U.S. officials to visit Indonesia for palm oil emissions talks

Michael Taylor and Yayat Supriatna Reuters 19 Oct 12;

JAKARTA | Fri Oct 19, 2012 4:21am EDT

(Reuters) - The U.S. Environmental Protection Agency will visit Indonesia next week, officials said on Friday, in what may prove a crucial step in the battle to meet green standards and open up a potentially huge market for the world's top palm oil producer.

Indonesia is seen as a key player in the fight against climate change and is under intense international pressure to curb its rapid deforestation rate and destruction of carbon-rich peatlands.

A recent blow to the Southeast Asian palm oil industry, which supplies more than 90 percent of world supplies of the edible oil, came in late January when it failed to meet greenhouse gas saving standards to qualify for the U.S. renewable fuels program.

The U.S. EPA said palm oil converted into biofuels in Indonesia and Malaysia cut up to 17 percent of climate warming emissions, falling short of a 20 percent requirement to enter the world's largest energy market.

Next week an EPA delegation will visit a palm oil plantation in Riau province, opposite Singapore on Sumatra island, and then meet the Indonesian agriculture minister in Jakarta, Gamal Nasir, director general of plantation at the ministry told Reuters.

"The visit is very important for both the EPA, American people and the Indonesian government and its people," Nasir added. "This is a good step to prove what EPA claims and Indonesia argues.

"We will be open up to them and prove our arguments in the field."

A senior spokeswoman at the EPA said that the group had been invited and would visit Southeast Asia next week, but was unable to give any further details.

Palm industry figures, including the Indonesian Palm Oil Board (IPOB) are due to be part of next week's EPA visit. The IPOB declined to comment.

In the last few years, Indonesia has seen rapid growth in production of palm oil, with output this year expected to be between 23 million and 25 million tonnes, with around 18 million tonnes exported.

In 2012, palm oil estates will sprawl across 8.2 million hectares of Indonesian land, and is expected to rise about 200,000 hectares each year for the next decade.

Green groups have been critical of expansion in the palm sector.

Plantation expansion is projected to pump more than 558 million metric tons of carbon dioxide into the atmosphere in 2020, an amount greater than all of Canada's current fossil fuel emissions, a study by Yale and Stanford University researchers said last month.

Plantation expansion in Kalimantan alone is projected to contribute 18-22 percent of Indonesia's 2020 CO2-equivalent emissions, the study added.

For their part, Indonesian government officials and palm industry figures have lobbied the U.S. government on the issue.

Indonesia's President Susilo Bambang Yudhoyono signed off on a two-year forest moratorium in May last year, although critics say breaches still occur.

Although the U.S. is not a large palm oil market at present, with India, China and Europe the top buyers, this could change in the future, say Indonesia-based traders.

Both Malaysia and Indonesian government officials have agreed to work together to improve the palm industry's record on environmental issues.

(Additional reporting by David Fogarty in Singapore; Reporting by Michael Taylor and Yayat Supriatna; Editing by Jeremy Laurence)