The Chain: KLK commits to High Carbon Stock protection

KLK commits to High Carbon Stock protection

This week, Malaysian palm oil trader Kuala Lumpur Kepong (KLK:MK) announced that it will employ the industry standard for High Carbon Stock (HCS) forests that has been developed by The Forest Trust, Golden Agri-Resources, and Greenpeace. The move clarifies how KLK will define “high carbon stock areas” while awaiting the results of their own HCS study that is underway.

In September, five major palm oil producers – KLK, Sime Darby, IOI, Musim Mas, and Asian Agri – announced that they would place a moratorium on clearing high carbon stock areas while awaiting the results of their own year-long study to define HCS forests. This group had previously resisted the No Deforestation approach to forest conservation undertaken by Wilmar, GAR, Cargill and others, and instead promulgated a “Sustainable Palm Oil Manifesto” that allowed continued clearing of high carbon stock forests. The companies agreed to not clear HCS areas while the study was ongoing, but no detail was provided about what definition of HCS would be used.

Since then, both IOI Loders Croklaan and Musim Mas have committed to No Deforestation palm oil policies using the TFT definition, and in December, KLK announced its own “sustainability policy.” The policy was widely criticized for not applying to the company’s suppliers, trading partners, or joint ventures, and it did not commit to using the standard HCS approach. This week’s announcement still does not bind KLK’s suppliers and partners to any No Deforestation practices, but its endorsement of the TFT HCS methodology shows how that approach has become the industry standard, representing 96% of global trade. It remains to be seen what approach the “Manifesto” group will take following the end of their HCS study later this year.

125 million ha of land suited for zero-deforestation agricultural expansion

A new study has identified 125 million hectares of degraded, low-carbon density land around the world’s tropics that would be fit for expansion of agricultural production without causing new deforestation. That is roughly equivalent to the size of Borneo and Sumatra combined. Using the latest satellite mapping technology from Global Forest Watch, the study finds that establishing new plantations, croplands, and pasture on these lands instead of clearing forests could avoid 13 billion tons of CO2 emissions – an amount roughly equivalent to the annual output of the world’s coal-fired power plants. Further, the study notes that 65 million hectares of this land are made up of “contiguous tracts” (greater than 5,000 ha and less than 500 m in elevation) that are typically desired for commercial-scale palm oil production. For comparison, palm oil plantations around the world currently cover about 16.4 million hectares of land in the tropics.

Indonesia revises peat rules

The Government of Indonesia is in the process of revising a policy that could weaken protection for the country’s carbon-rich peatlands. The law, number 71/2014, provides a new definition of what constitutes peat degradation, establishing that peat is considered damaged if groundwater is drained more than 40 cm below the surface, and/or the mineral soil below the peat is exposed. Scientists and forest advocates have criticized the standard, noting that peatland drainage at any level results in loss of stored carbon and increased risk of fire and degradation. Protecting peat is critical to slowing the rise of greenhouse gases – recent studies show that the amount of carbon stored in peat exceeds that stored in all vegetation, and is comparable in size to all carbon currently in the atmosphere.

The palm oil industry and other business groups in Indonesia have also rallied against the law, arguing that the water table would need to be raised on many existing plantations to comply with the regulation, which could lead to lower yields. As a result, the Environment and Forestry Ministry has announced that it will revise the regulations to prevent plantations currently operating on peatlands from closing, but that it would not be issuing any new permits for peat areas.

Despite theses regulatory changes, the major palm oil traders that have adopted No Deforestation, No Peat, No Exploitation policies have explicitly stated that they will not do business with companies that develop new plantations on peat. Regardless of Indonesia’s regulatory standards, plantations that operate out of compliance with these industry standards risk losing substantial market access.