a world growth report

Collateral Damage: How The Bogus Campaign against Palm Oil Harms the Poor A World Growth ReportDecember 2009

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Collateral Damage – How The Bogus War Against Palm Oil Harms The PoorIn an organized campaign lead by Greenpeace and Friends of the Earth and financed by misguided foun-dations in Europe, palm oil is derided as a leading gen-erator of greenhouse gases.

A rash of reports blame palm oil for causing deforesta-tion, destroying habitat and endangering orang-utan habitat in Southeast Asia.

The leaders also lodged complaints with national au-thorities and the World Bank claiming palm oil compa-nies in Asia disregard environmental safeguards.

The Campaign is Bogus Oil palm plantations are blamed for deforestation and loss of orang-utan habitat by environmental activists in Europe. This is simply not true. Development and forestry experts know two-thirds of forest clearance is driven by low income people in poor countries searching for land for habitation and food production.

Palm oil is the most environmentally sustainable vegetable oil available. It uses one-tenth of the land required by other vegetable oil crops to produce the same quantity of oil, a third of the amount of energy as input (e.g. fertilizers) and is as an effective sink to absorb carbon dioxide as any well managed forest.

It is also a more effective renewable diesel fuel as a low emission substitute for fossil fuels than biodiesels made from other vegetable oils such as rapeseed in Europe.

Palm oil producers are working with conservationists to implement effective strategies to preserve orang-utan. They are making a bigger contribution to con-servation efforts than the environmental protesters.

It is now also routinely asserted that palm oil is dramatically increasing greenhouse gases because it is being developed on peat lands. Yet the palm oil planted on peat lands is at most only one-quarter of production.

Knowledge of the real impact of plantations on peat land is rudimentary. There is no evidence for the sweeping conclusions. The industry is researching and developing techniques to minimize emissions where palm oil is developed on peat land.

Palm Oil’s Problem is its Success Within a decade, palm oil has emerged as the main global source of vegetable oil. Available in greater quantity and at lower cost than other vegetable oils, demand is strong in poor countries. Production is set to soar because of its commercial attractiveness in tropical countries.

Low cost agro-imports are never welcome in Europe. Following the well established pattern of protection of costly farm production in Europe, the EU has set environmental standards which would impede palm oil imports.

There, heavily subsidized producers of more costly rapeseed oil, clustered in Germany, insist on import controls to keep the market for renewable fuels, created by EU regulation, to themselves. The losers here are European consumers keen to reduce emissions of greenhouse gases in Europe.

The Duplicitous Diplomacy of European Environmental ActivistsEuropean environmental groups argue commercial forestry and plantations like palm oil must be halted because they cause deforestation and increase emissions.

This is not correct. Two-thirds of all deforestation is caused by poor people acquiring land for food and shelter. The key to reducing deforestation is prosperity.

The positions of these Green activists mask other motives. The first is to use climate change as an excuse to execute their long running campaign to restrict forestry worldwide, particularly in developing countries.

ExEcutivE Summary


The second is to downplay the fact that active development of forest land with more forestry and leafy plantation crops is, as the IPCC has noted, the cheapest way to reduce emissions in the long term. The Green groups are obsessed with the palm oil industry. Their agenda is to reduce emissions by cutting consumption of fossil fuels, the most costly strategy.

An Anti-Poor Strategy Denying these countries the right to develop a palm oil industry denies them the right and opportunity to reduce poverty and raise living standards.

The World Bank once commended Indonesia for promoting palm oil when it was first developed and expanded. It distributes wealth, creates property rights and raises living standards. The Malaysian Government fostered palm oil production to create wealth generating enterprises for people who were previously landless plantation workers.

The International Fund for Agricultural Development is also supporting development of this model in Uganda.

However, the environmental activist agenda and the policies of the EU deny tropical forest countries the opportunity to reduce poverty. The World Bank and major aid donors are now submitting to this anti-poverty reduction stance. They have agreed to provide funds to assist developing countries to manage climate change strategies in forestry, provided conversion of forest land to more productive uses is halted.

If developed countries and development agencies want developing countries to sign on to a new global strategy to reduce greenhouse gases, they must advance strategies that raise living standards and not regard increases in poverty as unavoidable collateral damage.


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2 PAlm Oil – THE DEvElOPmEnT Oil.....................9

3 lAnD COnvErSiOn AnD DEvElOPmEnT..................................................13

4 PAlm Oil AnD CArBOn EmiSSiOnS.......................................................17

5 COnSErvATiOn Of OrAng-uTAn – WHAT iS THE rOlE Of PAlm Oil?...................23

6 TOWArDS A SuSTAinABiliTy STrATEgy fOr THE EnvirOnmEnT AnD THE POOr..........................28

AnnEx – rATing THE STrEngTH Of ngO ClAimS.................................................30

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The world’s governments have convened in Copenha-gen to determine a global strategy to reduce greenhouse gas emissions. There is every indication the issue is so thorny that no clear agreement can be reached at Co-penhagen. It is likely the parties to the Copenhagen conference will try to identify the areas which can be the basis of a new global strategy and lay down a fresh mandate and program to meet it.

Not all efforts are singularly focussed on that goal. It is clear that interests that object to the use of forestry as an engine of growth and a tool to reduce poverty in developing countries want to see the climate change negotiations used to advance that goal.

It has become common wisdom in environmental and development circles in the industrialized world that any activity which reduces or even changes forest land needs to be deterred. Accordingly, there is a strong group of proponents of this idea, urging it be an integral part of any new, global agreement to address global warming.

In this context, a rather odd campaign has been mounted against palm oil, an ancient product with historically esteemed virtues in the Middle East, which today has emerged as an important food staple.

Palm oil has been made the ‘poster child’ in this campaign to ensure that any global strategy to reduce greenhouse gases must also cease conversion of forest land to any other purpose. The campaign rests on contentions that it is detrimental to the environment. Some of which are new and rather extreme.

The purpose of this report is to examine those contentions, and the leading propositions used to support them, in particular that palm oil is a major driver of change in land use, causes major emissions of greenhouse gases, and that it is the leading threat to the habitat of orang-utan.

The point of enquiry is relative, not absolute, in keeping with the official proposition of the members of the United Nations that policies to protect the environment should be framed in the context of sustainable development. The measure of this is that their effectiveness must be measured as much for their contribution to development as for protection of the environment.

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Palm oil has been widely acknowledged as an effective industry for alleviating poverty and for efficient land use in developing nations.

Palm oil is more productive than most other plantation crops and consistently delivers high returns to plantation owners and workers. Where smallholders are significant producers, it is even more effective in alleviating poverty.

It has been recognized that the use of plantations can strengthen recorded land rights in areas where there are no prior recorded land rights.1 As the international development economist Hernando De Soto has demonstrated, secure property rights are one of the basic building blocks of economic development and poverty alleviation in the developing world.2 The acquisition of property rights is more effective in the long run than direct aid which functions more as short term welfare.

Malaysia and Indonesia produce 87 per cent of the world’s supply of palm oil. Global vegetable oil production has risen by 47 per cent since 2000 driven by growing consumer demand and the recent emergence of a biofuels market. The greatest growth has been in palm oil production which now constitutes one-third of annual global vegetable oil production, reaching over 43 million tonnes in 2008.

Agriculture and plantation farming, such as rubber and palm oil, have been key drivers for economic growth in Malaysia and Indonesia, as in most other developing countries, for decades. Over 43 per cent of working Indonesians and almost 15 per cent of working Malaysians rely on agriculture to provide an income.3

In Malaysia, palm oil plantations have gradually taken over from rubber plantations and now directly employ

more than 570,000 Malaysians4 and are predicted to employ 750,000 Indonesians by 2010.5 In 2007, Indonesia exported 16.9 million tonnes of palm oil worth US$7.9 billion6, almost 7 per cent of Indonesia’s exports. Similarly, Malaysia’s export of palm oil and derived products was worth over $65.2 billion RM (US$19.6 billion) to the Malaysian economy in 2008 and has been credited with staving off some of the effects of the global financial crisis.7

Both the Indonesian and Malaysian Governments have utilized agriculture, particularly palm oil plantations, as a poverty alleviation mechanism. The Federal Land Development Authority in Malaysia was tasked with the allocation and organization of small plots of palm oil, its processing and transportation. Government schemes in Indonesia which use palm oil as a poverty alleviation tool have ‘secured major increases in living standards of the participants, along with considerable output rises, ...there were in addition considerable spread effects... using the outstanding economic per-formance of a particular crop [oil palm] as a means of extending prosperity’.8

Small landholders now own a large percentage of palm oil plantations in both Indonesia and Malaysia. Government settlement schemes and privately owned smallholder plantations constituted 40 per cent of land under oil palm plantation in Malaysia in 2008.

