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Tuesday March 27, 2012
Commodities Talk- by Hanim Adnan
ANOTHER uphill task for palm oil now involves the US Environmental Protection Agency's (EPA) recent decision to deny the commodity access to America's biofuel market.
The EPA, in its analysis released in January, stated that palm-based biodiesel and renewable diesel failed to meet the minimum 20% greenhouse gas (GHG) emissions savings threshold requirement to qualify as renewable fuels under the US Renewable Fuel Standard 2.
Currently, there is an ongoing public comment period held by EPA extended till April 27 for experts or the affected parties to respond to its findings.
While the EPA report found that palm oil achieves a 17% reduction, many other studies showed that the actual GHG reduction was higher, ranging between 38% and 60.4%.
Both Malaysia and Indonesia, the world's largest palm oil producers, held a joint mission to the United States last week to correct and update the EPA on palm oil attributes.
For Malaysian palm oil exporters, there are growing concerns the EPA decision on palm oil biofuel could also lead to collateral damage in terms of palm oil's access to the US food market.
Last year, the United States was the fifth largest importer of local palm oil, after China, the European Union, India and Pakistan.
Apart from the Malaysia-Indonesia submission to the EPA's public comment, interestingly there were other parties that fully supported palm oil's use as an efficient biofuel alternative in the United States.
A report published by Sonecon with support from pro-palm oil NGO, World Growth was submitted to EPA contesting the agency's decision to reject palm oil as a renewable fuel and why the rationale for EPA's decision is inaccurate.
The World Growth submission, prepared by Dr Robert Shapiro, a former undersecretary of commerce under President Clinton, argued that the EPA had relied on faulty science and also engaged in improper favouritism towards domestic agricultural interests.
He maintained that palm oil was needed as an alternative fuel to achieve the US government's emission-reduction targets.
Energy expert Thomas Tanton of California-based T2 & Associates in his comments to the EPA said palm biodiesel had consistently proven to meet international sustainability standards, in stark contrast to the EPA's attribution of 17% greenhouse gas savings compared with crude diesel.
“Independent assessments of palm oil's GHG footprint have found the GHG savings value to be between 38% and 74%, far exceeding the 17% attributed by the EPA, and putting into question the source of the EPA's value,” said Tanton.
Opposition to the sourcing of palm oil is based on mischaracterisations by environmental activist organisations with vested interest in other biodiesel feedstocks.
Thus, the EPA's decision against palm oil is seen as a significant step backward from the United States' goal of improving the nation's energy security through diversification.
Rather than allowing political manipulation to shape policy, the EPA should endorse the use of all energy sources and allow the market to shape the United States' renewable energy sector.
The White House should therefore consider these lessons and its drive to improve the national energy infrastructure and reverse the unfortunate politicisation of an otherwise commendable ambition.
● Deputy news editor Hanim Adnan hopes to see a smooth and positive conclusion to the EPA's episode on palm oil
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