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The UK Should Not Repeat The EU’s ILUC Mistakes

The UK needs to develop its own biofuels policy now that it has left the European Union. According to sources, the UK was for some time considering following the EU in its classification of palm oil biofuels as high-ILUC risk. This was led by the UK’s Environment Ministry (DEFRA) and Transport Ministry (DfT).

This has been subject to a rigorous debate inside the UK government, in particular with the Trade Ministry (DIT) and the Foreign Office (FCDO) advocating for a more cooperative approach. It appears that this approach will be taken, working with producer countries rather than classifying them as ‘high risk’ is gaining traction in London.

This is a welcome development.

In Geneva this week, the European Union will be forced to face off with Indonesia and 20 or so other third parties at the WTO over allegations that the European Union’s biofuel policy is discriminatory, and protects European farmers at the expense of fair trade.

At the heart of the matter is a policy known as ‘high indirect land use change (ILUC) risk. This classification has resulted in palm oil biofuels being effectively banned from the EU’s renewable energy programs.

This dispute has been and still is entirely avoidable, and it is good to see the UK taking a different approach. Recently, UK Foreign Secretary Rt Hon Dominic Raab MP signalled the new cooperative approach when he stated that the UK would support a pathway for ISPO to be recognised as a guarantee of legality under the UK’s Due Diligence legislation.

This is a positive step; it is hoped that the UK will also take a cooperative approach to the ILUC question. Below are the main reasons that the ILUC concept should not be used.

The ILUC Concept is Flawed

ILUC is a convoluted concept. It argues that calculated deforestation emissions from a commodity should also include any possible additional deforestation that could have resulted from potential displacement of other land uses.  It has been well noted throughout the ILUC debate that ILUC ‘cannot be observed or measured’ and can only be implied or modelled.  Further, there is no scientific consensus on how ILUC should be modelled. In other words, there is not even an understanding of what constitutes an accurate ILUC model, how it should be used, or whether it is in any way based in reality.

The ILUC Methodology is Flawed

The EU’s ILUC methodology hinges on two pieces of data. The first is data on the global expansion of a particular crop. The second is the percentage of this expansion that has occurred on land that was classified as ‘high carbon stock’. This EU definition also includes additional criteria for biodiversity. It is understood that some in the UK government are considering using the same model.

But determining the expansion of crops and into particular areas is difficult, as noted by the EU: “At present, globally consistent maps showing the expansion of all individual biofuel crops through time are not available, although research is ongoing to achieve this for palm oil and soybean through the interpretation of satellite imagery.”

The EU attempted to work around this by using existing data and applying them to a different deforestation model. The authors of this other model identified a number of problems and appropriate caveats for their work, notably that it is not possible to identify cases where there are several deforestation drivers in a particular landscape. In the case of soy, for example, forests are often cleared for pasture, and then developed for soy following that. So, in these circumstances, forest cleared for beef and then used for soy, will miss soybean as a driver of deforestation.

What is the UK approach to ILUC?

It has emerged that the UK was looking to borrow heavily from the EU’s flawed model to determine what will be eligible for its biofuel standards. This included the same exceptions for certification – which effectively prevents the use of any biofuel standards.

One of the major problems with the ILUC model is that once a commodity is determined as ‘high risk’, it is in effect banned entirely and its use is prevented. This is done regardless of where it is produced. This has resulted in countries where there is little or no historical deforestation having their palm oil blocked. It also prevents the possibility of palm oil being imported from countries where deforestation has dropped significantly – and where the EU’s historical models simply do not reflect today’s reality – such as in Indonesia.

In the long-term

Last month UK Trade Minister Liz Truss called on UK farmers and food producers to aim at middle class consumers in Asia. She stated, “By the end of this decade, 66 per cent of the world’s middle-class consumers are expected to be found in Asia. They are hungry for top-quality food and drink …  Our farmers need access to new markets around the world, but we need to get rid of the barriers holding them back”.

The UK is also applying to become a dialogue partner with ASEAN. This will be quite a significant development if it goes ahead. Regional partners including Korea, Taiwan, Australia, Saudi Arabia and Pakistan are more significant trade partners, but not dialogue partners.

It is highly likely that there are sensible voices inside the UK government who realise that any new ILUC rules would be a trade issue. This is the correct approach. A UK ILUC proposal would be erecting a barrier to the largest agricultural export from ASEAN’s largest member. Indonesia’s government has been consistent in its desire to defend and protect palm oil farmers and their exports against trade barriers. Those arguing not to follow the EU’s trade-antagonistic ILUC approach appear to have prevailed, and that is the best outcome for all concerned.

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