In 2006, 43 per cent of the total area under oil palm plantation in Indonesia was owned by small landholders. A significant portion of the growing palm oil market has directly benefited smallholders with the area of oil palm plantations owned by smallholders in Indonesia growing at a far higher rate than the growth in government or private estates since 1980 (Table 1).

2. Palm oil – thE dEvEloPmENt oil

1. Potter (2001) ‘Agricultural Intensification in Indonesia: Outside Pressures and Indigenous Strategies’. Asia Pacific Viewpoint 42:307–3262.De Soto, H., (2000), The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else.3. ADB (2009), Key Indicators report, 2009.4. Global Oils & Fats Business Magazine, 5 (4) (Oct–Dec), 2008.5. Sambodo, M. and Ekonomi, P., (2009) ‘Sustainable Biofuel Development in Indonesia: Hoping the Dream Come True’, Sustainable Biofuel Development Research Workshop.6. Jakarta Post, ‘Minister lobbies EU over palm oil restrictions’, 19 October 2008.7. Global Oils and Fats Business Magazine, 6 (1) (Jan–Mar), 2009. 8. Zen, Z., Barlow, C. and Gondowarsito, R., (2006) ‘Oil Palm in Indonesian Socio-Economic Improvement: A Review of Options’, Working Paper in Trade and Economics, Research

School of Pacific and Asian Studies, Canberra: Australian National University9. Amano, M, and Sedjo, R, 2006.

Palm oil has been widely acknowledged as an effective industry for alleviating poverty and for efficient land use in developing nations.


Palm oil plantations return more income per hectare than most alternative uses of land in Southeast Asia except boutique crops such as teak. The high income is a result of the oil palm requiring less land, energy and fertilizer than other oilseed crops for the same output. In 2008, the average yield from one hectare of oil palm was 3.8 tonnes. The soyabean and rapeseed crops returned 0.4 tonnes and 0.7 tonnes respectively for one hectare of land.

There are also a number of government and industry programs in place to support and grow smallholder plantations. Since 2008 the Indonesian Government has ensured that international investors set aside 20 per cent of plantation land to support and develop smallholder plantations through a ‘plasma scheme’. Under a plasma scheme developers commit to buy oil palm bunches from smallholders at prices set by the Government. The Indonesian Palm Oil Council also collaborates with commercial banks to provide smallholders with cheaper loans.

Studies on the impact of the use of oil palm planta-tions as a development tool have found that ‘the cul-tivation of oil palm had certainly played a dominant

role in enhancing the income of the rural population and in the alleviation of poverty among agricultural smallholders’.9

The incidence of poverty in the Malaysian agricultural sector between 1970 and 1990 declined markedly amongst smallholders of oil palm compared with other types of agriculture (Table 2).

By 1980 oil palm smallholders had the lowest incidence of poverty of any smallholder in the Malaysian agricultural sector. Estate workers, including oil palm estate workers, had the second lowest incidence of poverty.

Following the demonstrated success of palm oil in boosting prosperity and reducing poverty in South East Asia, it is being developed in other regions in the developing world.

Palm oil is proving very productive in Papua New Guinea where recently it exceeded timber as the leading agro-forestry export industry. It is now being developed in Africa from which it was originally transferred to Southeast Asia early in the twentieth century.

9. Simeh, A. and Ahmad, T. (2001), “The Case Study on the Malaysian Palm Oil”, Regional Workshop on Commodity Export Diversification and Poverty Reduction in South and South-East Asia, April 2001

yEAr gOvT. ESTATES PrivATE ESTATES SmAll HOlDingS TOTAl

1980

Area (‘000 ha) 200 89 6 295

Production (‘000 tonnes) 499a 222 1 721

1990

Area 372 463 291 1.127

Area growth rate (%) 6.4b 18 28.1 14.5

Production 1,247 789 377 2,413

2003

Area 561 2,555 1,811c 4,926

Area growth rate 3.2 14.0 15.1 12.0

Production 1,716 4,778 3,257 9,750

a Figures in parentheses are ‘000 tonnes of production. b Figures in brackets are annual compound area growth rates, %, 1980–1990 and 1990–2003. c Including 897,457 ha in nucleus estate plasma, and a balance of over 900,000 ha of individual holdings. Source: Zen et al (2006) citing Direktorat Jenderal Bina Produksi Perkebunan (2004.)

Table 1: Areas, Annual Area growth rates and Production of Oil Palm, 1980–2003


10. Simeh & Ahmad (2001).

yEAr / SECTOr 1970 1975 1980 1984 1990

Rubber smallholders 64.7 59.0 40.0 43.4 24.1

Oil palm smallholders 30.3 9.1 8.2 n.a1 n.a1

Coconut smallholders 52.8 50.9 47.1 46.9 27.1

Paddy farmers 88.1 77.0 73.0 57.7 39.0

Other agriculture 91.8 78.0 64.3 34.2 n.a

Fishermen 73.2 63.0 52.0 27.7 27.7

Estate workers 40.1 47.0 38.0 19.7 19.7

Total in agriculture 68.3 63.0 49.3 23.8 21.1

1. Combined with ‘other agriculture’ Source: Simeh (2001) Malaysia, Malaysia Plans: various issues

Table 2: incidence of poverty in the Agricultural Sector malaysia, 1970–199010

Case Study: ugandan vegetable Oil Development ProjectThe International Fund for Agricultural Development (IFAD) is dedicated to eradicating rural poverty in developing nations and to help ensure adequate food supplies.

In 1998 IFAD funded an ongoing program to develop oil palm plantations in Uganda. The project was aimed at reducing Uganda’s dependence on vegetable oil imports as well as providing opportunities for smallholders to grow their income.

Oil palm was considered an appropriate crop because of its high yield.

IFAD funded a partnership between the private sector consortium, comprised of BIDCO and Wilmar, and the Kalangala Oil Palm Growers’ Trust to develop a total of 10,000 hectares of oil palm trees. One third of that plantation is cultivated by smallholders. The private sector consortium has now made a commitment to the Ugandan palm oil industry almost four times the original IFAD proposal.

BIDCO is set to produce $40 million worth of crude palm oil each year, saving the Ugandan economy $150 million each year in palm oil imports. The oil palm will be developed in a new $30 million refinery built by the company in the Ugandan city of Jinja.

It is estimated that more than 7,000 smallholder farm families (a total of 42,000 people) will directly benefit from the project. The project has resulted in investment for roads, electricity and water infrastructure, housing and health clinics.

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11. This is discussed at greater length in the section on the Extent of land converted for oil palm, p. 15. 12. Joe Leitmann quoted in Reuters article ‘Palm Oil Could Scuttle Forest Carbon Plan: Experts’ 1 June 2009.13.IPCC, (2007a), Climate Change 2007: Mitigation of Climate Change: Contribution of Working Group III to the Fourth Assessment Report of the IPCC. Metz, B., Davidson, O.R.,

Bosch, P.R., Dave, R., and Meyer, L.A., (eds), Cambridge University Press, Cambridge, UK and New York, NY, p. 543, accessed at: http://www.ipcc.ch/ipccreports/ar4-wg3.htm.

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In the lead up to the UN Climate Change Conference in Copenhagen the case has been mounted that the conversion of forest land to other uses by developing countries, including production of palm oil (this is depicted as ‘deforestation’) is a major source of greenhouse gas emissions and should be curbed.

It is widely asserted by environmental NGOs that commercial forestry and plantation industries are the leading cause of deforestation. This is not true. Professional forest organizations like the Food and Agriculture Organization (FAO) and the Centre for International Research in Forestry (CIFOR) state repeatedly that the leading cause of deforestation is pressure from poor people for land for habitat, fuel and food.11

The result, nevertheless, is that ending deforestation (con-version of forest land) is being promoted as a necessary element in any successful global strategy to curb the emis-sion of greenhouse gases. It is also being proposed as a condition for provision of climate change aid.

The EU has also gone so far as to erect trade barriers against imports of biofuels like palm oil unless it is produced in areas where forest was not cleared.

