Insight - The path to decarbonisation with certified sustainable palm oil

As one of the largest producers and exporters globally, oil palm has become Malaysia’s most valuable agricultural crop

THE urgency to decarbonise has never been greater. While crude palm oil prices are projected to trade at a healthy RM5,000 per tonne in the first half of 2022, palm oil’s climate impact – deforestation, draining of peat swamps, land clearance by burning, biodiversity loss – is less rosy.

In Malaysia and Indonesia, greenhouse gas (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 action across palm oil supply chains is a critical step towards achieving net-zero status by 2050.

The human population is expected to reach 9.8 billion by 2050. To meet projected vegetable oil demand, oil palm-harvesting land will predictably double – from 14.6 million ha in 2019 to 31.1 million ha 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 land, triggering deforestation and biodiversity loss in new ecosystems. Unsustainable land conversion of this scale will further deepen the climate crisis.

These are sobering predictions which put Malaysia’s palm oil industry at a crossroads.

As one of the largest producers and exporters globally, oil palm has become Malaysia’s most valuable agricultural crop. Avoiding or replacing it is not a feasible solution; establishing a sustainable life cycle is. To achieve the commitments made at the United Nations Climate Change Conference 2021 (COP26) and align with global trends in decarbonisation, Malaysia will need to ramp up production and consumption of certified sustainable palm oil.

The message to the industry is clear: decarbonise now.

Why certified sustainable palm oil makes sense

Against the backdrop of rising edible oil prices in Asia, achieving net-zero may seem like a challenging process. But palm oil is undeniably 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.

Replacement oils need between four and 10 times more land to produce the same yield. That places a burden on the environment, displacing wildlife, exacerbating deforestation and accelerating habitat loss.

As we can see, palm oil per se is not the problem. If cultivated sustainably, palm oil can help combat the world’s climate and biodiversity crises, and be part of the solution to the growing food security needs of a global population.

Comprehensive and inclusive certification schemes, such as the Roundtable on Sustainable Palm Oil (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.

Palm oil supply chains are complex. While the RSPO’s certification is not perfect, it is one of the most effective tools to achieve positive environmental and social change at scale. RSPO continually improves its guidance on best practices and is committed to strengthening its 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.

Leveraging sustainability certification

Some companies in Malaysia and the region have recognised the urgency to produce palm oil in a sustainable manner.

United Plantations Bhd is one of the pioneers, having worked with consultants from Denmark on a comprehensive Life Cycle Assessment (LCA) study since 2005. Finalised in 2008, this study was the first-ever LCA on palm oil. The Bursa Malaysia-listed plantation group has recently undertaken another update from January to February 2022, building on top of five other large studies carried out in 2011, 2014, 2017 and 2020.

The findings are impressive. United Plantations achieved a 61% reduction in its GHG emissions per kg of palm oil produced from 2004 to 2021, including through indirect land use change and nature conservation. Moreover, it met its target of 60% reduction in GHG emissions in 2022 – three years early. The company has now set a new target in line with pledges made at COP26: to reach a 66% reduction in GHG emissions per kg of palm oil by 2030.

Another organisation that has conducted its GHG emissions analysis through the RSPO PalmGHG calculator is IOI Corp Bhd, which has made significant efforts to reduce emissions from palm oil milling operations. With its 10 methane capture facilities, it has achieved a 45% reduction of emissions from palm oil mill effluent, and is on track to achieve its target of 50% GHG emissions reduction by 2025.

Companies that reduce their GHG emissions, like IOI Corp and United Plantations, are able to qualify their sustainability credentials to investors, consumers and other stakeholders. With a greater understanding and better appreciation of sustainability certification, we may see more Malaysian producers that previously held back on mitigating climate risks turn towards certified sustainable palm oil.Decarbonisation requires collective action

With the industry projected to reach US$57.2bil (RM253bil) by 2026 – in tandem with population growth, growing affluence and bioenergy expansion – we need to find sustainable ways to meet this increasing demand. For palm oil producers, arresting deforestation is the first step to decarbonise their operations. CSPO improves the efficiency of palm oil production, reducing the need for land conversion and the risk of deforestation.

Furthermore, RSPO’s standards prohibit the use of fire for land clearance or in preparation for planting.

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. Drained peatlands are especially susceptible to fires which can be hard to extinguish and produce toxic haze.

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. 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.

Sustainability certification can build a protective web between our food, agriculture, and livelihoods. Malaysia can seize this opportunity to deliver on climate action with strong support from growers, investors, governments, advocacy groups and consumers.

Julia Majail is RSPO director of standard development. The views expressed here are the writer’s own.

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