13/05/2009 (Forbes) - The palm oil industry loves to tout its green credentials, mostly on the back of its biofuels burning cleaner than gasoline.
But the industry struggled at a biofuels conference Wednesday to defend itself amid recent studies by scientists showing that a majority of palm oil plantations started in Indonesia and Malaysia in the past two decades replaced tropical forests that were destroyed to make way for planting.
Even the sale of palm oil that meets certain environmental standards is falling short of expectations, according to a recent study by the environmental group World Wildlife Fund. It found only 1 percent of palm oil certified as sustainable was being sold. Certifiable oil must meet safeguards including assurances it comes from plantations that did not destroy rainforests.
"This sluggish demand from palm oil buyers ... could undermine the success of sustainability efforts and threatens the remaining natural tropical forests of Southeast Asia, as well as other forests where oil palm is set to expand, such as the Amazon," the WWF said in a statement.
Rosediania Suharto of the Indonesian Palm Oil Commission complained at the biofuels conference that it was difficult for many smaller companies to meet the 139 criteria required for their palm oil to be considered sustainable. Those that did are finding buyers unwilling to pay the extra 15 percent or $40- to $50-a-ton for it.
"Certified buyers are complaining because buyers said they don't want to buy the expensive oil. China has said it won't buy this expensive oil," Suharto told the two-day meeting. "If there is no demand, there can be no production."
Palm oil can be found in half of supermarket products from cosmetics to ice cream, according to the industry, and demand has risen sharply in China, India and the United States due to its health benefits. The industry is expected to grow as countries mandate the use of biofuels as part of a cleaner energy mix.
But as its profile has risen so has the controversy surrounding the methods used to farm palm oil. Plantation companies in Indonesia and Malaysia - which produce 87 percent of all palm oil - have come under fire for fueling deforestation that contributes to the demise of animals like orangutans and Sumatran elephants.
Indonesia is also planning to build half its future plantations on carbon-rich peat land - the draining and burning of which have contributed to the country being the world's third-largest greenhouse gas emitter, according to Wetlands International.
These destructive practices have called into question the green credentials of palm oil and other biofuels, with a University of Minnesota last year found that converting forest and grasslands to plantations resulted in 17 to 423 times more carbon than the annual savings from replacing fossil fuels.