These campaigns have placed an unwarranted emphasis on the palm oil industry. If they succeed, the impact on efforts by developing nations to reduce poverty and raise living standards would be highly detrimental.

reducing Emissions from Deforestation and forest Degradation (rEDD)In Bali in 2007, parties to the UN Framework Convention on Climate Change (UNFCCC) set out the mandate for the climate change negotiations, including consideration of the concept of Reducing Emissions from Deforestation and Forest Degradation (REDD). The concept had been before the parties to the convention for two years before, but precisely how it was to work had not been agreed.

There are many different positions on what REDD should mean. It is common ground that it should entail the provision of aid to forested developing economies. Differences are wide over what the money should be used for and what conditions should attach to it.

Originally the World Bank envisaged REDD as a fund to support restoration of forest lands in developing countries from which they could then derive carbon credits to raise funds to compensate for income lost from the cessation of clearing forest land for other productive purposes. The clear presumption was land conversion would cease. Since the concept was first advanced, it has become clear there will not be agreement in the near future in the UNFCCC negotiations to a globally regulated system of carbon credits. The frame of discussion within the World Bank has accordingly been reduced.

An effort was made in negotiations in the lead up to the Copenhagen conference to include ‘no land conversion’ as a goal in the new approach to climate change. Tropical forest developing countries rejected this. They have correctly pointed out that the mandate for Bali provides for expansion of carbon sinks and increased sustainable management of forestry, as well as ensuring their capacity to develop their economies is not impaired by measures to address climate change. However, there still remains a proposal to ‘promote’ actions that safeguard against the conversion of land.

Proposals also remain to avoid incentives for land clearance. Such measures would rule out aid for strategies to convert forest land for poverty reduction strategies that entailed development of new industries like palm oil.

The primary concern for developing nations is whether the income stream from REDD could adequately compensate for the opportunity cost of not pursuing a viable avenue for growth. The World Bank’s environment co-ordinator from Indonesia has been quoted as saying ‘the opportunity costs we have to overcome in order for REDD to work can almost all be overcome, except for oil palm grown on mineral soil. That will be so profitable and so difficult to beat’.12

REDD also contains the implicit assumption that all conversion of forest land for higher value uses is detrimental for the environment. This is despite the Intergovernmental Panel on Climate Change (IPCC) noting that long-term sustainable management of forests which produce annual sustained yield of timber, fibre or energy will generate the largest sustained greenhouse gas mitigation benefit.13 The capacity of


palm oil to achieve reductions in carbon emissions is discussed in the section on Palm Oil and Carbon Emissions (p. 13).

Despite the lack of agreement over REDD, the World Bank has adopted it as if it were a concept which was internationally agreed. The World Bank has developed the Forest Carbon Partnership Facility to attract funding from developed nations to prepare for the implementation of REDD. This tacit support for a no-conversion policy was made more obvious by recent World Bank guidelines on funding through a Forest Investment Program which rule out funding in most cases where projects entail conversion of forest land to other purposes.14

In this context, the debate on REDD now reflects the ‘no conversion’ position of environmental NGOs and the World Bank, rather than a greenhouse gas reduction or a pro-development strategy.

Carbon Accounting: Direct land-use ChangeIt is also clear that the UNFCCC’s current carbon accounting rules are also reflecting a ‘no conversion’ position despite significant evidence that plantations such as palm oil can provide a long-term reduction in carbon emissions.

Current accounting rules fail to consider two of the most important issues associated with forest land conversion and plantation cropping which would significantly decrease or mitigate greenhouse gas (GHG) emissions.

UNFCCC rules assume that the total carbon stock in the plant or tree cover is lost if that land is converted to another use. That is, any removal of forest cover will result in the immediate release of all carbon stock. This is not accurate. When logged timber is turned into paper, furniture or even remains as logs a significant portion of the carbon stock is retained.

It is an oversimplification to claim that all timber on cleared forest land is immediately released as carbon. Clearing forest land can result in carbon in the forest cover being retained while planting new crops with the ability to sequester more carbon from the atmosphere.

Secondly, the carbon accounting rules fail to include the whole of life carbon sequestering capacity of new timber or plantation cover. This grossly discounts the reality of the carbon cycle for new and old forests and plantations. To assess properly the operation of carbon sinks in forests and palm oil plantations, the operation of the sink over more than one regrowth cycle must be assessed.

The European Union and environmental NGOs still oppose rules which will allow the full value of carbon sequestration by forests to be assessed.

Carbon Accounting: indirect land-use ChangeThere has been an additional push from many environmental NGOs to account for the impact on emissions of ‘indirect land use change’ (ILUC) which may be generated by use of crops to produce biofuels. The concern is that development of a biofuel crop may displace another form of cropping which may require further land clearing for substitute production. The argument is that the additional land clearing is an indirect effect that will create more carbon emissions (either by removing vegetation or by disturbing the soil, which should also be counted).

However, there is no consensus on how to assess the emissions caused by ILUC, to what extent it may occur, how it may be proven or how it might be measured. It is generally accepted that ILUC will be extremely difficult to prove or measure.

This will also generate policy problems in those industrialized economies which have elected to exempt their own agricultural sectors from their climate change abatement strategies. Industrialized economies can hardly credibly insist that developing countries take into account the impact on carbon emissions of ILUC in their economies when they will not do the same in their own.

Further, if ILUC is included in the carbon account-ing of a biofuel then the flipside would be to include ‘avoided deforestation’. In the case of oil palm, the high land use efficiency avoids the conversion of additional land which would be required if another biofuel crop was used. This is discussed in greater detail in Palm Oil and Carbon Emissions (p. 13).

14. World Bank, (2009), ‘Design Document for the Forestry Investment Program, A Targeted Program under the SCF Trust Fund’, Forestry Investment Program , July.


‘no Conversion’ Trade BarriersThe EU Renewable Energy Directive seeks to restrict the import of palm oil into Europe by restricting its use as a biodiesel if it is sourced from converted forest land. Article 17 of the EU Directive states that biofu-els used for the purpose of meeting the mandatory target ‘shall not be made from raw material obtained from land with high biodiversity value, namely land that [was]... in or after January 2008, whether or not the land continues to [be]... primary forest and other wooded land’ or ‘from land with high carbon stock’ including wetlands, continuously forested areas or peatland.15

The clauses are formulated with the intention of blocking the import of all biofuels grown on forest land or wetlands which were converted to plantations after January 2008 – these are almost exclusively grown in developed nations. Further, the lack of robust traceability and verification standards in developing nations, by virtue of the fact that they are still developing, endangers the export of a significant portion of their produce to the EU.

The Directive also indicates that further work is required to assess the carbon rating of imported biofuels because of the impact on emissions of indirect land use change caused by diversion of crops to biofuels.

Despite these climate change pretensions, the measure has naked protectionist effects. Rapeseed, the vegetable oil crop grown in the EU, is considerably more expen-sive to produce than palm oil. The EU serves to keep cheaper and more environmentally sustainable biofuel out of the EU, consistent with the EU’s long established practice of restricting the import of lower priced agri-cultural commodities.

Clearing land for development has formed the backbone of economic growth for the majority of nations, including developed economies for hundreds of years. Campaigns by environmental NGOs and the bias within the current carbon accounting framework seek to deny developing nations’ access to that same path of economic growth.

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15. The countries include: Finland, France, Great Britain, Greece, Hungary, the Netherlands, Sweden and the United States of America.

indirect land use ChangeEnvironmental NGOs have made many claims that increasing reliance on biofuels will lead to an increase in land clearing and an increase in edible palm oil prices.

The 2008 Gallagher review concluded that the production of biofuels should be slowed until the indirect land effects caused by replacing agricultural crops with biofuel crops can be measured.

The Gallagher review, combined with claims that using vegetable oil for fuel will endanger global food security, has been widely quoted by environmental NGOs as an argument against palm oil.

This argument is flawed on two counts:

1. Firstly, global demand for vegetable oil is expanding at an average of 6 million tonnes per annum – 4 million tonnes for edible oil and 2 million tonnes of biofuel demand. The result is that edible palm oil is, in total, a far higher returning industry than biodiesel. The inelasticity of this demand and the total value to the industry will ensure that biodiesel feedstock will never ‘crowd-out’ consumer demand.

2. Secondly, the findings of the Gallagher Review that the reliance on biodiesel should be lowered because it leads to land clearing for displaced agriculture fails to consider the ‘avoided deforestation’ of growing high yield crops such as palm oil which will ease the land clearing pressure on lower yielding crops such as soya bean and rapeseed.


