T

he visit by the Environmental Protection Agency (EPA) to assess crude palm oil quality may have a positive outcome and could eventually boost exports to the US.

In January last year, the agency announced that Indonesian biodiesel produced from palm oil could only reduce greenhouse gas emissions by 17 percent.

Palm oil biodiesel was then removed from the list of environmentally friendly commodities as it does not meet the 20 percent benchmark to qualify as '€œrenewable'€ under the Renewable Fuel Standards.

Had palm oil diesel been included in the list, it would enjoy an import tariff reduction up to 5 percent.

This week'€™s visit is the second tour by the EPA to Indonesia following one last October when they surveyed an oil palm plantation in Riau and held talks with smallholders. They also met with the government and industry groups.

Trade Minister Gita Wirjawan said on Wednesday that the visit was crucial for the US agency as its findings should be announced by the end of July.

'€œWe hope the agency will come up with a favorable result for us and this will help us to put palm oil on the environmental goods list with APEC [the Asia Pacific Economic Cooperation],'€ he said.

EPA officials had collected information during their first visit in October but the data was not
followed up, apparently due to internal restructuring.

Two agriculture products '€” palm oil and rubber '€” are being pushed towards APEC'€™s list of environmentally-friendly commodities ahead of the APEC summit in Bali, in October.

Commodities on the list will be entitled to import duty reductions of up to 5 percent by 2015.

So far, the palm oil initiative has received a less than lukewarm response from majority of APEC members, particularly the US, despite support from some members such as Chile, Peru and Papua Guinea.

The government has repeatedly conveyed its determination to keep fighting for the issue until the upcoming summit.

Trade Ministry director general for export development Gusmardi Bustami added during the visit, the EPA officials were scheduled to assess palm oil management, finalize their data gathering and to hold discussions with local experts on carbon emissions by palm oil plantations.

'€œWe aim to compare EPA'€™s carbon emission analysis to our own so there will be more transparency,'€ he told The Jakarta Post.

According to EPA, palm oil-based biodiesel reduces greenhouse emissions by only 17 percent compared to petroleum diesel that it aims to replace and this estimate includes the emissions of the entire process of converting palm oil to biodiesel.

The US is not a big export destination for palm oil, but the eligibility and inclusion of palm oil in the program, would likely boost shipment.

In its regulatory filing, the EPA said that to deliver a projected 400 million gallons of biofuel to the US, Indonesia and Malaysia, the world'€™s biggest palm oil producers, would generate 2 million tons carbon dioxide each year over 30 years due to the clearing of peat swamps and forests.

Greenpeace claim that damage to peatland, partly due to palm oil production, contributes to environmental degradation, including four percent of global greenhouse gas emissions. It is also claimed that palm oil is responsible for eight percent of all annual global emissions caused by burning fossil fuels, due to the clearing of large areas of rainforest for plantations.

Many Indonesian and Malaysian rainforests lie on peat bogs that store great quantities of carbon. Deforestation and bog drainage to make way for new plantations releases this carbon.

In May 2010, after a contribution of US$1 billion from Norway, a two-year suspension on new agreements to clear natural forests and peatlands was announced.