According to the Union of Concerned Scientists and Climate Advisers (UCSUSA), “rising global demand for vegetable oils has accelerated deforestation.” Use of vegetable oil has grown by 5% per annum for a decade, with around 75% used in food products consumed by a growing global middle class. A similar growth rate is expected in the coming decade.
The report puts forward two options for addressing the problem:
- food processors should source only from companies that “pledge to only expand new production onto non-forest lands and work to increase crop yields through a combination of improved breeds and management practices”;
- food processors should “switch to vegetable oil inputs that do not directly cause deforestation (e.g., corn, sunflower, rapeseed)”.
February 2014 also saw reports emerge from researchers at the University of Colorado noting that “the wastewater produced during the processing of palm oil is a significant source of heat-trapping methane in the atmosphere”, with the annual amount of methane “released from a single palm oil wastewater lagoon…, roughly equivalent to the emissions from 22,000 vehicles”. However, there is seen to be scope for methane capture and utilisation of it as a renewable energy source, using existing biogas technology to “produce renewable electricity at a cost that’s competitive with traditional fuels”. The suggestion has been made that, in future, methane capture and utilisation should form part of sustainability certification requirements.
These reports need to be seen against the background of a growing number of food processing companies making commitments to use only palm oil certified as sustainably produced. In December 2013, Hershey committed to using only 100% traceable and sustainably sourced palm oil by the end of 2014, using the mass balance system, but the company is now increasing its demands on suppliers with regard to avoiding deforestation and peat land depletion. Greenpeace has criticised the use of the “mass balance” system of certification, calling for moves towards full traceability. In January 2014, Mondelez International announced that it had reached its goal of 100% Roundtable on Sustainable Palm Oil (RSPO)-certified palm oil 2 years ahead of schedule, but also recognised the need to go further in ensuring transparency and traceability along palm oil supply chains.
In February, meanwhile, Kellogg announced its commitment to sourcing “fully traceable palm oil” by the end of 2015, as it faced NGO-led protests. Kellogg is to base its new practices on a combination of Greenpalm certificates, mass balance and segregated sustainable supply chains. The UCSUSA welcomed the move, but questioned whether the company “has moved fast or aggressively enough to make the commitment a reality”.
The leading ACP sustainable palm oil producer, New Britain Palm Oil, reported “disappointing results” in February 2014, but the chairperson of the company considered that it was “well positioned to capitalise on… strong demand for sustainable and traceable palm oil products”.
In the coming years, the debate on sustainability certification of palm oil is likely to shift to the depth of the sustainability commitments incorporated into the certification requirements. New investments in palm oil production in ACP countries will need to build the future evolution of sustainability requirements into current investment plans, including with regard to potential methane capture and utilisation requirements.
Any incorporation of methane capture and utilisation requirements raises issues related to the sharing of costs and benefits of compliance along the supply chain. In the palm oil sector, sustainability certification has generally assisted in the market positioning of palm oil suppliers, but has not necessarily yielded price premiums. In the past, this left primary producers and first-stage processors generally carrying the costs of certification. Any methane capture requirement, however, would involve not only investment costs, but also potentially significant financial returns. This raises important issues related to the distribution of costs and benefits of sustainability certification requirements along palm oil supply chains.