Carbon accounting rules, environmental NGOs, the World Bank and developed nations now have a posi-tion that ‘no conversion’ on the grounds of reducing carbon emissions is more important than the allevia-tion of poverty.

However, there is significant evidence that shows that the campaigns against palm oil on these grounds are misguided. Palm oil has the potential to produce some of the largest reductions in carbon emissions compared to fossil fuels or other biodiesels.16 Palm oil also delivers long-term carbon reductions when considered over regrowth cycles and has the capacity to sequester a considerable amount of carbon.

Palm Oil Biodiesel’s good Carbon footprint Numerous life cycle analyses (LCA) have shown that palm oil biodiesel is a highly effective option to reduce greenhouse gas emissions when compared to fossil fuels and other biodiesel crops.

• Van Zutphen found that palm oil has the greatest potential of all biodiesels for the reduction of carbon emissions. It was found that one tonne of palm oil released just 835 kg CO2 equivalent – compared with 1,387 kg from one tonne of soyabean oil, 1,562 kg from one tonne of rapeseed oil and 4,288 kg for the equivalent in fossil fuel.17

• Beer et al. concluded that palm oil from existing plantations could return a reduc-tion in GHG emissions of 80 per cent compared to conventional diesel. This compared with a reduction of 49 per cent from canola feedstock and 76 per cent from tallow.18

• Zah concluded that palm oil biodiesel provides more GHG savings than soya-bean from Brazil or rapeseed. It was also concluded that palm oil has a lower ag-gregate environmental impact under the environmental scarcity measure than soya-bean from the United States and Brazil or rapeseed.19

• Foong Kheong Yew found that 1 MJ of energy produced from palm oil emitted a mean of 31.4 g CO2-e, compared to 47g CO2-e emitted by rapeseed biodiesel.20

• A study by Reinhardt from the Institute for Energy and Environmental Research (IFEU) found that palm oil biodiesel produced on land converted from other plantations, crops or natural forest can save more GHG emissions than sunflower seed, rapeseed, canola and soyabean crops. Reinhardt also found that palm oil bi-odiesel produced very high GHG emission savings if it was planted on degraded or fallow land as is currently occurring in Malaysia. The IFEU also found that an oil palm plantation which replaces a tropical forest will actually sequester more carbon than is released from land clearing over the longer-term.21

However, the analysis by Reinhardt, stemming from a paper written for the Greenpeace publication Rain Forest for Biodiesel? 22 only considers GHG emissions per hectare of cropland not per tonne of oil or joule of energy. Given the high productivity of oil palm produced compared to soyabean and rapeseed crops, this result overstates the GHG emissions from palm oil compared to other biodiesels. The end produce from an oil palm plantation is not a hectare of plantation – it is either a tonne of oil or the energy produced from a tonne of palm oil biodiesel.

16. All results are achieved assuming the unlikely scenario that all carbon is released into the atmosphere when forest land or existing plantations are cleared, which as discussed above, is a flawed assumption which will overinflate the impact of all land use change emissions.

17. Van Zutphen H (2007). The CO2 and energy balance of Malaysian palm oil, Zwolle, Netherlands, p 45.18. Beer, T., Grant, T. and Campbell, P. K. (2007) The greenhouse and air quality emissions of biodiesel blends in Australia, CSIRO19. Zah, R.et al,(2007), A Life Cycle Assessment of Energy Products: Environmental Impact Assessment of Biofuels. 20. Foong Kheong Yew et al., (2009), Mitigating climate change through oil palm cultivation: the Malaysian experience, IOP Conference Series: Earth and Environmental Science 6, IOP,

Bristol21. Reinhardt, (2009), ‘GHG Balances of Biofuel Oil Crops: State of the art balancing scientific accuracy with the demands of policy makers’, presentation at the International Palm Oil

Life Cycle Assessment Conference, Kuala Lumpur22. Rain Forest for Biodiesel? is often twisted to be used by environmental NGOs and recently the United Nations Environment Programme report ‘Assessing Biofuels’ as supposed proof

that palm oil increases GHG emissions.

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The results from LCA studies also vary based on the annualization or time-frame of the study. The study by Reinhardt found that palm oil which was planted in place of a natural tropical forest was a net sequesterer of carbon over 100 years, but a net emitter over 20 years when compared to conventional diesel. In other words, within 100 years an oil palm plantation which was planted in place of a tropical forest will produce net carbon sequestration. Similarly, Fargione found that palm biodiesel from a tropical rainforest became a carbon sequesterer after 86 years – less than soyabean biodiesel from Brazilian tropical forests (319 years) or corn ethanol from US grassland (93 years).23

The LCA studies reveal a number of common themes. Firstly, with good management practices, biodiesel from palm oil can provide one of the highest reductions in carbon emissions compared with fossil fuels; secondly, the primary source of concern over the GHG emissions from palm oil is from land use change, particularly plantations on peat forests; and thirdly, there is considerable scope to reduce those GHG emissions even further through methane capture and energy generation during the milling process.

land-use ChangeThe primary concern over the carbon emissions from palm oil stems from the land use change associated with new plantations. A large proportion of the carbon emissions attributed to palm oil comes from the cultivation process (the point up until harvesting), particularly emissions from oil palm plantations on peat soil.

However, current claims on land use change fail to properly consider the long-term capacity of the oil palm to sequester carbon, the extent and type of land clearing for oil palm crops and the environmental impact if oil palm crops were replaced with lower yielding crops such as rapeseed.

Once these factors are taken into consideration, it is clear that oil palm is providing an effective long-term reduction in carbon emissions.

Extent of land Converted for Oil PalmIt is commonly implied by environmental NGOs that most palm oil is sourced from plantations which have replaced tropical forests or peat. This is not true. Indeed, increasing proportions are being grown on fallow, degraded or secondary forest sites, particularly in Malaysia.

Oil palm plantations are not the primary or even major cause of deforestation in Indonesia and Malaysia. Research for the Stern Report found that oil palm accounted for only 20 to 30 per cent of forest land cleared in Malaysia and Indonesia.24 Indeed, the primary cause of deforestation in developing nations is poverty – land clearing for subsistence farming, shelter, food or firewood.25

The world’s largest exporter of palm oil, Malaysia, has pledged to only convert 23 per cent of land to agricultural uses, leaving more than 55 per cent of land under permanent forest. The fact that this target has now been met means that no primary forest land can be converted for new oil palm plantations.

Similarly, the Food and Agriculture Organization (FAO) found that while forest cover in Indonesia fell by 13.1 million hectares between 2000 and 2005, land used for building and infrastructure increased by 9.4 million hectares in the same period.26

Sequestering Capacity of the Oil PalmMuch of the debate on emissions from land use change has centred on the ‘lost’ carbon stock of the natural forest, not the net carbon sequestering capacity of the oil palm. The current carbon accounting rules do not recognize the difference between cleared carbon ‘stock’ and carbon emissions. A true estimate of the impact of the oil palm on GHG emissions would measure the carbon emitted to the atmosphere, rather than the lost carbon ‘stock’. It would also consider the long-term, multi-plantation impact on emissions – not the 20 year cycle that is commonly accounted for.

23. Fargione, J. et al, (2008) ‘Land Clearing the Biofuel Carbon Debt’, Sciencexpress, February 2008.24. Greig-Gran M., (2008), The Cost of Avoiding Deforestation: Update of the Report Prepared for the Stern Review of the Economics of Climate Change, International Institute for

Environment and Development.25. There is considerable debate on the drivers of deforestation in tropical countries and whether it is caused by poverty and subsistence activities or industrial activities. The line between

‘industrial’ and ‘subsistence’ is difficult to establish and often intimately linked. However the UNFCCC did find that 48 per cent of all deforestation was due to subsistence farming. However, the above research by Greig-Gran found that nearly 70% of compensable deforestation (i.e. deforestation which could be halted by direct payments) in Indonesia was due to smallholder rubber, rice fallow or cassava. And this did not even consider land clearing caused by growing populations’ need for shelter. Whether this is subsistence or industrial activities is debateable – however it is clear that the primary cause is not oil palm plantations as is often falsely asserted

26. Food and Agriculture Organisation, (2009), ResourcesState, FAO statistical database on resources, www,faostate.fao.org/site/405/default.aspx


At the end of a 25-year plantation cycle the oil palm will not have the same carbon stock as primary forest, as pointed out recently by commentary site Monga-bay,27 however, this measure does not reflect the actual carbon emissions caused. When the carbon balance of oil palm is considered over a number of regrowth cycles, with a number of new-growth phases, it has the poten-tial to sequester a large amount of carbon. A long-term view of oil palm shows that it can reduce total carbon emissions because it is a renewable source of energy.

