Date: 10-Jun-10
Country: BELGIUM
Author: Pete Harrison
 

Palm oil grown on recently deforested land is unlikely to be acceptable for use in European biodiesel, a draft report from the European Commission shows.

The decision aims to curb any environmental damage from biofuels and could limit future export markets for Asian producers such as Indonesia's PT SMART, Singapore's Wilmar and Malaysia's Sime and IOI Corp.

The European Union aims to get 10 percent of its road fuels from renewable sources by 2020, and 7 percentage points are expected to come from land-using crops such as grains, palms or sugar cane.

But critics charge that the multi-billion-dollar market will compete with food crops, forcing up grain prices and encouraging farmers to expand their land by hacking into tropical forests.

The EU's executive arm has responded with a set of environmental standards, which will be announced by Energy Commissioner Guenther Oettinger Thursday.

The development of the rules has been closely watched by biofuels exporters such as Malaysia and Indonesia, especially as early drafts appeared to remove all barriers to palm plantation expansion by defining the plantations as another type of forest.

But a more recent draft seen by Reuters Wednesday ruled that out.

"Any change in land use, including for example a change from forest to palm plantation, must be taken into account in the calculation of the greenhouse gas impact," it says.

An EU source said the draft was not the final version to be launched by Oettinger Thursday, but its meaning was the same.

"You cannot chop down forests and convert them to palm plantations and use those fuels to meet the EU's biofuel targets," the official said on condition of anonymity.

"Oettinger is trying to make certain that the EU biofuels strategy is credible."

(Editing by Dale Hudson)