Indirect Land Use Change, Green House Gas Emission and Trade Protectionism
Could Double Counting GHG Emission by EPA Disqualify Palm Oil from Participating in the US Biofuel Trade?
Malaysia made a policy commitment at the Rio Earth Summit in 1992 to keep a minimum of 50% of the country’s land area under permanent forest. Today, it still has 55% of its land under forest. Forests act as carbon sinks. They remove carbon emissions generated by economic activities and other sources in the country. In 2000, Malaysia generated and emitted 223.1 million tonnes of CO2 equivalent (eq) and removed 249.8 million tonnes of CO2 eq. This was mostly by the forests and plantation tree crops belonging to the Land Use and Land Use Change and Forestry (LULUCF) sector, as reported officially in a published document submitted to the United Nations UNFCC (see nc2.nre.gov.my). This means that in the year 2000, the country was a carbon sink with a negative net emission of 26.7 million tonnes CO2 eq. It clearly shows that by judiciously keeping a large enough percentage of forest, the national effort to mitigate carbon emission can be achieved.
Emissions from deforestation and other land use change for the production of palm oil, rubber, timber, rice and other agricultural commodities were mitigated by the sequestering capability of the LULUCF sector. Most importantly, the sequestration capacity of the oil palm plantation sector alone which behaves as a forest in its sequestration characteristics is more than able to mitigate all the emissions coming from land use change, including land clearance (LULUCF) for oil palm development and the agricultural sector as shown below.
In 2000, Malaysia had 3.376 million hectares of oil palm plantations. The carbon removal capacity of this plantation crop was 82 million tonnes, while total emission from the LULUCF and agricultural sector was 35.5 million tonnes CO2 eq. This implies that oil palm plantations can remove not only its own emission generated from deforestation and methane emission from processing of effluent ponds at the palm oil mills, but also the emissions from all land use change and agricultural activities of the country.
The time series trend shows that in recent years the LULUCF sector has stabilised its emission and removal capacity. This is brought about by the deliberate policy of the country to maintain a minimum of 50 % permanent forest and pursue a prudent expansion of oil palm cultivation often by partly replacing other less profitable crops such as coconut, rice, rubber and cocoa. Based on the projected estimates for 2007, it is shown (Figure 1) that palm oil produced by Malaysia remains fully emission free (or actually net negative emission) because of the combination of the superior sequestering effects of forests and plantation crops.
In recent years, Malaysia has, like other countries, increased its carbon emission due to growth in the use of fossil fuel in the energy and transport sectors. In 2007, Malaysia’s total emission increased to 292.9 million tonnes from 223.1 million tonnes in 2000. Emission from the energy sector in 2007 increased to 217.0 million tonnes (74 %) from 147 million tonnes (65.9 %) in 2000. Nevertheless, emissions from other sectors have reduced in absolute as well as in percentage terms. Emission from the LULUCF sector has even declined substantially because of reduced deforestation. By 2007, Malaysia graduated to become a carbon emitter, joining the same status of most other countries of the world because of the appetite for energy consumption with increased income. The carbon removal capacity of the LULUCF sector of 247 million tonnes in 2007 could no longer contain all the emissions of the nation because of the rapid growth in energy consumption, resulting in the net national emission reaching 45.9 million tonnes. Such emission levels are considered small by international standards. In comparison, emission from the world aviation industry amounts to over 600 million tonnes per year representing 2% of the total global emission. Thus, Malaysia which accounts for 0.4% of the world population emits only 0.15% of the global total GHG. In comparison, the USA accounts for 17% of global emissions although it represents only 4% of the world population.
In its notification of the CO2 eq. emission of palm biodiesel, the US Environmental Protection Agency (EPA) has erroneously estimated that palm biodiesel emits up to 83% of the CO2 emission equivalent of fossil diesel resulting in an emission saving level of only 17 % compared to fossil diesel (as a comparison the EU assigned 19 % emission saving for palm oil). Only biodiesel having an emission saving value of 20% or more will be approved as biofuel under the EPA’s Renewable Fuel Standard (RFS 2) ruling. Biofuels with emission saving of 50% or more will be further approved for classification as advanced biofuels which qualify for additional incentives. The proposed notification therefore threatens to disqualify palm oil from being used for producing biodiesel in the US.
