Deforestation detection, RSPO GHG and trade clashes
Khor Reports comments and views:
DEFORESTATION DETECTION
All the pieces are falling in place for the global monitoring of deforestation, with the year-end launch of a platform promising near-real time satellite data combined with submitted from-the-ground data. Global Forest Watch 2.0 is an initiative of NGO World Resources Institute, Google, University of Maryland and the UN Environment Program.
NGOs started using satellite imagery to good effect, to identify open burning incidents in plantation concessions, notably in Sumatra, Indonesia. The plantations generally attributed it to third-party burning on their land (not their doing nor by their contractors) and pledged to try to better police the situation. Open burning in peat land areas has been a key source of the annual haze in Southeast Asia. A series of academic studies of satellite imagery have also shed light on deforestation rates in the region, including peat swamp forest deforestation. It has highlighted interesting regional trends, including those in Sarawak and Kalimantan.
Satellite imagery studies for high carbon stocks has also been done by Golden-Agri Resources with the aid of sourcing facilitator TFT and a key NGO, Greenpeace. Importantly, this included the ground-truthing of carbon stocks measures of canopies viewed from satellites. In a nasty surprise for the palm oil industry, it found pretty high carbon stocks in what has been loosely called "degraded areas." Bottom-line: even large areas of degraded scrub lands should not be planted.
Also notable in recent writings by international research organisations and in marketing of end products is the wider reference to "deforestation-free commodities." Deforestation detection is likely to be a negative for oil palm extensification (land development) by plantations in higher carbon stock areas. The logical move would be for NGOs to highlight their expansion moves to buyers in developed markets, who are most conscious of sustainability and leery of socio-environmental issues.
RSPO GHG WILL CHALLENGE GROWERS
In a tough revision of its certification standard for growers, the RSPO will require measurement of GHG emissions from operations and new plantings. Some time will be given to develop these tools, and public reporting will only start 31 Dec 2016. Nevertheless, the implications are obvious and significant for plantations. The new P&Cs will require changes in carbon stocks to be measured against a baseline of land use in November 2005 (dig out those satellite images and peat land maps!). This could generate a list of the biggest net destroyers of carbon stocks in a recent ten year period; such retroactive reporting will also catch those who were less than fulsome in their new planting procedures reporting. Current RSPO grower members, should prepare for potential bad publicity surrounding such retrospective analysis of their land developments.
RSPO defines low carbon stock areas "as those with (above and below ground) carbon stores, that would be lost by conversion to oil palm, smaller than that which would be sequestered within an oil palm crop and other set-aside areas within the management unit over the period of one rotation."
This is likely to mean:
a) low or no peat land development (negating or superseding* Principle 7.4 which allows for non-extensive planting on peat?);
b) usage of the 35 tonnes carbon per hectare ceiling** (the often cited measure of carbon sequestered in oil palm; which Golden Agri has accepted for its pilot scheme) which would supersede* Principle 7.3 on non-usage of primary forest from November 2005); and
c) much higher set-asides (i.e. areas not to be developed).
*Why not just rewrite Principles 7.3 and 7.4 if they are set to be superseded by a new measure in Principle 7.8?
** "The time averaged carbon stock in an oil palm plantation appears to be in the order of 35 tonnes carbon/ha, calculated over... 25-30 years... by various authors using different approaches... " (source: Greenhouse Gas Emissions from Palm Oil Production, Literature review and proposals from the RSPO Working Group on Greenhouse Gases, Final report, 9 October 2009)
RSPO's new P&C is set to be ratified soon. All RSPO ordinary members will be able to vote on the revised P&C at an Extraordinary General Assembly on 25 April 2013 (Thursday week, in about 10 days time) in Kuala Lumpur, Malaysia. Oil palm growers represent 15.4% of RSPO members. If the other member categories vote by bloc, it is likely that oil palm growers views may be isolated. If palm oil processors vote as a bloc with oil palm growers, these two categories represent 52.4% of members.
TRADE CLASHES
On deforestation-free palm oil concerns in end markets, Khor Reports notes that the Ferrero Group has for years been carefully sourcing palm oil from Peninsula Malaysia, a long human use area i.e. plantations there developed many decades ago. However, it faced a negative marketing blitz in the so-called Nutella Wars in France last year. It is interesting to note that it has lodged a complaint against its fellow RSPO members, Groupe Casino and Systeme U on 2 April 2013. In one, Ferrero says that "The complaint is made on ground that the Groupe Casino is undermining the objectives of the RSPO, as enshrined in the RSPO Vision and Mission, and breaching the RSPO Code of Conduct..." It has lodged a similar complaint against Systeme U.