Adapting to climate change is not only about reducing carbon emission now, but enabling future generations to continue to reduce emissions through renewable energy sources. Policies should be tailored for the long-term reduction in emissions, rather than consider short-term, artificial calculations.

Other studies have found that oil palm plantations sequester 250 grams of carbon per square metre per year compared with only 43 grams of carbon per square metre per year by a natural tropical rainforest.28 Similarly, Henson found that the oil palm sequesters almost as much as a tropical forest on an annual basis.29

Chen found that oil palm on a secondary or logged-over forest sequestered 0.66 tonnes of tonnes of CO2 per tonne of crude palm oil (CPO) and ‘the oil palm plantation is in principle still a carbon sink’ once the sequestering capacity of the oil palm was taken into account.30

This means that palm oil biodiesel which replaces fossil fuels can provide a greater reduction in net carbon emission than retaining tropical forests in the longer-term.

Types of land Converted to Oil Palm PlantationOil palm plantations have also been found to take in more carbon than is released over the short-term if they are planted on degraded land, fallow or some existing plantations.31 However, there is a considerable lack of information on the quality or type of land being converted to oil palm plantations. Current data on land conversion relied on by environmental NGOs has been heavily criticized for relying on random sampling from satellite images32. This methodology fails to accurately represent the change in different classes of forests therefore providing an inaccurate measurement of changes in carbon stocks.33

Avoided DeforestationPalm oil currently produces over 43 million tonnes of vegetable oil on 11 million hectares of land. If the current demand for palm oil were supplied by the next most productive crop, rapeseed, then it would require 61.4 million hectares of land – over 50 million more hectares than is currently being used to provide vegetable oils.

A large portion of this land would have to be provided by clearing currently forested land – which would result in carbon emissions. It has been calculated that the avoided carbon emissions from palm oil are 4 billion tonnes of carbon equivalent if substituted for rapeseed oil and 6.7 billion tonnes of carbon equivalent for soyabean oil.

27. http://news.mongabay.com/2009/1102-palm_oil.html28. Lemade, E., Bouillet, J. P., (2005), ‘Carbon storage and global change: the role of oil palm’, Oléagineux, Corps Gras, Lipides , 12 (2), MARS–AVRIL 2005. 29. Henson I. E., (1999), ‘Chapter 2: Comparative Ecophysiology of Oil Palm and Tropical Rain Forest’ in Oil Palm and the Environment – A Malaysian Perspective. Gurmit Singh, Lim

Kim Huan, Teo Leng and D Lee Kow (eds.) Malaysian Oil Palm Growers Council, Kuala Lumpur. Pp. 9–39.30.Chen, S. S., (2008), ‘The LCA approach to illustrate palm oil’s sustainable advantage’, International Palm Oil Sustainability Conference, Sabah.31. CarbonCapital Solutions, (2007), The CO2 and Energy Balance of Malaysian Palm Oil: Current Status and Potential for Future Improvements.32. Tucker, C.J., and Townshend, J.R.G., (2000), ‘Strategies for monitoring tropical deforestation using satellite data’, International Journal of Remote Sensing, 21(6&7), pp 1461–1471.33. Houghton, R. A., (2003), ‘Revised estimates of the annual net flux of carbon to the atmosphere from changes in land use and land management 1850–2000’ Tellus B 55, 378–390.

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mitigation Opportunities with Palm Oil measuresVan Zutphen finds that 51 per cent of GHG emissions from palm oil, not including land use change, are emitted at the processing mill, primarily through methane emitted from the open effluent ponds.34 This means there is considerable scope to reduce the GHG emissions from palm oil even further.

A bottom-up study of the Sime Darby Plantations in Selangor showed that 1 tonne of biodiesel released 1,377kg CO2 without GHG capture and almost 60 per cent less GHG emissions using GHG capture.35

The largest savings come through methane capture and energy generation from palm oil mill effluent (POME). POME is the effluent from the final oil clari-fication plant stages of palm oil production in the mill. It is made up of various liquids, dirt, residual oil and suspended materials. It is commonly stored in pits where its high organic content leads to considerable methane emissions. There are currently a number of methane capture units in operation which are capa-ble of powering a 600kW plant (500kW of which is fed back into the electricity grid) from a mill with a processing capacity of 54 tonnes of fresh fruit bunches per hour.36

Palm oil waste is also heavily utilised as a useful commodity either for energy generation or for other purposes. The conversion of co-products, such as husks and shells of the oil palm, can provide massive carbon credits for the production and use of palm oil. Empty fruit bunches can be used as fertilizer and oil palm shells are also being used to strengthen concrete from local concrete plants.

The reduction in carbon emissions and energy use if palm oil waste is used for energy generation (without considering land use change effects) can be up to a 99 per cent saving compared to fossil fuel (see Table 3). Although the impact of land use change was not consid-ered in detail, it is noted that it would reduce the base case savings from 59 per cent to 42 per cent.

Unfortunately, the recent EU Directive on Renewal Energy specifically states that in calculating the GHG savings from a source of renewable energy, all co-products shall be taken into account except for ‘agricultural crop residues, including straw, bagasse, husks, cobs and nut shells [and] residues from processing, including crude glycerine’.37 Given that palm oil producers are now actively using palm oil waste to either mitigate GHG emissions or for other productive purposes, this exclusion is difficult to justify.

34. Van Zupthen (2007).35. Hashim, K., (2009) ‘Life Cycle Assessment of Palm Oil Products of Sime Darby Plantations’, Presentation at International Palm Oil Life Cycle Assessment Conference 2009, Malaysia.36. Specifications given for the Jempol, Negeri Sembilan Biogas plant: http://www.ptm.org.my/biogen/biogas.aspx.37. Annex V of EU Renewable Energy Directive (2009/28/EC).

miTigATiOn mEASurE

CArBOn EmiSSiOnS EnErgy uSE

BASE CASE WiTH miTigATiOn BASE CASE WiTH miTigATiOn

Composting 1,302 kg/t CPO (59%) 406 kg/t CPO (87%) 6.89 GJ/t CPO (83%) 6.60 GJ/t CPO (84%)

Empty Fruit Bunch (EFB) Combustion

1,302 kg/t CPO (59%) 894 kg/t CPO (71%) 6.89 GJ/t CPO (83%) 3.62 GJ/t CPO (91%)

Biogas from Palm Oil Mill Effluent (POME)


Power Generation from EFB and POME


Notes: Savings compared with fossil fuels Source: CarbonCapital Solutions, 2007, ‘The CO

2 and Energy Balance of Malaysian Palm Oil: Current Status and Potential for Future Improvements’.

Table 3: Potential Carbon Emissions and Energy Savings through improved Palm Oil Production Process


Smoke and mirrors on Peat Emissions A significant amount of attention has been focussed on the carbon emissions from plantations on peat land. When peat land is cleared and drained the layer of decomposed material which is revealed oxidises and emits GHG.

Environmental NGOs now portray oil palm as the biggest culprit in conversion of peat land. Yet, current estimates are that at most 26 per cent of oil palm plantations are located on peat land – 10 per cent of plantations in Malaysia38 and approximately 27 per cent of Indonesian oil palm concessions.39

Emissions from peat decomposition and fires have led environmental NGOs to claim that Indonesia is the third highest GHG emitter in the world. However, it is widely recognized that the science of emissions from peat land is still developing and highly uncertain.

Environmental groups such as Greenpeace claim that emissions from peat decomposition and fires amount to 4 per cent of global emissions.40 However, this claim is based on a report Peat–CO2 for Wetlands International which has questionable figures in relation to rates of deforestation and emissions from peat fires.

