- A top Indonesian minister says the country may consider pulling out of the Paris climate agreement in retaliation for a European policy to phase out palm oil from biofuels by 2030.
- Luhut Pandjaitan, the coordinating minister for maritime affairs, says Indonesia, the world’s biggest producer of palm oil, can follow in the footsteps of the United States, which has declared its withdrawal from the climate pact, and Brazil, which is considering doing the same.
- The threat is the latest escalation in a diplomatic spat that has also seen Indonesia and Malaysia, the No. 2 palm oil producer, threaten retaliatory trade measures against the European Union.
- The EU says its policy is driven by growing consumer concerns about the sustainability of palm oil, which in Indonesia is often grown on plantations for which vast swaths of rainforest have had to be cleared.
JAKARTA — Environmental activists have blasted threats by a senior Indonesian minister that the country will withdraw from the Paris climate accord over a European plan to phase out palm oil from renewable biofuels.
The statements by Luhut Pandjaitan, the coordinating minister for maritime affairs, who oversees the palm oil industry in the world’s biggest producer of the commodity, have been likened to the nationalist rhetoric employed by U.S. President Donald Trump to pull his country out of the agreement.
“If Trump exited the Paris Agreement to defend the coal industry, Luhut is defending the palm oil industry to his last breath,” said Yuyun Harmono, a climate justice campaigner with the Indonesian Forum for the Environment (Walhi). “Both are commodities that destroy the environment and exacerbate climate change. If Luhut is proud to be associated with Trump, then go ahead.”
The war of words marks the latest escalation stemming from a decision by the European Union to phase out the use of palm oil in biofuels by 2030, over concerns that production of the crop, often on land cleared of rainforest, contributes to global carbon emissions and thus exacerbates climate change.
Indonesia and Malaysia, which together supply 85 percent of the world’s palm oil, have threatened a host of retaliatory measures, including filing complaints with the World Trade Organization (WTO) and restricting imports of goods from the EU.
The most drastic option on the table is Indonesia withdrawing from the landmark 2015 Paris Agreement. Indonesia has committed to reducing its greenhouse gas emissions by 29 percent (and up to 41 percent with international assistance) by 2030, mainly through reduced deforestation and increased reforestation.
Luhut, one of President Joko Widodo’s closest advisers and the owner of a string of palm oil companies himself, said the government might follow in the footsteps of the U.S. and Brazil. The new president of the latter, Jair Bolsonaro, promised during his campaign last year to abandon the Paris Agreement.
“If we’re talking about environmental issues, the U.S. was able to exit the climate change [agreement] and Brazil could potentially do so as well,” Luhut said in Jakarta recently as reported by The Jakarta Post. “So, we could consider withdrawing from the deal also. Why not?”
He also framed the issue as one of economic development, telling online outlet Kumparan that the EU was “thinking only about [saving] orangutans” while he was concerned with the livelihoods of the 17 million Indonesians employed in the palm oil industry.
‘Bargaining chip’
“We all agree [on the Paris Agreement] and we all respect it,” Luhut said as quoted by Liputan 6. “But if you don’t respect our people, then I have to ask what it is that we’re getting from climate change [deal]. They talk about carbon [payments] but where are [they]?”
Walhi’s Yuyun questioned the argument that the climate accord needed to be financially beneficial to be meaningful. “Did we join the Paris agreement just to make money from carbon trading?” he said.
“Luhut is using our involvement in the agreement as a bargaining chip for economic interests and to defend the interests of the palm oil industry,” he added. “That’s just not right.”
Dechen Tsering, the Bangkok-based Asia-Pacific director for the United Nations Environment Programme, called on Indonesia to stay in the Paris climate deal, saying the agreement would be undermined if it left.
“We need countries like Indonesia in the Paris Agreement, taking forward their commitments quite seriously,” she told Reuters.
Indonesia is the world’s fourth-biggest emitter of greenhouse gases, due largely to deforestation and forest fires. These activities, in turn, are carried out for the most part to clear land for plantations and logging concessions.
The country is home to the third-biggest expanse of tropical forest left on the planet, after the Amazon and the Congo Basin, making it a globally significant carbon sink. Indonesia’s peatlands alone hold at least 57 billion tons of carbon. If all of it were released into the atmosphere, it would account for a third of all the CO2 the world is projected to emit between now and 2050.
Political support
In Jakarta, however, the importance of keeping Indonesia within the Paris Agreement hasn’t resonated as strongly as the nationalist fervor to take a stand for palm oil, with both the Foreign Ministry and the House of Representatives backing Luhut.
Peter F. Gontha, a policy adviser to the ministry, said Indonesia could learn from Brazil’s plan to exit the Paris accord. He said that Brazil wanted to withdraw so that it could open up large tracts of its land for sugarcane plantations to produce ethanol for biofuel and for cattle ranching. The latter activity accounts for 80 percent of new deforestation in the Brazilian Amazon.
