'Climate bomb' warning over deforestation for palm oil

FE Team | Published: November 17, 2007 00:00:00 | Updated: February 01, 2018 00:00:00

John Aglionby, FT Syndication Service
NUSA DUA (INDONESIA): Rampant deforestation in Indonesia for conversion to oil palm plantations could "detonate a climate bomb" if it is not controlled, Greenpeace warned in a recent report.
The environmental group cited the predicted destruction of millions of hectares of peatland forests as being of particular concern, since they contain some of the densest carbon reservoirs on earth and would emit billions of tonnes of greenhouse gases if converted into plantations.
Greenpeace blames soaring global demand for palm oil in food, cosmetics and biofuel for the crisis as much as the producers.
"Trade in palm oil by some of the world's food giants and commodity traders is helping to detonate a climate bomb in Indonesia's rainforests and peatlands," said the report, entitled How the Palm Oil Industry is Cooking the Climate. "Efforts to prevent dangerous climate change will not succeed unless this and other industries driving forest destruction are brought under control."
The report says 1.8bn tonnes of greenhouse gases are released annually by the degradation and burning of Indonesia's peatlands, some 4.0 per cent of total emissions.
It focuses on Riau province on Sumatra, where Greenpeace has built a camp to monitor and try to mitigate deforestation and peatland destruction. If the 4.0m hectares of Riau's peatlands are destroyed the amount of greenhouse gases emitted would be the equivalent of global annual emissions, the report says.
Global production of palm oil is currently some 37m tonnes a year, of which 17m is produced in Indonesia. Palm oil futures on the Malaysian derivatives bourse, the global benchmark, recently hit 3,000 ringgit for the first time.
Experts predict demand for plant-based oils will grow at some 4.0m tonnes a year and expanding oil palm plantations in Indonesia is regarded as the only easy way to meet this demand. Some 300,000 hectares of new oil palm plantations are targeted to be planted each year for the next five years.
Derom Bangun, the CEO of the Indonesian Palm Oil Association, accepted some companies could well be destroying peatland forests. "We don't know what all of them are doing when they plant," he said.
The industry is moving to become more sustainable. The Roundtable on Sustainable Palm Oil, a coalition of producers, consuming companies, banks and non-governmental organisations, is expected to finalise its criteria for sustainability this month and begin certification of plantations early next year.
M R Chandran, of Platinum Energy in Malaysia and a founding member of the RSPO, said most of the established companies were working hard to improve their sustainability but many newer companies were less concerned.
"They're just looking, at palm oil as a great investment opportunity," he said. "Those who came in the past seven years, for every dollar invested they're looking at a $20 return."
Mr Chandran predicted the amount of peatland destroyed would decline because of the mounting environmental outcry and the fact that peatland is 30 per cent more expensive to convert than forests.