The Peat–CO2 report simply assumes that the rate of deforestation which occurred between 1985 and 2000 will continue until all peat land is deforested. This assumption both conflicts with government policies preserving land and with findings by the Food and Agriculture Organization which has found that the global rate of deforestation is decreasing.41

This is supported by a recent study by Van der Werf which found that claims that deforestation causes 20 per cent of global emissions were based on out-of-date information and that the rate of tropical deforestation had been overstated.42

Further, tropical peat scientists have found that figures in the Wetlands International report are overstated because it did not consider the six different identified types of flora communities on peat land or the unique composition of tropical peat compared to boreal peat, including the diverse layers within the peat and the presence of large logs and other undecomposed mate-rial in tropical peat.43

Similarly, research by Ywith found that ‘conversion of secondary forest on peat to initial stages of oil palm plantation seems to not exert any significant difference on carbon storage in tropical peat soil’.44 Given that Sukrenso found that there was 7.5 million hectares of secondary peat swamp forest remaining compared to 5.7 million hectares of primary peat swamp forest,45 this could significantly impact calculations on emis-sions from oil palm on peat land.

Data on the emissions from peat fires are also heavily skewed by El Niño events and political upheavals which led to large scale fires in 1997. It is unreasonable to assume that these events will continue at trends rates into the future. Estimates on the emissions during the 1997 fires are also highly uncertain, ranging from 900MtCO2e

46 to 3,200MtCO2e.47

Emissions from peat decomposition and fires are highly uncertain and provide inadequate data to make assumptions about or ascertain the impact of palm oil grown on peat land on GHG emissions.

38 CARBOPEAT, New data analysis conclusive about release of CO2 when natural swamp forest is converted to oil palm plantation citing the Roundtable on Sustainable Palm Oil.39 FAO. 2009. State of the World’s Forests 200740. Betina V. Dimaranan and Robert A. McDougall, eds., Global Trade, Assistance, and Production: The GTAP 6.0 Data Base (West

Lafayette, Ind.: Center for Global Trade Analysis, Purdue University, 2006)41. EU at the United Nations, EU Council Conclusions on EU position for the Copenhagen Climate Conference, at http://www.eu-un.europa/ev/home/index_htm. 42. ‘CO2 from forest destruction overestimated’, The Guardian, 3 November 2009 citing research by Van der Werf.. 43.Paramananthan, S., Tropical Lowland Peats: To Conserve or Develop Them? Param Agricultural Soil Surveys (M) Sdn. Bhd. Petaling Jaya. Selangor, Malaysia. 44. Ywith, Ahmed, Majid and Jalloh, (2009), ‘Effects of Converting Secondary Forest on Tropical Peat Soil to Oil Palm Plantation on Carbon Storage’, American Journal of Agricultural and

Biological Sciences, 4 (2).45. Sukresno, 2007 ”Developing Soil and Water Indicators for Sustainable Forest Management of Peat Swamp Forest in Indonesia’, Forest Research Institute Solo (BPK Solo), Forestry Research

and Development Agency, Indonesian Ministry of Forestry, Surakarta, Indonesia (http://www.geog.le.ac.uk/carbopeat/media/pdf/yogyapapers/p18.pdf).46. Levine, J. S. (1999) ‘The 1997 fires in Kalimantan and Sumatra, Indonesia: Gaseous and particulate emissions’, Geophys. Res. Lett., 26(7).47. Van der Werf et al., (2008), Climate Regulations of Fire Emission and Deforestation in Equatorial Asia, PNAS.

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5. coNSErvatioN of oraNg-utaN – What iS thE rolE of Palm oil?

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Environmental groups including WWF, Greenpeace and Friends of the Earth have blamed the loss of habitat for orang-utan primarily on the palm oil industry. This builds on long-standing campaigns which characterize large-scale forestry and agriculture as the predominant threat to megafauna, particularly in tropical countries. The Borneo orang-utan and to a lesser extent the Sumatran orang-utan have become conservation totems in campaigns in Malaysia and Indonesia to halt expansion of palm oil. ‘Don’t Palm me off ’ is the slogan for one such campaign run by a zoo in Australia.

As noted elsewhere in this report, plantations like oil palm and commercial forestry are not the leading driver in reduction of forest habitat, nor therefore are they the principle threat to orang-utan. Rather, the palm oil industry is active in conservation programs because it has the financial capacity and stewardship of land in its control which give it the capacity to cooperate with government and conservation groups for that purpose.

Preventing species loss, particularly of individual species, is a very complex environmental problem. Solutions depend upon many factors. There are many greater threats to the orang-utan populations than oil palm, for example failures by local institutions to enforce conservation and protection areas and hunting by local populations.

Orang-utan PopulationsThere are two species of orang-utan: the Bornean orang-utan and the Sumatran orang-utan. There are three Bornean sub-species. The species distribution is restricted to the islands of Borneo and Sumatra respectively, and specifically to lowland forests.

Estimates on the populations of orang-utans have varied, but the most recent estimates are 6,624 for Sumatra and at least 54,000 for Borneo.48

The orang-utan’s habitat – forested areas – is often considered as a proxy for population, as orang-utans are unable to survive outside of a forested environ-

ment. They are, however, able to survive reasonably well within an acacia pulp plantation matrix.49 A pop-ulation of approximately 2,500 orang-utans was re-corded living within pulp plantations in Kalimantan.50

There is little or no overlap between orang-utan populations and oil palm or forestry development in Aceh, Indonesia, where conflict and political instability has limited economic activity. In Kalimantan there is little overlap between the distribution of palm oil developments and orang-utan populations. No more than 12 per cent of oil palm developments occur in the habitats of orang-utan populations.51

There is no comparable data for Malaysia, however, as mentioned previously no primary forest is removed to plant oil palm in Malaysia. The key problem with orang-utan conservation in Malaysia, and particularly Sabah, is that the majority of orang-utan populations – 60 per cent – live outside of protected areas.52

Threats to Orang-utan PopulationsThere are a number of threats to orang-utan popula-tions. It is not effective to attempt to address them in isolation since there are many interdependencies. A far more useful approach is to use the proximate cause/underlying driver model as proposed by Geist and Lambin.53 For example, if protected orang-utan habitat is cleared for subsistence agriculture and the result is a fall in population, the proximate cause is habitat loss, yet the underlying drivers are economic (subsistence livelihoods) and legal (lack of enforcement).

The importance of drivers which threaten orang-utan populations, like the driver of deforestation, is greatly determined by the immediate environment.54 The key variables include institutional arrangements, governance, economics and geography. On Borneo the drivers and causes differ between Indonesia and Malaysia. Palm oil cannot be attributed as the leading and dominant driver. In Kalimantan, just 12 per cent of orang-utan populate palm oil development areas. In Sabah, protected areas are well established, but 60 per cent of orang-utans reside outside of them.

48. Wich, S. A., Meijaard, E, Marshall, A J., Husson, S., Ancrenaz, M., Lacy, R.C., van Schaik, C. P., Sugardjito, J., Simorangkir, T., Traylor-Holzer, K., Doughty, M., Supriatna, J., Dennis, R., Gumal, M., Knott, C. D. and Singleton, I. (2008) Distribution and conservation status.

49. Meijaard, E. (2009), ‘Orang-utan conservation in Indonesia – achievements, new findings, challenges’, Presentation delivered to the Orang-Utan Conservation Colloquium. November 1 2009.50. Ibid. 51. Ibid. 52. Ambu, L. (2009), ‘Orang-Utan Conservation in Sabah’. Presentation delivered to the Orang-Utan Conservation Colloquium. November 1 2009.53. Geist, H. and Lambin. E. (2001), ‘What drives tropical deforestation’. Technical report: Land-Use and Land-Cover Change (LULUCC) Project, 2001.54. Ibid.


The key threats and their underlying causes are reviewed below.

Habitat Fragmentation

Fragmentation of habitat is a significant problem in Malaysian Borneo, particularly in Western Sarawak. Orang-utan populations require access to primary forest area to maintain numbers. Fragmentation of forest areas diminishes this access. The fragmentation of habitat in both Sarawak and Peninsular Malaysia preceded the expansion of the palm oil industry.55 It was the result of a combination of shifting agriculture and timber harvesting.