Palm oil sustainability has been morphing into palm-oil free in some areas. This unfortunate linkage has to be addressed. At the same time, negative health claims still abound. Strategic consultancy, Hill & Knowlton (whose clients include big brands and big banks) has been a key player in global opinion-making on palm oil acceptance recently, just as it was in yesteryear. It had roles in the clash of US soybean interests and Malaysia palm oil over 20 years ago; which ended with 1992 US non-discriminatory legislation which outlawed "no palm oil, no cholesterol" labels and the 1993 US military lifting on its ban on palm oil usage.
We reckon that the deforestation / high carbon stocks challenge will be heating up, and it will need to be watched. With some serious challenges faced upstream and downstream, many industry players consider this a period of edible oil trade wars.
Announcements & news:
"Global Forest Watch 2.0 will enable users to track deforestation over time, including forest clearing that has occurred within the past 30 days. It will also allow users to submit georeferenced photographic evidence of forest destruction, supporting efforts by journalists and concerned citizens to report on deforestation." source: http://news.mongabay.com/2013/0409-global-forest-watch.html?goback=.gde_2007470_member_231012851
"The Groupe Casino: has initiated a campaign aimed at denigrating palm oil in general as well as products containing palm oil (the tag line of such campaign being "L'huile de palme c'est nul" which can be translated as "Palm oil is rubbish"); is fueling the negative perception of palm oil in France and other parts of the world; has launched a number of palm oil free products under its own brands and promotes them through denigrating statements about palm oil in general as well as through disparaging comparisons with competing products containing palm oil (including Ferrero Group's Nutella), refers to palm oil in a general way without making any distinction between sustainable palm oil promoted by the RSPO and non sustainable palm oil; fails to promote the use of sustainable palm oil; hasn't been willing to resolve the matter despite direct contacts made by the Ferrero Group." source: http://www.rspo.org/en/status_of_complaint&cpid=27
"The RSPO has revised an existing Criterion on monitoring and reporting GHG emissions from existing operations and developed a new Criterion on minimising net GHG emissions from new planting developments. However, it is recognised that these significant emissions cannot be monitored completely or measured accurately with current knowledge and methodologies. Therefore, growers and millers commit to an implementation period for promoting best practices in reporting to the RSPO and after December 31st 2016 to public reporting against both of these Criteria. During the implementation period the RSPO will further develop and improve the RSPO carbon assessment and reporting tools. Growers and millers make this commitment with the support of all other stakeholder groups of the RSPO. These revisions demonstrate the RSPO’s commitment to developing credible requirements relating to GHG emissions."
Notably in Principle 5.6: "during the implementation period, growers will start to assess, monitor and report emissions arising from changes in carbon stocks within their operations, using the land use in November 2005 as the baseline. The implementation period for Indicator 5.6.3 is the same implementation period for Criterion 7.8."
And in Principle 7.8: "Growers are strongly encouraged to establish new plantings on mineral soils, in low carbon stock areas, and cultivated areas, which the current users are willing to develop into oil palm. Millers are encouraged to adopt low-emission management practices (e.g. better management of palm oil mill effluent (POME), efficient boilers etc.) in new developments... Public reporting is desirable, but remains voluntary until the end of the implementation period. During the implementation period until December 31st 2016...Thereafter growers and millers will ensure that new plantation developments are designed to minimise net GHG emissions and commit to reporting publicly on this."
In Annex 2: "Definition of Low carbon stock areas: As per the recommendation of the RSPO GHG WG2 the total carbon emissions (above and below ground) from new developments should ideally not be greater than the carbon which can be sequestered in the period of one rotation over the whole new development (i.e. the average of oil palm, riparian areas, forest set-aside etc.). To help achieve this the expansion of plantations should be on low carbon stock areas (i.e. mineral soils, areas with low biomass etc.) or on land which is in current intensive agricultural or plantation use where the current users agree to its conversion to oil palm. An agreed methodology for assessing and reporting carbon stocks and sources of emissions as well as default figures for estimates of both are being developed by the RSPO. As guidance to growers low carbon stock areas are defined as those with (above and below ground) carbon stores, that would be lost by conversion to oil palm, smaller than that which would be sequestered within an oil palm crop and other set-aside areas within the management unit over the period of one rotation."
More background on the palm oil sustainability movement (upstream impacts) here:
DEFORESTATION DETECTION
All the pieces are falling in place for the global monitoring of deforestation, with the year-end launch of a platform promising near-real time satellite data combined with submitted from-the-ground data. Global Forest Watch 2.0 is an initiative of NGO World Resources Institute, Google, University of Maryland and the UN Environment Program.
