The Future of Palm Oil Industry

The local palm oil industry has urged the Indonesia government (June 07, 2012) to file a formal complaint with the World Trade Organization (WTO) against the Europian Union's (EU) discriminatory renewable energy policy.
The Indonesian Palm Producer's Association (Gapki) executive director Fadhil Hasan said that the government should take the EU renewable energy directive (RED) to the Dispute Settlement Body (DBS) because it was a form of unfair trade practice that restricted access for Indonesian palm oil to the world's largest economic bloc in terms of intra-regional trade.
The 27 EU-member countries aim to generate 20 percent of their total energy from renewable sources, including biofuel, by 2020. What made the Gapki outrage about this renewable energy is the exclusion of palm-oil based biofuel as it fails to meet the threshold of greenhouse gas emission saving required.
Indonesia, a potential key supplier of biofuels to world markets particularly in Europe, stressed that aside from the discriminatory nature of the directive, the calculation of palm oil green house gas emission default values, which disqualified the oil as a biofuel source in the EU, was not strongly scientifically based.
To controvert this premise,EU released a report, though remains under further research, showing emissions from biofuels produced from different resources. It reflects that palm oils 105g of carbon dioxide equivalent per megajoule of fuel, higher than conventional gasoline with 87.5g CO2e/mj emission.
While Indonesia is up to a more challenging argument against the discriminatory renewable energy policy of EU, the Philippine government is being urge by the Philippine Palm Oil Development Council Inc. (PPDCI) to include oil palm as high yield value crop in the National Greening Program (NGP). PPDCI believes that the time has come for the national government to recognize oil palm farming as a solution to overcome rural poverty.
The good thing about the situation is that establishing palm oil plantation in the Philippines soils will decrease product imports from Malaysia, and it will become independent in supplying its needs when the production became operational.
But even though a treaty anew the two countries' relationship through Philippine-European Union Partnership and Cooperation (PCA), as far as the Philippine is concerned, the local palm oil industry will be affected by the renewable energy policy of EU. Its move could serve as bad precedent for other importing countries, including the Philippines which is a net importer of palm oil and palm kernels from Malaysia. Importers already made similar move. Australian parliament deliberates the bill requiring palm oil products to be explicitly labeled as such last year. The US Environmental Agency excluded palm oil from the US renewable-fuel program as it did not meet greenhouse gas emission standards.
Consequently, over supply of palm oil will occur among the main exporters which will push them to offer their products at a lower price.