The underlying causes of continuing forest fragmenta-tion are numerous. They include:

• Gaps in environmental regulation: Smallholders make up 40 per cent of oil palm production in Malaysia. Yet small-holders (defined as plantations areas under 50ha) are not required to under-take environmental impact assessments, which prohibit planting in corridors such as gazetted conservation areas, riparian reserves and areas at risk of erosion.56

• Poor enforcement: There is chronic lack of enforcement of areas that are required to be protected under Malaysian law for environmental purposes. This is partly due to changes in responsibility for implementation, from national to state governments in Borneo.57

Poaching and Hunting

Orang-utans are not valued by local populations in Borneo, from either a biodiversity or conservation perspective, and local populations value orang-utans for other uses which threaten them:58

• Pet trade: There is an established, albeit well-hidden, trade in orang-utans as pets, generally for private zoos. Black market prices have been estimated in the region

of US$350 to US$400 at 2005 prices. Estimates of the number sold annually vary, ranging from 200 to 500. It is also estimated that for every orang-utan that is sold, another 4 are killed in the proc-ess, taking annual minimum estimates of trade-related mortality to 800.

• Bushmeat: Several tribes in Central Kalimantan have been reported to pre-fer orang-utan meat over all other types of food. Orang-utan meat has also been openly sold in local markets in Kaliman-tan.

• Medicinal and traditional use: Numer-ous tribes in Kalimantan believe that orang-utan parts have functional uses, such as the use of skin and fat to protect buildings from fire, or the consumption of meat as an aphrodisiac.

• Crop protection: Many subsistence farmers with fruit crops such as mango or banana simply see orang-utans as a pest to be eradicated if crops are being damaged.

Hunting for bushmeat and medicinal use has a significant impact that is greater than others, for example, moderate logging operations.59

The extent of hunting varies from region to region. For example, hunting is the key threat to orang-utan populations in Eastern Sabah, but in Western Sabah it is forest loss and habitat fragmentation.

The underlying drivers for poaching and hunting are therefore economic and technological. Subsistence livelihoods prompt the consumption, illegal poach-ing and sale of species; lack of access to education and health care prompts the use of orang-utan for medicinal purposes.

55. Svan Hansen, T. (2005), Spatio-Temporal Aspects Of Land Use And Land Cover Changes In The Niah Catchment, Sarawak, Malaysia. AKF – Institute of Local Government Studies-Denmark, Copenhagen, Denmark.

56. Killer, W., Noor, M.N.F. and Anja Gassner, (2005), Learning from Forestry: An Innovative Plannting Concept for the Development of Sustainable Palm Oil Plantations, Universiti Malaysia and GTZ School of Interntaional Tropical Forestry. Germany.

57. Mary McCabe and Barry Sadler (eds.) Studies of EIA Practice in Developing Countries: A Supplement to the UNEP EIA Training Resource Manual. UNEP, Geneva. Switzerland, 2003.58. See Vincent Nijman (2009). An assessment of trade in gibbons and orang-utans in Sumatra, Indonesia. TRAFFIC Southeast Asia, Petaling Jaya, Selangor, Malaysia, and Vincent Nijman

(2005), Hanging in the Balance: An Assessment of trade in Orang-utans and Gibbons in Kalimantan, Indonesia TRAFFIC Southeast Asia59. Andrew J. Marshall, Nardiyono, Linda M. Engstrom, Bhayu Pamungkas, Jhon Palapa, Erik Meijaard, Scott A. Stanley,(2006), ‘The blowgun is mightier than the chainsaw in determining

population density of Bornean Organg-utans (Pongo pygmaeus morio) in the forests of East Kalimantan’, Biological Conservation, 129 (4) May 2006, Pages 566–578.


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Forest Loss

Forest loss is a clear threat to orang-utan populations, particularly for areas such as Sabah where 60 per cent of the orang-utan population lives outside of protected areas. Both the causes of forest loss and underlying drivers are complex and vary according to national and regional context. In the cases of both Indonesia and Malaysia, poverty, agricultural/forestry activity, institutions and technology are all considered to be significant causes and drivers of forest loss.

Placing the blame on deforestation – and by proxy orang-utan loss – is therefore unhelpful. As already noted much of Malaysia’s forest loss preceded the large increase in oil palm production. Similarly, the ill-fated mega-rice project in Kalimantan is estimated to have killed 15,000 orang-utans between 1996 and 1999 – more than 25 per cent of the current population in Borneo.60

Protected Areas in Malaysia and Indonesia

Protected areas in Malaysia and Indonesia are subject to a number of national, state and local level laws. Juris-dictional overlap for land-use planning is particularly acute in Indonesia, where the reformasi period follow-ing the Suharto era, has been blamed by a number of commentators for much of the deforestation that took place in Indonesia between 1998 and 2003.61

The percentages and areas of reserved and protected land for Malaysia and Indonesia are shown below. Reserved and protected areas for states or provinces in which orang-utan are distributed are also shown.

With the exception of Aceh, there is a substantial forest estate that exists in each state containing orang-utan populations. Moreover, there is substantial land set aside for reserve, protection or conservation purposes in all these areas.

60. Rijksen H.D. & Meijaard E. (1999). Our vanishing relative. The status of wild orang-utans at the close of the twentieth century. Kluwer, Dordecht. 61. Barr, C., Resosudarmo, I. A. P., Dermawan, A., McCarthy, J.F., Moeliono, M., Setiono, B. (eds.) Decentralization of forest administration in Indonesia: implications for forest sustainability,

economic development and community livelihoods. Center for International Forestry Research (CIFOR), Bogor, Indonesia. 2006.

COunTry / ArEA TOTAl ArEA (‘000 ha)

fOrESTED ArEA (‘000 ha) fOrEST (%)

fOrEST fOr COnSErvATiOn Or

PrOTECTiOn (%)

INDONESIA 181 157 88495 48.8 23.6

Aceh 5736 739 12 42

Kalimantan (combined) 54789 40481 73 40

MALAYSIA 32855 20890 63.6 39.1

Sabah 7611 3604 47.3 26

Sarawak 12445 9200 80 35

Sources: FAO (2005). Forest Resources Assessment 2005. FAO, Rome, Italy; Sabah Forestry (2008), ‘Forest Resources’ accessed at: http://www.forest.sabah.gov.my/resources/ForestReserves061008.pdf; Sarawak Forestry Department; Peter Stephen. Introductory Course on Reducing Emissions from Deforestation and Forest Degradation (REDD): A Training Manual The Nature Conservancy, Conservation International, Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ), Rainforest Alliance, and World Wildlife Fund, Inc. 2009.

Table 4: Percentages and areas of reserved and protected land for malaysia and indonesia


Conservation ActivitiesThe palm oil industry has been active in taking steps to conserve the orang-utan. This year, the Orang-utan Conservation Colloquium met to draft a resolution on orang-utan conservation that was handed to Malaysia’s environment minister Masidi Manjun. The meeting was funded by the palm oil industry and conservationists.

The parties represented included industry, government and conservationists which came to a joint resolution. The resolution included a recommendation for the acquisition of land for creating wildlife buffer zones of at least 100 meters along all major rivers, in addition to corridors for connecting forests. The Malaysian Minister for Plantation Industry and Commodities pledged to support the implementation of the recommendations.

The Malaysian Palm Oil Council also established the Malaysian Palm Oil Wildlife Conservation Fund with initial funding of $20 million RM to help fund research and conservation efforts.

There are many other examples of the palm oil industry aiding efforts to protect the orang-utan including donations to conservation funds and relocation efforts.

However, while the industry and private sector are seeking to find ways to conserve and protect the orang-utan, it is clear that environmental NGOs are more concerned with politicking than conservation.

The Orang-utan Conservation Colloquium meeting was notable for Greenpeace’s refusal to join the joint effort to draft a resolution. A representative from Greenpeace told the crowd that neither his organization nor he, himself, could approve of any deforestation. Greenpeace’s refusal to collaborate once again reveals that they are motivated less by environmental concerns and more by grandstanding.

Similarly the Perth Zoo in Australia in collaboration with WWF recently staged a stunt to attack an Indonesian forestry company for planning forestry operations in an area where they had recently returned an orang-utan to the wild. Unfortunately for the orang-utan both the Zoo and WWF knew that the area was zoned for forestry before they released the orang-utan.


A strategy must be developed which recognizes the value of palm oil to economic development and the reduction of greenhouse gas emissions.

Sustainable palm oil production should form an integral part of a global strategy to reduce GHG emissions. The scientific literature points to a general consensus that palm oil has the potential to provide some of the highest GHG emissions savings of any biodiesel.

Such a strategy must also recognize that developing nations have a right to develop and convert forested land for higher value uses and that oil palm has one of the highest yields, returns and carbon sequestering capacities of any land use. Sustainable plantations such as oil palm are a highly effective way for developing nation to reduce carbon emissions.