NGOs started using satellite imagery to good effect, to identify open burning incidents in plantation concessions, notably in Sumatra, Indonesia. The plantations generally attributed it to third-party burning on their land (not their doing nor by their contractors) and pledged to try to better police the situation. Open burning in peat land areas has been a key source of the annual haze in Southeast Asia. A series of academic studies of satellite imagery have also shed light on deforestation rates in the region, including peat swamp forest deforestation. It has highlighted interesting regional trends, including those in Sarawak and Kalimantan.
Satellite imagery studies for high carbon stocks has also been done by Golden-Agri Resources with the aid of sourcing facilitator TFT and a key NGO, Greenpeace. Importantly, this included the ground-truthing of carbon stocks measures of canopies viewed from satellites. In a nasty surprise for the palm oil industry, it found pretty high carbon stocks in what has been loosely called "degraded areas." Bottom-line: even large areas of degraded scrub lands should not be planted.
Also notable in recent writings by international research organisations and in marketing of end products is the wider reference to "deforestation-free commodities." Deforestation detection is likely to be a negative for oil palm extensification (land development) by plantations in higher carbon stock areas. The logical move would be for NGOs to highlight their expansion moves to buyers in developed markets, who are most conscious of sustainability and leery of socio-environmental issues.
RSPO GHG WILL CHALLENGE GROWERS
In a tough revision of its certification standard for growers, the RSPO will require measurement of GHG emissions from operations and new plantings. Some time will be given to develop these tools, and public reporting will only start 31 Dec 2016. Nevertheless, the implications are obvious and significant for plantations. The new P&Cs will require changes in carbon stocks to be measured against a baseline of land use in November 2005 (dig out those satellite images and peat land maps!). This could generate a list of the biggest net destroyers of carbon stocks in a recent ten year period; such retroactive reporting will also catch those who were less than fulsome in their new planting procedures reporting. Current RSPO grower members, should prepare for potential bad publicity surrounding such retrospective analysis of their land developments.
RSPO defines low carbon stock areas "as those with (above and below ground) carbon stores, that would be lost by conversion to oil palm, smaller than that which would be sequestered within an oil palm crop and other set-aside areas within the management unit over the period of one rotation."
This is likely to mean:
a) low or no peat land development (negating or superseding* Principle 7.4 which allows for non-extensive planting on peat?);
b) usage of the 35 tonnes carbon per hectare ceiling** (the often cited measure of carbon sequestered in oil palm; which Golden Agri has accepted for its pilot scheme) which would supersede* Principle 7.3 on non-usage of primary forest from November 2005); and
c) much higher set-asides (i.e. areas not to be developed).
*Why not just rewrite Principles 7.3 and 7.4 if they are set to be superseded by a new measure in Principle 7.8?
** "The time averaged carbon stock in an oil palm plantation appears to be in the order of 35 tonnes carbon/ha, calculated over... 25-30 years... by various authors using different approaches... " (source: Greenhouse Gas Emissions from Palm Oil Production, Literature review and proposals from the RSPO Working Group on Greenhouse Gases, Final report, 9 October 2009)
RSPO's new P&C is set to be ratified soon. All RSPO ordinary members will be able to vote on the revised P&C at an Extraordinary General Assembly on 25 April 2013 (Thursday week, in about 10 days time) in Kuala Lumpur, Malaysia. Oil palm growers represent 15.4% of RSPO members. If the other member categories vote by bloc, it is likely that oil palm growers views may be isolated. If palm oil processors vote as a bloc with oil palm growers, these two categories represent 52.4% of members.
Note: These statistics should represent ordinary members, eligible to vote at the EGM.
Source: RSPO website, accessed 5.30pm 14 April 2013
TRADE CLASHES
On deforestation-free palm oil concerns in end markets, Khor Reports notes that the Ferrero Group has for years been carefully sourcing palm oil from Peninsula Malaysia, a long human use area i.e. plantations there developed many decades ago. However, it faced a negative marketing blitz in the so-called Nutella Wars in France last year. It is interesting to note that it has lodged a complaint against its fellow RSPO members, Groupe Casino and Systeme U on 2 April 2013. In one, Ferrero says that "The complaint is made on ground that the Groupe Casino is undermining the objectives of the RSPO, as enshrined in the RSPO Vision and Mission, and breaching the RSPO Code of Conduct..." It has lodged a similar complaint against Systeme U.
Palm oil sustainability has been morphing into palm-oil free in some areas. This unfortunate linkage has to be addressed. At the same time, negative health claims still abound. Strategic consultancy, Hill & Knowlton (whose clients include big brands and big banks) has been a key player in global opinion-making on palm oil acceptance recently, just as it was in yesteryear. It had roles in the clash of US soybean interests and Malaysia palm oil over 20 years ago; which ended with 1992 US non-discriminatory legislation which outlawed "no palm oil, no cholesterol" labels and the 1993 US military lifting on its ban on palm oil usage.
