Hakym via FlickrMarcel Silvius recently declared in the Herald Tribune that palm oil is a failure as a biofuel. Rhett Butler over at Mongabay thinks otherwise, as he argues in an article titled, um, “Palm oil is not a failure as a biofuel.” His main point is that even if America and Europe were to reject palm oil biodiesel as inherently unsustainable, the forests would still be converted to palm oil by China. We can’t stop its development by refusing to use it, so we (by “we” he means Europe) need to get in there and finance the establishment of sustainable practices now or we will have no say in the matter later. China will own the industry:

China appears to be ramping up for a massive expansion of diesel car production. Where is the diesel fuel to power these vehicles going to come from? Smart bets are on oil palm in southeast Asia and soybeans in the Amazon. Why else would state-backed Chinese firms be bankrolling oil-palm development in Indonesia and infrastructure projects linking coastal South America to the heart of the Amazon?

Since demand for palm oil isn’t going to go away, Europe’s best approach is to convince Indonesian oil-palm producers to cultivate their crop in a manner that’s less damaging to the environment.

This won’t be done by hand-holding or Kumbaya circles; it will be done through financial incentives — if no one is demanding “green” palm oil, no one will produce it. Europe should inform producers that it is willing to buy a set amount of palm oil (in billions of liters per year), provided that it is independently certified as having been produced in an environmentally friendly and socially equitable way. Europe may even want to offer a minimum price guarantee to satisfy producers that it intends to hold up its side of the bargain.

Europe should engage the Indonesian government as well. It should urge Indonesia to eliminate subsidies for oil-palm plantations grown on natural forest lands, ban development of peatlands, and set aside primary forests for conservation in exchange for funds reflecting the value of the carbon emissions avoided. (Since deforestation produces greenhouse gases, reducing forest clearing cuts global warming emissions.)

Since neither the United States nor China is going to take the lead on this issue, Europe should not miss the opportunity to do so.

Now’s the time to act. Almost everyone will be better off from greener palm oil.

This article from the Guardian critiquing palm oil supports Rhett’s position that Indonesia is still open to offers of financial help on a first come, first served basis:

Jakarta is increasingly aware of the dangers, highlighted by its inability to prevent continuing illegal logging. But it is keen to grab the chance and is pledging to put in place regulations to seize allocated palm oil land not planted within a time limit.

Yet as a developing country it also believes Europe must help out financially if it wants the safeguards against the downside of palm oil production that will assist in cutting greenhouse gas.

“The Indonesian government simply doesn’t have the capability or the capacity to do this alone without the support of the Europeans, the US, Japanese, or whoever,” said Alhilal Hamdi, chief executive of Indonesia’s biofuels development board. “It’s no good other countries looking to us to help cut their CO2 emissions without helping to support us in that effort.”

I have to cede this debate to Rhett — with some caveats. In the end, the free market is going to dictate how palm oil is grown. Consumers must begin applying pressure by refusing to use environmentally destructive biofuels so investors will respond by funding the establishment of sustainable production on Indonesia’s vast stretches of deforested and abandoned wasteland (which I did not know existed). All consumers, including Chinese consumers, must exert this pressure. We need to get the message out to them (as well as to the United States and Europe). China has celebrities now calling for the end of shark fin soup and other environmentally destructive practices. This issue needs to be added to the list.

And let’s not kid ourselves — Indonesia is going to sell its last rainforests to the highest bidder. If we don’t get in there soon and pay with some kind of carbon offset scheme to lock what remains away, the profit motive is going to convert them all into palm plantations. It is a complex world. Maybe we should get on this now while our line of credit with China is still good, essentially borrowing money from them to lock the carbon sinks away from them (and us).