EU’s new law may hurt palm oil exporters

Thursday March 5, 2009

By HANIM ADNAN The Star, Malaysia

KUALA LUMPUR: Malaysia’s palm oil exports to European Union (EU) countries may be affected by the European Commission’s (EC) latest renewable energy directive on biofuel content, which encompasses regulations on carbon emissions. The latest directive will be made into national laws within the next 18 months.

Local industry players, including those with Roundtable on Sustainable Palm Oil (RSPO) certifications, must be able to comply with the EC’s latest “sustainability and environment” requirements designed to reduce greenhouse gas emissions, said Mission NewEnergy Ltd chief sustainability officer Mursalin New.

Mission NewEnergy is a biodiesel producer. It has a plant in Kuantan with a production capacity of about 100,000 tonnes per year.

The EU, as a bloc of 27 countries, is the second-largest importer of Malaysian palm oil after China.

“I believe even local players, including those with RSPO certifications, will need to take an assessment study on their carbon emissions to prove that the industry is saving at least 35% as required by EC’s renewable energy directive,” he told StarBiz.

New said this on the sidelines of the ongoing Global Sustainable Feedstock, Biofuel and Biochemical Summit 2009 here yesterday.

On the effect of the latest EU directive on Mission NewEnergy, New said: “Given the new development in EU, we will need to be more selective on the sourcing of our palm feedstock from plantations and mills.”

Meanwhile, Britain-based LMC International Ltd Biofuels Research manager Carl Philipp Riedel admitted that the margins on biodiesel were currently not so viable, given the weak crude oil prices.

However, he said there was still potential for a quick shift in the markets. “Crude oil prices are expected to rise by US$40 to US$60 per barrel by next year on the possibility of a supply crunch, given the cutbacks and fast declining crude oil production.”

He stressed that biofuel demand was still growing in the world market. “The potential for producing rapeseed for biofuel production alone is limited. To cater for the increasing demand, it will need other alternative feedstocks in the form of soybean and palm oil,” Riedel noted.

http://biz.thestar.com.my/news/story.asp?file=/2009/3/5/business/3405384&sec=business

Personal Note: Now we need people and conservation organisations especially in the USA, Australia, Canada and New Zealand to camoaign for similar regulations in their countries. The BIG questions is, will they?