The Chain: EU biodiesel policies driving palm oil demand

45% of EU Palm Oil Used by Transportation Sector

As reported by Transport & Environment, in 2014 45% of all palm oil consumed in Europe was used for biodiesel by the transportation sector. This is a six-fold increase from 2010, when that figure was only 8%.

Palm Oil Demand Spikes While Soybean Oil Drops

In aggregate, EU biodiesel palm oil demand in 2010 was 456,000 metric tons. By 2014, demand reached 3.220 million metric tons, an increase of 2.764 million metric tons. Over this time, EU consumption of soybean oil for biodiesel decreased by 555,000 metric tons – from 995,000 metric tons in 2010 to 440,000 metric tons in 2014.

EU Policies Driving Deforestation

EU policy promotes biodiesel as an option to reduce carbon emissions from the transportation sector. Because most biodiesel is produced from crops, there has long been concern that competition over available lands between crops destined for biodiesel vs. food production could result in food scarcity and increased forest loss.

As a result, the EU Renewable Energy Directive (2009/28/EC) told the European Commission to develop a methodology to account for the Indirect Land Use Change (ILUC effect) from its biodiesel mandate. The results are clear: after looking at 14 crop-specific scenarios for conventional and advanced biofuel, the analysis found that the EU 2020 mandate could result in total land use change of 8.8 million hectares – an area about the size of Austria. 2.1 million hectares of this land use change could come from SE Asian palm oil expansion – an area slightly smaller than Armenia.

After accounting for greenhouse gas emissions and forest-based carbon sequestration, the EU’s report concludes that palm oil production has 54% more emissions than soybean oil. Compared to other biodiesel feedstocks, palm oil has 267% more emissions than sunflower oil and rapeseed oil. However, for now the European Commission considers biofuels as renewable energy and carbon neutral regardless of the carbon footprint of crop expansion.