is well placed to serve as an efficient feedstock for renewable diesel as it has a a high potential to save greenhouse gas emissions.”

Pointing out that “Neste Oil was the first oil company to join the Roundtable on Sustainable Palm Oil (RSPO),” Lastikka affirms that Neste had “committed fully to sustainable sourcing of feedstocks for the production of the NExBTL renewable diesel.”   The RSPO has over 270 members, representing all phases of production and civil society – including many NGOs with critical interests in rainforest conservation and protecting the habitat of threatened species including orangutan populations.

Lastikka also laments that the latent underpinning of the directive was a strong support for domestic agriculture and notes, with some irony, that environmental NGO’s were treated by the Commission as experts on sustainability issues

In the view of the Palm Oil Truth Foundation, it is imperative that such sustainability criteria set out by this directive has to be based on sound science and should not serve as a concealed trade barrier!

In any event, the palm oil industry has to prepare for the eventuality that when the directive comes into force circa 2010, it will change the fundamentals of the biofuel industry.  Then sustainability and greenhouse gas data verification will serve as the fundamental requirements for market entry into Europe’s Renewable Energy and Biofuel market.  Palm oil feedstocks that are grown according to a relevant environmental standard such as the RSPO’s with good supporting GHG data will likely enjoy a considerable price premium over other feedstocks.  THE END.