In the palm biofuel modelling, the EPA has assumed that indirect land use change (ILUC) for cultivation of oil palm results in deforestation and emission of CO2 of up to 57% of the total emission for palm biodiesel. This wrong assumption alone leads to the emission saving of palm oil declining from 74% to 17% of fossil fuel equivalent.
In practice, palm oil production in Malaysia as shown above has negative emissions because of the sequestration effect of the LULUCF sector. In reality, emissions associated to palm oil production have been offset by the sequestration capacity of the oil palm plantations. Malaysia has accounted for emissions from the oil palm sector in its commitment to emission mitigation at the UNFCC, by balancing the using of carbon removal capacity of the LULUCF sector. Therefore, it would be wrong to add back emissions due to deforestation by the oil palm plantations in the EPA’s palm biodiesel emission calculations. This would be considered as double counting and highly punitive for palm oil. The deforestation emission from oil palm cultivation from yearly clearing of degraded forest land can be capably offset not only by the superior carbon removal capacity of the LULUCF sector, but also by the sequestration capacity of the oil palm plantations itself, which was not duly considered in the EPA’s modelling exercise.
The EPA’s projection also indicated that soyabean cultivation will have to grow enormously by 50% each year or (14 milllion hectares per year) to meet the volume of soyabean oil needed to achieve the 2022 target of biodiesel to be produced in the USA. This would mean a massive expansion of land and deforestation for soyabean cultivation. If palm oil is imported, such deforestation can be partly avoided. Based on its high yield of 10 times more than soyabean oil, each tonne of palm oil imported into the US for biofuel will lead to 2.5 hectares of avoided deforestation by not having to plant the equivalent amount of soyabean crop. The emission saving value of the avoided deforestation should be added to the total emission saving for palm biodiesel. This would result in the total emission saving for palm biodiesel to be more than 100% compared to petroleum diesel equivalent. It implies that if the US were to import palm based biodiesel to meet it future biofuel targets, there is a net removal of carbon globally for every tonne of palm oil used. Palm oil production in Malaysia is a net carbon sink, and when used in the US it prevents forest from being deforested as a result of not having to produce soya bean oil, and the forest saved from being cut will continue to further sequester carbon.
In conclusion, the EPA has used an incorrect model to calculate the life cycle carbon emission of palm oil using the ILUC concept. It fails to take into account Malaysia’s deliberate policy of preserving forest to act as a sequestering agent to remove emission from all of its economic activities. Poor understanding of the nature of the oil palm as a sequestering agent (as it acts like a forest) leads the EPA to exclude from the emission calculation the massive carbon removal capacity of the oil palm itself.
One way to understand the negative emission of palm biofuel is to visualise the plantation as a ‘factory’ emitting ‘smoke’ (which is the GHG) but this ‘factory’ has an enormous ‘smoke trap’ that is capable of trapping all the ‘smoke’ from the same factory as well as ‘smoke’ emitted by all ‘factories’ under the LULUCF and agriculture sector. Furthermore, if palm oil is imported to replace soy bean oil for biofuel use in the USA, ‘smoke traps’ in the US (2.5 hectares forests preserved per tonne of imported palm oil) will continue to ‘trap’ the ‘smoke’ every year.
The above analogy reflects the reality on the ground. If the CO2 from LULUCF and agricultural sector is fully removed by the same sector through it sequestering capability, there is physically no net CO2 emitted into the atmosphere by palm oil when it is produced in Malaysia. If the EPA modelling simulation cannot reflect the actual negative emission situation for palm oil produced in Malaysia, a different and more appropriate model should be developed.
It can be concluded that palm biodiesel is truly capable of reducing CO2 emissions by more than 100% compared to fossil fuel. Palm oil is a renewable source. The oil palm tree acts as a CO2 remover just like a forest. Deforestation for oil palm cultivation involves only degraded logged over forest (not virgin forest), and the rate of developing new plantations and replanting is well below 5 % per year of the total oil palm area at any time in the recent past or future. The CO2 emission from such small deforestation rate is fully removed by the sequestering capacity of the existing palms. The data submitted by Malaysia to the UNFCC proves that palm biofuel is indeed carbon emission free because of the sequestering effects of the LULUCF sector in Malaysia and it will probably continue to carry the emission free status in the US too if it is imported to replace soya bean oil for biofuel use due to the huge ‘avoided’ deforestation effect.