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What is the largest vegetable oil variety by global production, import, export and trade? The answer is palm oil.

From processed foods to cosmetics, soaps, detergents, and even energy fuels, palm oil's applications are seemingly invisible but ubiquitous in our lives. Palm oil is a controversial product, which not only brings economic benefits to the planting countries, but also causes damage to the forest resources and biodiversity of the planting areas.

As the world's fourth largest consumer of palm oil, the EU issued the EU Zero Deforestation Regulation (EUDR) in 2022, which stipulates that the EU will completely stop the import and export of products involved in deforestation in any part of the supply chain by the end of 2024, including palm oil.

Eighty-five percent of the world's palm oil comes from just two countries: Indonesia and Malaysia. A "tug of war" on the planting side and the consumption side has long been inevitable.

What does the EU Zero Deforestation Act mean

According to China Observer Network, on March 14, 2019, the European Commission made a final ruling that palm oil, mainly in Malaysia and Indonesia, leads to environmental problems such as deforestation, so palm oil (except for small plantations under 2 hectares) is no longer considered a "renewable energy source". Under the hard target that EU countries must use 32% of "renewable energy" by 2030, the use of palm oil becomes very uneconomic.

The EU Zero Deforestation Act, approved by the Council of the European Union on 16 May 2022, states that by the end of 2024, the EU will completely stop the import and export of products involved in deforestation at any point in the supply chain, including seven key commodities and their derivatives: cattle, cocoa, coffee, oil palm, rubber, soybeans and wood.

The regulation, which came into effect on June 29, 2023, will be enforced on December 30, 2024, and will be relaxed for micro and small businesses until June 30, 2025.

The European Union is a major consumer of "commodities related to deforestation and forest degradation," including "palm oil." In the global palm oil consumption countries and regions, the European Union ranked third, the top two consumers are Indonesia, India, China ranked fourth.

On May 8, 2024, Malaysia's Plantation Enterprises and Commodities Minister Johari wrote in a post on the X platform that "Malaysia cannot adopt a defensive posture on palm oil". Instead, he said, Malaysia needs to show the world that "Malaysia is a sustainable oil palm producer while committed to protecting forests and environmental sustainability".

According to Malaysia's Sin Chew Daily, Johari plans to give orangutans to trading partners such as the European Union, China and India, and compared the new diplomatic strategy to China's "panda diplomacy". He also called on palm oil companies to work with ngos to help protect Malaysia's wildlife and provide wildlife-related technology and expertise.

The Path to Sustainable palm Oil

Regardless of whether Malaysia really wants to "buy palm oil and give away the orangutans", many people may wonder if we can live without palm oil since it is so controversial. The answer, for now, is no.

Palm oil is the most profitable vegetable oil, producing 6 to 10 times more oil than other vegetable oil crops. The land used for palm oil production accounts for less than 10% of all land used for oil crops. From the perspective of protecting forests and biodiversity, if humans want to obtain the same amount of vegetable oil, they need five times the planting area of oil palm trees. This could lead to higher rates of deforestation, more greenhouse gas emissions and biodiversity loss.

According to WWF, reducing the negative impact on forests and nature and growing and producing palm oil in a sustainable way has become the consensus of the world.

Many key players and stakeholders in the palm oil industry have been pushing for more sustainable measures. The largest and most well-known Palm certification is the Roundtable on Sustainable Palm Oil (RSPO) initiative, established in 2004 by WWF in association with key multinational companies in the palm oil industry chain. At present, about one-fifth of the palm oil traded globally is certified by the RSPO.

In addition to the Roundtable Initiative on Sustainable Palm Oil (RSPO), common palm oil certifications include the Rainforest Alliance Sustainable Agriculture Standard (SAN/RA), the International Sustainability and Carbon Certification (ISCC), the Malaysian Sustainable Palm Oil Certification (MSPO), and the Indonesian Sustainable Palm Oil Certification (ISPO).

Efforts by Indonesia and Malaysia to try

ISPO was created in 2009 as a policy tool of the Indonesian government to enhance the sustainability and competitiveness of Indonesian palm oil in the world market, support commitments to reduce greenhouse gas emissions, and focus on environmental issues. Since 2014, the ISPO system has been mandatory, so it is often referred to as the "legality standard".

Malaysia's MSPO certification scheme came into effect in 2015 to support small and medium-sized growers. These growers have historically been unable to afford RSPO certification and have failed to operate sustainably. In December 2019, the MSPO certification scheme changed from a voluntary scheme to a mandatory one. This move is also believed by the industry to effectively limit the disorderly expansion of the Malaysian palm oil industry.

Since the implementation of MSPO, considerable achievements have been made. As of April 2024, 4.94 million hectares (equivalent to 87.4% of the oil palm plantation area), 407 out of 446 palm oil plants, and 151,152 small-scale growers covering 542,215 hectares (66.0% of the total) were certified, according to the Minister of Commodities and Plantations. In addition, Malaysia Sustainable Palm Oil will launch its 2024-2026 Strategic Action Plan, which will focus on establishing a robust and reliable sustainability certification mechanism to ensure industry compliance, enhance the value of MSPO certification, and expand awareness and recognition of such certification.

The quest for sustainable palm oil will continue. And as long as human beings still need palm oil, the "tug of war" on the consumption and production of palm oil will continue.