“This could be a reference for Indonesia,” Peter said. “If Indonesia is merely a victim of the Paris Agreement, then we [will] exit [the agreement] just like what Brazil and the U.S. do, Since the beginning, Indonesia isn’t obligated to join the Paris Agreement because our emission is still low.”
He added that the decision by the EU to phase out palm oil from its biofuel mix constituted a form of discrimination that advantaged European producers of other types of vegetable oils.
“We’ve implemented a moratorium [on new palm oil plantation permits] and we’ve said no more land [clearing], but we’re still discriminated against,” he said.
Firman Subagyo, one of the most vocal proponents of the palm oil industry in the House of Representatives, who previously criticized the permit moratorium as the result of foreign meddling, welcomed Luhut’s statements.
“Our stance is if they boycott us, we boycott them,” he said as reported by Bisnis. “So even though it’s a bit late [for the government to adopt it], I appreciate and support the step they’ve taken.”
Sinking islands
Both Luhut and Peter, who previously served as the Indonesian ambassador to Poland, said Indonesia had shown good faith in global efforts to mitigate climate change, as seen during the U.N. climate talks in Poland last year. Luhut said a large part of Indonesia’s commitment centered on promoting palm oil-based biodiesel and reducing coal consumption.
The minister has argued that while Indonesia has done much in recent years to tackle emissions from the palm oil industry, including imposing the nationwide moratorium on new permits, implementing a one-map policy to address land claims, and devising its own certification scheme called Indonesia Sustainable Palm Oil (ISPO). The EU, Luhut said, had failed to fully recognize these efforts.
“So Indonesia is very aware,” he said in a statement on his ministry’s website. “Don’t perceive us as being not aware about the environment, because we understand that if we don’t handle [climate change] well, then the next generation is going to be the one that feels the impact.”
Peter agreed that environmental protection required sustainable development.
“Economic growth has to be coupled with an increase in the quality of life as well as environmental sustainability,” he told Indonesian media at the climate talks in Katowice last December. “This is a herculean task. This is Indonesia’s task looking ahead.”
But that commitment to improving the livelihoods of everyday Indonesians seems to be lacking, Yuyun suggested. He cited cases of coastal villages and islands being drowned by rising sea levels, and said it was ironic that Luhut, nominally in charge of maritime affairs, neglected to address this very issue.
“Some villages have disappeared, same with small islands. There’s such a big threat hanging over this country, which has more than 17,000 islands,” Yuyun said.
“It’s such a contradiction for a maritime minister to not work to save coastal people,” he added, “but instead fight for palm oil companies that are among the industries that contribute to climate change.”
Retaliatory measures
While withdrawing from the climate accord is the most drastic option raised by Indonesia in response to the EU biofuel policy (and the worst one, by Luhut’s own admission), Jakarta has threatened a host of other retaliatory measures.
This includes possibly cancelling an order for 300 Swedish-made buses for Jakarta’s public bus network. “We whispered to the Swedish ambassador to Indonesia that we’re afraid their buses aren’t allowed to come in,” Foreign Ministry adviser Peter said.
Last month, Peter wrote on his Facebook page that it would be better to buy buses from Japan or Australia rather than Sweden, a member of a union that, by his account, was discriminating against Indonesia’s palm oil.
While that threat hasn’t been carried through, European spirits makers may have become the first casualty in the looming trade war.
Reuters reported last week that members of SpiritsEurope, which represents major liquor producers and national associations, were suffering delays in securing approval to bring EU products into Indonesia — something that non-EU liquors had no trouble with.
The Indonesian government has denied this is linked to the palm oil spat, saying the domestic market simply prefers spirits from the U.S.
Diplomatic disputes have also flared up between Indonesia and individual European countries considering imposing their own restrictions on palm oil.
Last December, Indonesian Trade Minister Enggartiasto Lukita threatened to block market access for Norwegian salmon under a trade deal with the European Free Trade Association (EFTA) if its members — Norway, Switzerland, Iceland and Liechtenstein — restricted access for palm oil.
The threat came after the Norwegian parliament asked the government to develop measures to exclude biofuels with a high risk of deforestation in their production.
France has also been looking to restrict imports of palm oil, first through a plan to tax unsustainable palm oil in 2016. The plan was eventually scrapped after Indonesia reportedly insinuated it would execute a French citizen on a death row for drug trafficking if France went ahead with the tax.
The Indonesian Foreign Ministry has denied the report.
Malaysia, too, has threatened its own tit-for-tat measures. Prime Minister Mahathir Mohamad last month said Malaysia might retaliate by purchasing new fighter jets from China instead of Europe.
