Renewables Update

Great Risks Involved in Palm Oil Power Generation:
Sustainability Standards Are Urgently Needed in Japanese

12 September 2017 (Japanese original published on 4 September 2017)
Takanobu Aikawa, Senior Researcher, Renewable Energy Institute

Developments in palm oil power generation under FiT

Bioenergy generation capacity registered under the Feed-in Tariff scheme (FiT) is rapidly growing. As of 31 March 2017, more than 12 GW had been registered for biomass generation, among which 11 GW or more was for "ordinary wood and agricultural residues" mainly using imported woody biomass. In November 2016, Renewable Energy Institute published a set of recommendations, pointing out problems such as concerns over fuel shortage and limited development of combined heat and power (CHP) 1 . However, within a year after after the recommendations were published, 8 GW of ordinary wood has been registered. Some measures must be taken immediately 2 . Meanwhile a new problem has emerged as palm oil power plant has been registered under the FiT and put into operation.

In the first place, imported fuels are not helpful in terms of energy self-sufficiency and security, giving smaller economic spillover effects on forestry and other related industries. Among them, palm oil is especially problematic. First, palm oil, accounting for roughly a quarter of vegetable oil and fat consumed in Japan, is used mainly for processed foods, as well as material for soap and detergent. Such uses are feared to compete with fuel. Power producers say on their websites that they use "non-food" palm oil for fuel, probably inedible by-products produced at the refining process, for now 3 . Still, it should not be ignored that palm oil production itself has several problems repeatedly pointed out, such as infringement of indigenous people's rights, forced labor 4 , deforestation, and the loss of biodiversity 5 .

Palm oil production has another fatal flaw from the standpoint of energy policy, as it emits significant amount of carbon dioxide (CO2). Before allowing palm oil to be used as fuel, comprehensive analysis must be performed to review environmental risks of palm oil production, and take necessary measures based on the findings. It may be that, for instance, palm oil power generation should be excluded from the FiT, or that the power plants must satisfy certain standards to be made eligible for the scheme.

CO2 emissions from palm oil production

CO2 emissions from palm oil production are mainly related to the development of the land for its production. In Indonesia and Malaysia, major producers of palm oil, plantations are developed in lowland swamp forests, resulting in CO2 released from soil, especially peat. Even when parts of the existing agricultural land are converted into oil palm plantations, some forests may have to be cut down to develop new agricultural land. Taking into consideration such indirect changes in land use, it turns out that palm oil production releases a much greater amount of CO2 than generally thought to be the case.

Many studies have already pointed out the significant amount of CO2 emitted through palm oil production 6 . The latest study, commissioned by the European Commission, has also revealed that as a result of land use change, consumption of palm oil as biofuel emits 231 g CO2-eq/MJ, greater than any other material, far exceeding coal releases 90.6 g CO2-eq/MJ 7  8 . The Roundtable on Sustainable Palm Oil (RSPO), an organization that grants certification to sustainable palm oil, published a report which concluded the CO2 emission factor of palm oil is larger than that of fossil fuel 9 .

EU and the US move to ban use of palm oil as fuel

Based on accumulated knowledge on problems caused by palm oil mentioned above, the European Union and the United States have imposed restrictions on use of palm oil as biofuel. In the United States, in the first place, palm oil is not allowed to be used as biofuel, as it only produces smaller CO2 reduction effects than the standards 10 .

In the EU, around half of 6.6 million t/year of imported palm oil has been used as auto fuel, but the EU is in the direction of imposing restrictions to palm oil. Specifically, the EU revised the Renewable Energy Directive in 2015 to modify its scheme in a manner to take into consideration effects of changes in land use, as well as to set higher standards for reduction of greenhouse gas emissions. In May 2017, the European Parliament adopted a resolution that use of vegetable oil that might result in deforestation as fuel, especially for automobiles, be phased out by 2020 11 .

Environmental load of fuel must be quantified urgently

As outlined above, use of palm oil causes many social and environmental problems. Among them, the amount of CO2 emission, larger than that from fossil fuel, is a fatal flaw from the standpoint of energy policy. Europe and the United States are considering banning or restricting use of palm oil as fuel. In contrast, it is hard to say that Japan, despite being aware of the risk that using palm oil as fuel may compete with food production, fully understands the problems caused by palm oil production — human rights violations, deforestation, and CO2 emissions.

That helps maintain the current FiT scheme that grants approval to palm oil power plants running. For instance, a power plant with an output capacity of 10 MW is said to consume 20,000 t/year of palm oil. Seeing that Japan imports 600,000 t/year of palm oil, of which 20,000 t/year is used by major detergent producers, it could be imagined what a large impact is made by fuel for power generation.

In principle, all the other bioenergy resources, in addition to palm oil, should also be examined under a uniform method to quantify their risks and environmental load, including CO2 emissions. For that purpose, Japan can refer to research data Europe and others have accumulated so far. Based on the results, Japan should also set standards for sustainability, including CO2 emissions, and exclude any fuels from the FiT scheme if they fail to satisfy such standards.

 1 Renewable Energy Institute, "Recommendations for Woody Biomass Power Generation under FiT" (Published in English on 26 December 2016),
 2 However, as of March 2017, capacities of only 0.33 GW had been installed for ordinary wood and agricultural residues.
 3 The "Business Plan Guidelines" under the FiT scheme states, "For biomass generated through harvesting of farm products, traceability must be secured; effort must be exerted to use the fuel in a sustainable manner; and consideration must be paid to competition with food production."
 4 For example, Amnesty International (2016) The great palm oil scandal - Labour abuses behind big brand names
 5 For example, UNEP (2009) Assessing Biofuels -Towards sustainable production and use of resources
 6 Laborade (2011) Assessing the Land Use Change Consequences of European Biofuel Policies; UNEP (2009) op. cit.
 7 The value for ordinary coal in "The Calculation Method and List of Emission Factors under the Calculation, Reporting, and Disclosure System", the Ministry of the Environment.
 8 ECOFYS (2015) The land use change impact of biofuels consumed in the EU
 9 RSPO (2009) Greenhouse Gas Emissions from Palm Oil Production -Literature review and proposals from the RSPO Working Group on Greenhouse Gases