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Unclear if France will revisit ‘discriminatory’ palm oil tax

  • The proposed tax became a controversy in Indonesia and Malaysia, the two largest palm oil producers, which lobbied hard to get it rescinded.
  • France consumes less than two-tenths of a percent of the palm oil produced globally, most of which goes to India and China.
  • Palm oil is crucial to the Southeast Asian nations’ economies but leads the way in damaging the environment.

Last month, the French Senate removed a proposed tax on palm oil from their version of the country’s biodiversity bill. The draft initially increased the tariff on all palm oil entering the country, but was later revised in response to industry pressure. Producers called the tax discriminatory, excessive, arrogant, and an attack on the developing world.

The watered-down bill reduced the tax amount, made it applicable only to consumable products, and excluded certified sustainable oil. However, this did not satisfy industry lobbyists, and the Senate later removed the section entirely. It is unclear whether the issue will be revisited by the other house of parliament, the National Assembly, before the final vote.

During a brief meeting during the G7 summit in Japan, the president of Indonesia reportedly asked the president of France to help “halt ongoing discussions” about the planned tax. Indonesia is the world’s largest producer of palm oil.

As the industry struggles with a long history of environmental degradation and human rights violations,  economists, politicians and environmentalists struggle to find practical paths toward positive change.

“There’s no perfect solution, but boycotts and taxes against producers seem to be one of the most effective mechanisms for promoting more-sustainable production,” Bill Laurance, founder of the Alliance of Leading Environmental Researchers & Thinkers, told Mongabay.

“It’s really been sticks — such as the loss of market share and reputation risk — that have prompted many corporations to announce zero-deforestation agreements,” he said, referring to several commitments and initiatives announced by players in some of Southeast Asia’s most environmentally destructive industries.

Oil palm fruit on a plantation in Indonesia. Photo by Rhett A. Butler/Mongabay

However, given that France consumes only 111,000 tons of palm oil per year — or less than two-tenths of a percent of the 50 million tons produced globally — it is questionable what impact the proposed tax would even have on the industry, which is poised to double production by 2030.

“There’s really no scenario under which demand for palm oil is going to decline in a world with a rapidly growing population and the fact that it can be used in such a diverse array of foods and other products, including biofuels,” Laurance said.

“The key is that we need better land-use planning and limits on the spread of palm oil, because it is so profitable and productive that it’s going to keep expanding like a tsunami across the tropics. Right now Southeast Asia is the epicenter production, but it is ramping up in Latin America and Africa, and places like New Guinea.”