“If they keep on taking action against us, we will think of buying airplanes from China or any other country,” he said as quoted by the official Bernama news agency.
Reassessment window
There’s still a chance the EU might walk back the planned phase-out, enshrined in a so-called delegated act. The delegated act passes into law after a two-month scrutiny period, but there’s a reassessment period in 2021 during which European authorities will consider the latest data from palm oil producers to determine anew the deforestation risk.
“The European Commission will reassess the data and, if appropriate, the methodology in 2021 and will carry out a revision of the delegated regulation in 2023,” the EU says. “At that moment, any efforts undertaken by Indonesia will be taken into account.”
President Widodo and Prime Minister Mahathir have both sent official letters to the EU asking for it to reconsider its policy on palm oil.
“Both our governments’ view this as a deliberate, calculated and adverse economic and political strategy to remove palm oil from the EU marketplace,” they said. “Should this delegated regulation enter into force, our governments shall review our relationship with the EU as a whole, as well as its member states.”
For its part, the EU denies it is engaged in a campaign to smear the reputation of palm oil to advantage its own vegetable oil producers.
“What is frequently described here as a ‘black campaign’ against palm oil is an expression of the genuine environmental concerns of consumers as well as manufacturers,” EU Ambassador to Indonesia Vincent Guérend said in a press statement. “Informed consumers (in the EU and elsewhere) increasingly favor healthier, fairer and more-sustainable consumption patterns: recycling waste, using canvas rather than plastic bags, buying locally grown produce and so on. Preserving our planet for future generations is at the core of these patterns.”
To-do list
Activists see the reassessment period as a window of opportunity for Indonesia and Malaysia to address the environmental concerns raised by the EU, including deforestation. For Indonesia, one of the most pressing matters to attend to is the lack of definitive data on oil palm plantations.
Dono Boestami, the head of the Indonesian Oil Palm Estate Fund (BPDP-KS), a Finance Ministry initiative to develop sustainable palm oil, said there were at least three sets of official data about how much land was dedicated to oil palm concessions.
According to figures from the Agriculture Ministry, the oil palm land bank spans 140,000 square kilometers (54,000 square miles); the Central Statistics Agency puts it at between 120,000 and 300,000 square kilometers (46,300 and 115,800 square miles); and the Corruption Eradication Commission (KPK), which has increased its scrutiny of graft in the palm oil sector, records total plantation area at 200,000 square kilometers (77,200 square miles).
“How can we get a valid figure of our palm oil total production when we still don’t know the exact total area of our plantations?” Dono said as quoted by The Jakarta Post. “It’s unsurprising if we get criticized for our lack of valid data.”
Edi Sutrisno, executive director of TuK Indonesia, an NGO that advocates for social justice in the agribusiness sector, said there was no way to achieve sustainable palm oil without a transparent and accurate data set.
“That’s a huge challenge which makes it difficult for the government to determine the potential revenue [from palm oil taxes],” he told Mongabay. “If the data is clear, then I think the efforts to push for sustainability will be clear as well. How can you plan something without clear data?”
The lack of clear data has given rise to problems such as tax avoidance and financial irregularities, according to Muhammad Teguh Surya, executive director of the environmental NGO Yayasan Madani Berkelanjutan.
Many palm oil companies aren’t paying their taxes, with a compliance rate of only 6 to 7 percent, according to the tax office. That’s because the government doesn’t know how many taxpaying entities there are in the palm oil industry.
A recent study by the Jakarta-based think tank Perkumpulan Prakarsa shows a flow of illicit money from the palm oil industry in Indonesia to other countries, including Finland, which doesn’t import palm oil from Indonesia, totaling more than $40 billion.
“So if the government is arguing that it’s defending the palm oil industry because it’s a national interest, why doesn’t it address these problems?” Teguh said. “It’s impossible to argue that this is a national interest if the government allows millions of dollars of money from the palm oil industry to pour out of the country for years.”
And while Indonesia has its own sustainability criteria, the ISPO, it only covers 41,100 square kilometers (15,900 square miles) of plantations, a fraction of the total figures listed above.
Edi said other items on Indonesia’s long to-do list to achieve sustainability include resolving land conflicts between plantation companies and residents, and the looming threat of industrial-scale deforestation in previously untouched regions such as Papua.
In the end, he said, Jakarta has to realize that the biggest enemy of Indonesia’s palm oil industry isn’t the EU.
“There are still many land conflicts, and the expansion of palm oil in Papua continues despite the moratorium,” Edi said. “[And yet] our stance is to be defensive. We’re not being honest about the facts [on the ground]. Regardless of the diplomatic challenge with the EU, our biggest challenge is actually our own nation.”
Banner image: An oil palm plantation adjacent to tropical forest in Borneo. Image by Rhett A. Butler/Mongabay.