A sustainable strategy for palm oil, plantations and the agricultural industries of developing nations requires the following:

• Greater research into palm oil and GHG emissions to create a comprehensive and agreed-on set of data, particularly for tropical peat and forests

• Amendments to current carbon account-ing rules to recognize the end use of forest cover from converted land and the seques-tering capacity of new plantations

• A greater focus on the long-term impact on GHG emissions of land conversion and alternative uses. Policy decisions must be based on 20 year calculations of emissions alone, and must also consider the long-term impact

• Redefinition of carbon accounting rules for Land Use Change and Indirect Land Use Change to recognise ‘avoided defor-estation’ and long-term carbon balances

• Recognition of the carbon mitigating potential of oil palm as a plantation and fuel source.

It should also be recognized that some level of land conversion is an inevitable part of an economy’s devel-opment. In many circumstances, if cleared land was not planted with oil palm, then it would still be cleared and planted with a lower yield crop. For this reason, there should be recognition of different carbon accounting for produce from developed and developing economies and the different drivers of land conversion.

In short, developed nations must recognize the devel-opment imperative for developing nations and struc-ture trade and environmental policies accordingly. Policies which penalize developing nations for devel-oping must be rejected.

6. toWardS a SuStaiNaBlE StratEgy for thE ENviroNmENt aNd thE Poor

Annex: RAting the StRength of ngo ClAimS

62. Greenpeace, Indonesia’s Rainforests and the Climate Crisis, October 200963. Achard, F, Eva, HD, Stibig, H-J, Mayaux, P, Gallego, J, Richards, T, and Malingreau, J-P, (2002); and DeFries, RS, Houghton, RA, Hansen, MC, Field, CB, Skole, D, and Townshend,

J, (2002).64. Greenpeace, Cooking the Climate, November 200765. Friends of the Earth, The Oil for Ape Scandal, 2005

NGO Claim RaTiNG RealiTy

Greenpeace 20% of global greenhouse gas emissions are caused by deforestation62

Overstatement Current estimates of rates of deforestation are based on very weak science. In fact, a leading scientist has recently stated that these estimates are over-stated and based on out-of-date data. The calculations of the carbon sinks and sources were based on two types of data: rates of land-use change and per hectare changes in carbon storage that result from changes in land use and land management. The estimates of land clearing rates are based on satellite data which takes broad-level area samples as representative of country-wide land clearing rates.

For tropical countries the estimates of deforestation rates have a 50 per cent error margin. Analyses of tropical deforestation find rates that are between 23 per cent and 54 per cent lower than the rates that have been reported from the satellite images.63

Greenpeace A UNEP Report recognized that palm oil plantations are the leading cause of rainforest destruction in Malayia and Indonesia. 64

Misleading The report The Last Stand of the Orang-utan was written by as a ‘Rapid Response Assessment’ which appears to have very little, if any, scientific backing for the claim. In actual fact, the statement referred to was ‘the rapid increase in plantation acreage is one of the greatest threats to Orang-utans and the forests on which they depend. In Malaysia and Indonesia, it is now the primary cause of permanent rainforest loss’. Whether this statement refers to oil palm plantation or the total expansion of agriculture is unclear. There are certainly no statistics given to back this claim. This is throwaway line in a report which was researched out of Norway – not a scientific study.

Actual data has been given in research for the Stern Review which found that only 20–30 per cent of forest clearing occurs because of oil palm plantations. Similarly, the FAO has found that while forest cover fell by 13.1 million hectares between 2000 and 2005, land used for building and infrastructure increased by 9.4 million hectares in the same period.

Friends of the Earth

Palm oil plantations are responsible for decimating the Orang-utan population65

Overstatement There are a number of threats to Orang-utan populations which are causing a greater impact than palm oil plantations. These threats differ between areas or provinces. These impacts include hunting and poaching, mining and poor government regulation. Given that oil palm is not even a primary driver of land conversion, it is an overstatement to claim that palm oil is decimating Orang-utan populations and that ceasing to purchase palm oil will save the Orang-utan.

Table 4: Percentages and areas of reserved and protected land for malaysia and indonesia


An

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Table 4: Percentages and areas of reserved and protected land for malaysia and indonesia (con’t)


Nature Alert The Palm Oil industry is ‘arguably the most environmentally destructive industry in the world’.66

Dogmatism Statements such as these are a good indication of the weakness of the case made against palm oil. To contend “arguably” it is one of the most environmentally destructive industries in the world reflects a dogmatic assessment. No evidence is presented to support this sweeping conclusion. The evidence suggests the reverse. Palm oil biodiesel has been proven to be significantly more efficient at reducing GHG emissions that other biofuels, has an extremely high yield and is a renewable source of energy.


Indigenous tribes are being forced off their ancestral land to make way for oil palm plantations.67

Overstatement The issue of indigenous rights and benefits is a fraught one. As countries develop there is inevitable friction between competing interests. This is particularly the case in developing countries where property rights are generally poorly defined. This is a fairly rare occurrence in relation to palm oil however. The reason is that oil palm is such a productive plantation and has the capacity to return enough income to provide a living for small land owners who want to plant oil palm. Conflicts with traditional forest people such as the Penan have been used to cast the palm oil industry in a light that is not accurate or representative.

Nature Alert Some 20 years from now, oil palm plantations mean that there could be little or no forest cover left in Malaysia and Indonesia.68

Contrary to Established Facts

Malaysia has over 55 per cent of its land under forest. It pledged at the Rio Earth Summit to retain at least 50 per cent of its land as permanent forest. It has set an upper limit on agricultural land of 23 per cent, which has now been reached. This means that no more primary forest will be cleared for agriculture. Indonesia has 60 per cent of the total land area designated as forest – although some of that is production forest, not permanent forest. Both nations have recognized the need to retain forest cover and have made commitments to that end.


Rapid plantation development is leaving indigenous communities impoverished and indebted.69

Overstatement The impact on indigenous communities is exaggerated and disregards the contribution to local economic development of introduction of plantations. The Indonesian Government and Palm Oil Commission (IPOC) that help develop and support smallholders in growing oil palm plantations. Under a Plasma Scheme, the developer is committed to purchase fresh fruit bunches (FFB) from the local small landholders at formula prices set by the government less the costs incurred by the developer in processing and selling the FFB. IPOC also collaborates with local banks to facilitate cheap loans for smallholders to replant oil palm plantations and ease the debt burden.

66. Sean Whyte, Nature Alert, 11 November, 200967. Friends of the Earth, Malaysian palm oil – green gold or green wash? A commentary on the sustainability claims of Malaysia’s palm oil lobby, with a special focus on the state of Sarawak,

October 2008.68. Sean Whyte, Nature Alert, 11 November 2009.69. Friends of the Earth, Losing Ground, February 2008.




Oil palm plantations lead to methane emissions from peat fires

Unsubstantiated The level of current research on the impacts and cause of peat fires do not warrant sweeping assertions such as this. Estimates of carbon equivalent emissions from peat show huge variations and margins of error. It is impossible to generalize about methane emissions from peat fires. Similarly, it is virtually impossible to isolate the source of peat fires to one cause. Fire events such as the 1997 Indonesian fires were caused by a combination of political upheaval, an abnormal El Niño weather period and population pressure. Scientists who have attempted to quantify the emissions from peat fires state that the causes are largely unknown.

Friends of the Earth (Australia)

When palm oil is used in food, it has such a high saturated fat content that even the Australian Heart Foundation recommends it should be avoided.70

Unwarranted Health Alarmism

While palm oil is high in saturated fats, it has no trans fat and is high in vitamin E. The American Heart Association has consistently cited trans fat as more harmful to the health than saturated fats.71 The negative health effects of trans fat has lead to many national and sub-national governments imposing bans or restrictions on the use and sale of goods containing trans fat.72 As the CEO of the Canadian Heart and Stroke Foundation has been quoted as stating ‘trans fats are not a choice. They are a killer.73’

70. http://www.foe.org.au/campaigns/corporates/activities-and-projects/project-171. http://www.americanheart.org/presenter.jhtml?identifier=458272. These include New York City’s Health Board, Denmark, Switzerland and some Canadian provinces.73. http://www.cbc.ca/health/story/2008/07/21/f-transfats.html


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For too long, well-meaning governments, aid agencies and others have promoted policies that fail to address the true roblems that afflict poor societies. As a result, too many people around the globe remained locked in pre-modern conditions where their talents and inherent capacities are shackled.

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