We reckon that the deforestation / high carbon stocks challenge will be heating up, and it will need to be watched. With some serious challenges faced upstream and downstream, many industry players consider this a period of edible oil trade wars.
Announcements & news:
"Global Forest Watch 2.0 will enable users to track deforestation over time, including forest clearing that has occurred within the past 30 days. It will also allow users to submit georeferenced photographic evidence of forest destruction, supporting efforts by journalists and concerned citizens to report on deforestation." source: http://news.mongabay.com/2013/0409-global-forest-watch.html?goback=.gde_2007470_member_231012851
"The Groupe Casino: has initiated a campaign aimed at denigrating palm oil in general as well as products containing palm oil (the tag line of such campaign being "L'huile de palme c'est nul" which can be translated as "Palm oil is rubbish"); is fueling the negative perception of palm oil in France and other parts of the world; has launched a number of palm oil free products under its own brands and promotes them through denigrating statements about palm oil in general as well as through disparaging comparisons with competing products containing palm oil (including Ferrero Group's Nutella), refers to palm oil in a general way without making any distinction between sustainable palm oil promoted by the RSPO and non sustainable palm oil; fails to promote the use of sustainable palm oil; hasn't been willing to resolve the matter despite direct contacts made by the Ferrero Group." source: http://www.rspo.org/en/status_of_complaint&cpid=27
"The RSPO has revised an existing Criterion on monitoring and reporting GHG emissions from existing operations and developed a new Criterion on minimising net GHG emissions from new planting developments. However, it is recognised that these significant emissions cannot be monitored completely or measured accurately with current knowledge and methodologies. Therefore, growers and millers commit to an implementation period for promoting best practices in reporting to the RSPO and after December 31st 2016 to public reporting against both of these Criteria. During the implementation period the RSPO will further develop and improve the RSPO carbon assessment and reporting tools. Growers and millers make this commitment with the support of all other stakeholder groups of the RSPO. These revisions demonstrate the RSPO’s commitment to developing credible requirements relating to GHG emissions."
Notably in Principle 5.6: "during the implementation period, growers will start to assess, monitor and report emissions arising from changes in carbon stocks within their operations, using the land use in November 2005 as the baseline. The implementation period for Indicator 5.6.3 is the same implementation period for Criterion 7.8."
And in Principle 7.8: "Growers are strongly encouraged to establish new plantings on mineral soils, in low carbon stock areas, and cultivated areas, which the current users are willing to develop into oil palm. Millers are encouraged to adopt low-emission management practices (e.g. better management of palm oil mill effluent (POME), efficient boilers etc.) in new developments... Public reporting is desirable, but remains voluntary until the end of the implementation period. During the implementation period until December 31st 2016...Thereafter growers and millers will ensure that new plantation developments are designed to minimise net GHG emissions and commit to reporting publicly on this."
In Annex 2: "Definition of Low carbon stock areas: As per the recommendation of the RSPO GHG WG2 the total carbon emissions (above and below ground) from new developments should ideally not be greater than the carbon which can be sequestered in the period of one rotation over the whole new development (i.e. the average of oil palm, riparian areas, forest set-aside etc.). To help achieve this the expansion of plantations should be on low carbon stock areas (i.e. mineral soils, areas with low biomass etc.) or on land which is in current intensive agricultural or plantation use where the current users agree to its conversion to oil palm. An agreed methodology for assessing and reporting carbon stocks and sources of emissions as well as default figures for estimates of both are being developed by the RSPO. As guidance to growers low carbon stock areas are defined as those with (above and below ground) carbon stores, that would be lost by conversion to oil palm, smaller than that which would be sequestered within an oil palm crop and other set-aside areas within the management unit over the period of one rotation."
More background on the palm oil sustainability movement (upstream impacts) here:
ISEAS Perspectives: Struggle for sustainability in palm oil industry shows results By Khor Yu Leng ; Just published by ISEAS Perspectives, my paper on the shift of the Malaysia and Indonesia palm oil sectors to sustainability efforts. One group of transnational NGOs, led by the WWF, has pressured large corporate growers as well as multi-national consumer brands to accept Europe-centric voluntary certification standards. Thus, since about 2003, the net impact of various NGO pressures has helped to rein in the speed and prospects for oil palm expansion in Indonesia and Malaysia by large corporate growers. The authorities in Indonesia and Malaysia have reacted by creating their own certification schemes.