Decarbonising the palm oil industry

Decarbonising the palm oil industry

An Indonesian man extinguishes a fire at an oil palm plantation in Pekanbaru, Riau province, Sumatra in 2018. Fires, due to 'slash and burn' farming methods and the dry season, regularly burn across South Sumatra and Riau province. (Photo: AFP)
An Indonesian man extinguishes a fire at an oil palm plantation in Pekanbaru, Riau province, Sumatra in 2018. Fires, due to 'slash and burn' farming methods and the dry season, regularly burn across South Sumatra and Riau province. (Photo: AFP)

The urgency to act on the climate crisis has never been greater. The ongoing Expo 2020 in Dubai focuses on creating sustainable links between food, agriculture, and livelihoods. And building on the outcomes of COP26, the upcoming Middle East and North America Climate Week will help regional stakeholders identify actionable climate change opportunities.

These are much-needed initiatives when over 690 million people go to bed hungry, and over 270 million people are experiencing acute food shortages.

How climate risk plays out on a local level

In the context of palm oil's climate impact: deforestation, draining of peat swamps, land clearance by burning, and biodiversity loss due to oil palm cultivation all pose significant environmental challenges. But the most immediate effects are felt at the local level with the destruction of ecosystems.

The September 2015 Indonesian forest fires, for example, destroyed 2.6 million hectares of forest and emitted greenhouse gases (GHG) equal to Germany's annual emission volumes. It put the health of millions at risk and cost Indonesia US$16.1 billion -- twice the cost of reconstruction following the 2004 tsunami.

The human population is expected to reach 9.8 billion by 2050. To meet its vegetable oil demand, oil palm-harvesting land will predictably double -- from 14.6 million hectares in 2019 to 31.1 million hectares by 2050.

However, the current suitable oil palm climatic zones will shrink 22% by 2050. This could lead to the migration of oil palm cultivation to replacement lands, triggering deforestation and biodiversity loss in newer ecosystems. Unsustainable land conversion of this scale will further deepen the climate crisis.

These predictions provide a stern warning for the industry -- decarbonise now.

Discerning fact from opinion

Palm oil is among the world's most versatile raw materials: semisolid at room temperature and stable for long periods without going rancid. Its functional properties make it a key ingredient in everyday products -- from bread and infant milk formula to toothpaste, washing up detergent, and even cough syrup. It is almost impossible to avoid palm oil.

It is also the most efficient vegetable oil crop on the market. It meets 40% of the global demand yet only occupies 6% of the land used to produce vegetable oils. This makes it especially beneficial for the millions of smallholders who rely on palm oil for a steady income.

Replacement oils need between four and 10 times more land to produce the same yield, which only displaces and exacerbates deforestation and habitat loss.

Avoiding or replacing palm oil is not a viable solution; establishing sustainable life cycles is.

Why certified sustainable palm oil makes sense

Comprehensive and inclusive certification schemes, such as the RSPO, mitigate environmental and social issues and ensure that demand is met sustainably. Several studies have sought to quantify the environmental impacts of palm oil certified by the RSPO. A LifeCycle Assessment finds that RSPO certified sustainable palm oil (CSPO) emits 35% less GHG emissions and is associated with a 20% lower impact on biodiversity compared to non-certified palm oil.

Malaysia's and Indonesia's GHG emissions from oil palm-driven land conversion alone have reached a staggering 1.4% of the global aggregate, bringing it on par with global emissions from the aviation industry. Given this reality, integrating climate resilience across palm oil supply chains is key to achieving net-zero status by 2050.

Arresting deforestation is the first step in this direction. With the industry projected to reach US$57.2 billion by 2026 --in tandem with population growth, growing affluence and bioenergy expansion--we need to find sustainable ways to meet this increasing demand. CSPO improves the efficiency of palm oil production, reducing the need for land conversion and the risk of deforestation.

The second step is the reduction of GHG emissions. Peatlands are among the most valuable ecosystems on Earth, storing more carbon than all other vegetation types combined. This makes draining them for oil palm cultivation especially problematic. Annually, damaged peatlands release 5% of global anthropogenic CO2 emissions.

Peatland conservation is therefore vital to our decarbonisation goal. The RSPO supports such conservation with criteria of no new planting on peat and no deforestation areas, a critical part in limiting the carbon footprint of palm oil. As my colleague and Head of Climate Change Unit at RSPO, Amir Afham points out, "Given the vital role that tropical forests and peatlands play in regulating global climate, we must continue to strengthen our standards and enforcement mechanisms, and push for sustainability over a boycott of palm oil".

The third measure is the empowerment of local communities, improving the lives and livelihoods of millions. Malaysia is an ideal case, where palm oil has been a key contributor to reducing poverty from 50% in the 1960s to just 5% today, and where 40% of oil palm growers are smallholder farmers!

To bring more independent smallholders into the sustainable supply chain, RSPO has sought to tailor compliance mechanisms and financial assistance to their needs. The RSPO Independent Smallholder Standard simplifies the approach to certification while the RSPO Smallholder Support Fund helps to offset the cost of audits. Together, these are essential in enabling smallholders to access international markets and command a premium for their produce.

Improving our toolkit

Palm oil supply chains are complex. While RSPO certification is not perfect, it is one of the most effective tools we have to achieve positive environmental and social change at scale.

RSPO continually improves its guidance on best practices and is committed to strengthening the assurance system's transparency and integrity. GeoRSPO, the RSPO Hotspot Hub, and building the capacity of auditors to better assess compliance with our standards are among the recent enhancements.

If cultivated sustainably, palm oil can help combat the world's climate and biodiversity crises and drive socio-economic development in rural communities.

Change requires collective action

Some 93% of the world's top palm oil companies have not publicly assessed climate risk, and 78% of companies are yet to make public targets to reduce GHG emissions.

Life cycle assessments need more transparency. Just 16% of producers report on how they are monitoring their zero-deforestation commitments, only 27% report their total peatland cultivation areas, and an even fewer (15%) report GHG emissions from land-use change.

Another big obstacle to progress is a lack of consumer awareness. Although RSPO-certified products assure deforestation-free palm oil, the market takes up just over 50% of what is grown to RSPO standards. Increasing the market share of CSPO is therefore a fundamental goal for both producers and consumers.

To deliver on climate action and shared responsibility goals, we need to garner stronger support from all stakeholders – growers, investors, governments, advocacy groups and consumers.

Nicholas Hurt, Global Head of Stakeholder Engagement at The Roundtable on Sustainable Palm Oil (RSPO), a not-for-profit body that unites stakeholders from the seven sectors of the palm oil industry to develop and implement global standards for sustainable palm oil.

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