Tengku Noor Shamsiah Tengku Abdullah, Bernama 23 May 10;
KUALA LUMPUR, May 23 (Bernama) -- The sustainability criteria in the European Union (EU) Renewable Energy Directive (RED), due to come into force on Dec 5, 2010, will not affect Malaysia's palm oil exports to the region.
EU ambassador and head of delegation to Malaysia, Vincent Piket, said there would be no change for crude palm oil imports.
"The EU will not block any Malaysian crude palm oil exports. Malaysian crude palm oil exports into the EU can continue just as they are today, with no new tariffs, quotas, restrictions or conditions," he told Bernama here.
"The EU RED and its sustainability criteria do not concern Malaysia's crude palm oil exports to the EU market for consumer products, like food, cosmetics, detergents and so forth. In other words, 90 per cent of Malaysia's palm oil exports to the EU are in no way affected by the new EU rules," he said.
Certain quarters have voiced their concern about the EU new directive and its effect on palm oil exporting countries like Malaysia and Indonesia.
To clear the air, Piket said the EU RED is an essential element of the climate and energy package to meet the group's climate change and energy policy objectives.
He said the directive contained a 10 per cent binding target for renewable energy in transport, including biofuels, by 2020.
This will provide an opportunity, also for developing countries, to supply biofuels to the EU market, according to Piket.
"With this directive, the EU is creating a new market and we want to make sure that we do it right. It is crucial that the measures to fight climate change and to implement the renewable energy policy, including biofuels, do not have negative side-effects on the environment," he said.
Piket said it was for this reason that the directive contained sustainability criteria for biofuels.
The sustainability criteria are related to two issues -- the lifecycle greenhouse gas emissions of biofuels and the land used to produce the biofuels.
"They aimed to achieve significant greenhouse gas savings, as compared to fossil fuels, and to prevent negative side effects on biodiversity," he said.
Piket said the sustainability criteria used by the EU RED were science-based, verifiable and in accordance with the World Trade Organisation (WTO) principles.
"The criteria will be the same across the EU. They will apply to both EU production and imported biofuels," he said.
The EU RED foresees incentives for sustainably produced biofuels, though biofuels which do not meet the criteria can still be imported and marketed in the EU, Piket said.
"They will not, however, receive tax exemptions, subsidies or other incentives from EU member states, nor will they count towards the objective of 10 per cent of renewable energy in transport," he said.
According to Piket, it is important for Malaysia to note that the are incentives for sustainably produced biofuels.
The EU RED, he said, is exclusively about trade in biofuels.
"For biofuels, the EU countries will be offering incentives to promote the use of sustainably produced fuels, including biodiesel. This will increase opportunities for third countries like Malaysia to export into the EU, by tapping the potential of a new market," the envoy said.
"Other biofuels can still be imported. In order to benefit from the incentives, biofuels have to meet the criteria defined in the EU RED. Biofuels which do not comply with these criteria, can however still be imported," he said.
Palm biodiesel can be eligible for incentives, Piket said, adding that the general default value for palm oil defined in the directive is 19 per cent (savings of green-house gas emissions as compared to fossil fuels).
"This is below the 35 per cent threshold for eligibility set in the EU RED. However, this does not mean that biodiesel from palm oil cannot fulfil the criteria," he said.
"Those suppliers who can show scientific data that their biofuels have a higher greenhouse gas saving than the threshold value will be eligible."
Piket said that science showed that palm oil biodiesel could deliver significant greenhouse gas emissions savings, if the right conditions were met.
He said that eligibility for the EU RED thus depended more on the production process than on the crop itself.
"We are creating a new market, and we intend to do it while taking into account relevant environmental concerns. The industry will need to adapt accordingly," Piket said.
"The EU recognises that the Malaysian palm oil industry has understood the need for sustainability efforts and is taking steps to ensure it. We appreciate the work carried out to date on sustainability certification of palm oil in the framework of the Roundtable of Sustainable Palm Oil (RSPO)," he said.
"We believe that such certification schemes developed by the industry will play an important role. The directive provides for the possibility that such certification schemes can be used to prove compliance with the criteria, if the environmental issues at stake are properly addressed."
Hence, for Malaysia, the consequences of the EU RED boiled down to two aspects, Piket said.
On one hand, it means increased potential to export palm oil or biodiesel to the EU but it also means that the sustainability criteria have to be met, he said.
The added requirement might call for additional efforts from the industry in order to preserve the environment, the envoy said but he assured that the benefits are there, should Malaysia and its palm oil industry explore further the opportunity offered by the EU RED.
The ambassador, now into his two-year term here, said the EU market for biofuels was changing fast.
"This is partly a government-driven process in line with the EU's top priority to fight climate change. But it is also a process driven by the civil society and consumers, who are more and more environmentally conscious in their consumer choices," he said.
"This process applies to producers in the EU market as well as for importers. They will all need to adapt. Those who do so fast will reap the earliest benefits," he added.
-- BERNAMA
