Palm oil for electricity, heat and transport in the UK

Down to Earth No.84, March 2010

There was a time when public debates around palm oil centred mainly on food ingredients and cosmetics. Today the focus of the debate has shifted to the use of palm oil for electricity and heat generation as well as for transport.

In the last couple of months the UK has seen a nation-wide wave of planning applications for agrofuels-based power stations. Two energy companies W4B Renewable Energy and Vo-gen, mention palm oil as fuel source in their applications, while others have not legally ruled it out. W4B Renewable Energy's application for a 17.8 MW power station in Portland, southwest England, was approved by the local authority at the beginning of this year.

However, W4B's plan to run a much bigger (50 MW) power plant in Bristol was rejected by city councillors on the grounds of fuel source a month later.1

The 'no' vote was a great success for environmentalists, particularly for Biofuelwatch and local campaigners who have worked persistently on an objection petition in the run-up to the planning decision. W4B is very likely to appeal, so the story in Bristol is not over yet, and more planning decisions are likely to be made in other places. Nevertheless, it is certain that messages about the impacts of oil palm - both on communities and in terms of climate change - are getting through as the majority of applications have so far been rejected or withdrawn.

Subsidies & certificates

Agrofuels-based power plants, like the one that W4B plans to build, are subsidised through the Renewables Obligation (RO), which is the UK Government's main mechanism to promote the generation of renewable energy.2 Through the RO, suppliers of electricity are obliged to source an increasing percentage of their electricity from renewable sources.

Renewable Obligation Certificates (ROCs) are supposed to indicate how renewable those sources are. They are 'green' certificates that are tradable between energy companies: if companies do not have enough ROCs to meet their obligation, they have to pay an equivalent amount into a fund. The same fund is used to pay suppliers who have been able to provide their ROCs.

ROCs for palm oil have been widely criticised by environmental groups in the UK. Especially since energy from agrofuels-based power stations is awarded double the amount of ROCs as on-shore wind energy.

Meanwhile, another public body, the UK Environment Agency, which is attached to the government's Department of the Environment, Food and Rural Affairs (DEFRA), recently voiced its concern about the support of palm oil electricity through ROCs as "using solid biomass for electricity generation typically produces much bigger greenhouse gas savings, and is therefore preferable." They state that they do not support ROCs for palm oil burning. Furthermore, the agency states that "lifecycle greenhouse gas emission savings compared to fossil fuels can be minimal, and if land use change is caused directly or indirectly, there is a net increase in emissions."3


EU's renewable energy directive could work against palm oil

Later this year the European Commission will publish a proposal on how to deal with Indirect Land Use Change (ILUC) in the context of the Renewable Energy Directive (RED). This EU law, passed in December 2008, covers energy as well as transport and is due to be implemented at the end of 2010. It requires 20% of energy across the EU to be renewable by 2020 and 10% of energy used in transport to be renewable by the same date.

The RED has been criticised by campaigners due its weak sustainability criteria as it includes direct Land Use Change, but not yet indirect land use change; as it excludes all social criteria; and as it has no credible auditing mechanism.

Direct Land Use Change includes forests being converted for oil palm plantations, whereas ILUC is where lands are cleared to make way for crops that have been displaced by agrofuel crops. Environmentalists hope that the expected regulation on ILUC will reduce the calculated emissions saving from each agrofuel according to their likelihood of causing Indirect Land Use Change. As a result, not a lot of palm oil would be likely to pass the RED criteria.

If ILUC is included in this way, it could well have a positive knock-on effect for communities in producer countries like Indonesia, whose livelihoods are threatened by the expansion of oil palm plantations. Indonesia plans a further 20 million hectares of plantations, according to estimated by Sawit Watch4, building on an existing 7.5 million hectares. Indonesia's National Team for Biofuels Development is proposing that 10.25 million hectares of agrofuels crops (including oil palm) are developed by the end of 2015.5 If subsidies supporting imports of palm oil are withdrawn across Europe, this could have the effect of scaling down those expansion plans.


Heat and transport

Palm oil and other agrofuels are not only being supported by the government in terms of electricity generation. The UK government has now also proposed a new subsidy scheme for heat generation, the Renewable Heat Incentive (RHI). The current consultation paper suggests limited subsidies for agrofuels. According to Biofuelwatch figures, around 3 billion litres of heating oil are burned every year in the UK. So even if just a small percentage was replaced by agrofuels, this would have a big impact on the amount of agrofuels used per year. If the RHI was to also cover pure plant oil like the RO then the volumes of agrofuels subsidised under the RHI would be even greater. Palm oil is the cheapest vegetable oil and thus likely to be used for much of the new demand, unless restricted by EU legislation.6

In addition to the recent discussion on electricity and heat, the palm oil debate in the UK is very much related to the transport sector. Agrofuels for transport are covered under the UK Renewable Transport Fuels Obligation (RTFO).7

The Renewable Fuels Agency (RFA), which has been commissioned by the Department of Transport to implement the RTFO, has published a report about the first year of the RTFO in January 2010. According to this report only 9 percent of agrofuels used here in the UK is produced from domestic feedstock. Moreover, just 4% of agrofuels imported to the UK meet the environmental sustainability standard of the RTFO. Around 15% of agrofuels from crops was declared to be sourced from palm oil. However, the current reporting scheme allows companies to declare the origin of recently cleared land as "unknown land". So, for example, fuel retailer Esso was able to specify the source of a mere 6% of its agrofuels.8 As soon as RED is adopted at national level next year, companies will have to declare the previous use of all the land from which they source their agrofuels. One loophole: this does not apply to suppliers if land was cleared before 2008.

Whether it is electricity, heat or transport, it seems as if the UK palm oil debate is more controversial than ever at the beginning of the new decade. At the end of last year, the Roundtable on Sustainable Palm Oil rejected greenhouse gas emissions standards. Now new legislation proposals are fuelling the debate in the run-up to the implementation of RED at UK level. And latest messages from Brussels about environmental standards are not particularly encouraging either: in February, Friends of the Earth Europe revealed a leaked document from the European Commission. This caused widespread outrage among campaigners because it stated that oil palm plantations can be defined as 'forests', meaning that "a change from forest to oil palm plantation would not per se constitute a breach of the (sustainability) criterion."9

Apparently the Commission is trying to do two conflicting things at the same time: apply sustainability standards to controversial sources of energy, but also accommodate the interests of the powerful Indonesian and Malaysian oil palm lobby. The question now is: what else is to come?



1 Down to Earth, like many other organisations, has submitted an objection statement to Bristol Council. See public statements here (The DTE statement is Statement No.21 on Page 51) and watch the council meeting here See also DTE 76-77: for further background.
3 See also DTE 76-77 for more on studies comparing oil palm to fossil fuels
4 FPP-SW. 2006. Promised Land / Tanah yang Dijanjikan.
7 for RTFO see also DTE 76-77
8 for details of the RFA report see
9 See press release by FoE Europe at