What Indonesia’s Palm Oil Ban Really Means for Climate and Energy

After months of lobbying against efforts by Europe to restrict the import of unsustainable oil palm, Indonesia, the largest producer of the world’s most used consumer food oil, made a shocking announcement — an export ban on palm oil, to last for at least a month. The repercussions are likely to be felt in your local grocery store, both along the cooking oil aisle and also in prices for the many processed foods — cookies, spreads, ice cream and bread — that use palm oil as an ingredient.

“With Indonesia’s surprise ban on exports, the world is really left without a backup plan,” said Shara Ticku, CEO of the biotech oils company C16 Biosciences, in a press statement.

The reasoning is the global shortage in food oils caused by the war in Ukraine, which, alongside Russia, is a top producer of sunflower oil. The Indonesian government is concerned about rising prices domestically, and the ban is partly, some believe, to limit the political fallout.

“With the Lebaran holiday approaching, when millions gather to celebrate the end of Ramadan, the government felt it needed to be seen taking more decisive action and finally announced a blanket export ban,” James Guild, an expert in trade, finance, and economic development in Southeast Asia, wrote in an op-ed for the Diplomat.

To some, this may sound like a positive. Palm oil has been derided for being a key driver in the loss of crucial habitat for endangered species including rhinos, elephants and orangutans, primarily on the Indonesian islands of Borneo and Sumatra. Perhaps using less of it would help protect these critically important landscapes?

Unfortunately, this export ban likely will do little to benefit the climate, because the reasons for the ban are purely political and economic, not environmental. But it does point at a need for more attention to the use of so much palm oil, and other food oils, to produce biofuels for transportation.

The problem with palm oil isn’t due to the nature of the oil palm tree, which, in tropical regions, is among the most productive oil producing crops in the world when measured by yield per-hectare. It is how and where oil palm is grown — too often, on tropical forests or peatlands. The conversion of these carbon-rich landscapes to monoculture oil palm plantations has made Indonesia one of the top emitters of greenhouse gasses, primarily due to land-use change.

Palm oil can be sustainable, if grown right, and efforts like Palm Done Right and the Roundtable on Sustainable Palm Oil have made significant progress in decoupling palm oil and deforestation. But it’s not enough, and the reason has nothing to do with food. 

While much of the discussion around Indonesia’s palm oil ban is focused on its use as a cooking oil, that is just one of many uses for the oil. In fact, its initial rise as a global commodity in the early 2000s wasn’t for its use in ramen noodles or Nutella, but for use in biofuels.

A big driver of palm oil’s growth was when, in 2003, the European Union (EU) added a mandate that 10 percent of transport fuel mix come from biofuels, part of its greenhouse gas emissions reduction strategy. Palm oil quickly became the most popular choice due to its high productivity and low price, and imports to Europe grew by an astounding 400 percent between 2008 and 2018, when 65 percent of European palm oil was for transportation use. It was only later, when concerns about hydrogenated oil led major brands to search for a cheap alternative, that palm oil imports also rose in the United States.

In recent years, however, concerns about the climate impacts of palm oil began to lead to a shift. The key impetus was the conclusion of a stunning study from Transport and Environment, a European NGO, which found that, when comparing life-cycle greenhouse gas emissions, palm oil produced three times the emissions of gasoline. A policy meant to reduce emissions was actually resulting in increased emissions, primarily due to deforestation.

For Indonesia and neighboring Malaysia, which together account for upwards of 85 percent of palm oil production globally, losing the European biofuels market meant less demand. It got so bad that in 2019, before the pandemic, oil palm was at record low prices globally. So, both countries decided to increase demand at home. How? Biofuels.

The first move was to increase mandates for the inclusion of palm oil-based biodiesel in domestic transportation fuel. In Malaysia, 20 percent of fuel must come from palm-oil-based biodiesel, while in Indonesia, that figure is 30 percent — and the nation’s leadership hopes to increase it. There’s little to no sustainability requirements for palm oil destined for biofuels use, so it could be argued that all the palm oil boycotts and consumer pressure have merely led to conflict palm oil being burned in Indonesia rather than eaten abroad.

Palm oil may be the worst culprit when it comes to climate impacts, but it’s not the only one. Other food crops, including rapeseed (canola), corn, soy and sugar, are also used to produce fuel. A huge amount of global agricultural land is used to produce food that is turned into oil. And nearly all of these biofuels are worse for the climate, from a life cycle analysis, than petroleum gasoline. 

Instead of cutting down Indonesian forests, Amazonian jungles and other landscapes to grow inefficient food for energy, we should prioritize investments in clean energies that have clear benefits for the climate and environment. That might include second-generation and waste-based biofuels, which don’t rely on food crops like palm oil.

The crisis in Ukraine, and Indonesia’s export ban, should be a wake-up call for the planet. We produce more than enough cooking oil to feed the world — the problem is that we put too much of it into our cars, trucks and planes, where it does far more harm than good. It’s time to shift to a more sustainable system.

Image credit: PxHere