In Brief

2021 in Review: Global Environmental Developments & Future of Palm Oil


2021 was a significant year in terms of climate change. Extreme weather patterns, floods, and droughts alike shook the world. The groundbreaking IPCC report moved the Secretary General of the United Nations calling the year “a code red for humanity.” 

Seeing the climate disasters in 2021, we saw world leaders coming together to address climate change with the United States joining the all-important Paris Agreement, the environment ministers of G7 coming together for a renewed climate agreement and NATO, arguably the world’s most powerful defense alliance, discussing climate change for the first time at its Leaders’ Summit. Efforts that resulted in major global commitments being made towards protecting wildlife and the environment, including bans on the use of plastic, steps taken against the use of fossil fuels and aims of achieving net-zero emissions as soon as possible and by 2050 at the latest. 

Despite steps taken in the right direction, the 2021 Climate Transparency Report published in October told another story altogether stating that the world’s richest nations, responsible for around 75% of global greenhouse gas (GHG) emissions, are still not on track to limit global warming despite raising ambitions. 

European Union’s Climate Ambitions 2021 

The European Union, a historically significant contributor to carbon emissions and an important global player in the fight against climate change, also rolled out massively ambitious plans in 2021. 

In June, the EU issued the European Climate Law, as part of the European Green Deal, for Europe to become  climate-neutral by 2050. As part of the law, intermediate targets were also set to reduce net greenhouse gas emissions by at least 55% by 2030, known as their ‘Fit for 55’ package, including the Carbon Border Adjustment Mechanism (CBAM). 

Also released as part of the ‘Fit for 55’ package was RED II which bans the use of palm oil and talks about using sunflower oil as an alternate biofuel which is produced in Europe. Stating the reason for the ban on palm oil is that it contributes to extensive deforestation in Indonesia and Malaysia. 

The challenge posed by the initiative is that it ignores the impacts it has on vulnerable communities in developing countries. The banning of palm oil use by the EU, for instance, affects the livelihoods of smallholder farmers who happen to form the largest part of the sector globally. 

Meanwhile, oil palm only grows in humid tropical conditions and has the extraordinary advantage of being able to produce more oil per hectare than other vegetable oil sources. As per the 2018 study by IUCN (International Union for Conservation of Nature), oil palm produces up to nine times more oil per unit area than other major oil crops. Palm oil, the report says, produces 36% of food oil globally on just 8.6% of the land dedicated to food oil production.  

The use of alternative crops, like rapeseed and soybeans, leads to inefficient use of land. Even in Europe, for instance, we see France, one of the biggest rapeseed producers within Europe, use it as a source of oil for biofuel. However, it is questionable why the EU does not realize that these crops require much more land to generate the same amount of oil as palm plantations. Rapeseed produces four to 10 times less oil than palm oil per unit of land and requires more fertilizer and pesticides. More than that, they store less CO2 than palm oil. The answer to finding a balance between our needs and that of our forests may lie in European Commissions own proposal. 

Released November 2021, amid its struggle to control imported deforestation, the European Commission published a proposal titled “Proposal for a regulation on deforestation-free products.” For the first time, the commission agreed that voluntary schemes have been ineffective in offering the required outcomes and strongly supported legally binding certifications as an effective policy measure to curb deforestation. 

Both, pre-regulation impact assessment and public consultations (that received nearly 1.2 million responses) stakeholder feedback showed clear support for legally binding options, including mandatory public certifications.  

The Malaysian Sustainable Palm Oil (MSPO), a nationally mandated certification scheme enforced by the Government of Malaysia, which was first launched in 2015 and has since been made mandatory, is a good example of why this support for legally binding certification is well founded. MSPO has achieved prominent outcomes in guaranteeing that the palm oil produced in Malaysia is sustainable across the supply chain, with 93% of all its palm oil sector certified. Furthermore, Malaysia has reduced deforestation levels for four consecutive years

The real question here is, will the EU under the French Presidency pay head to the results from the European Commission proposal and act accordingly in 2022, by introducing more successful initiatives to regulate deforestation-free products and by giving a chance to national certification schemes? 

Deforestation and Global Food Systems Under the Spotlight 

Another area that got attention in 2021 was deforestation and global food systems. By the end of 2021, the IPCC Working Group I report, “Climate Change 2021: the Physical Science Basis” was published, which highlighted that the global temperatures will likely rise 1.5 degrees Celsius by around 2030.  

Following that, COP26 was held in Glasgow, where nations from across the globe focused on the same goals and priorities. With environment in the forefront, leaders from 110 nations signed the deforestation pledge, vowing to eliminate deforestation by 2030. It also focused on the need to limit investments in contributing projects and implement restrictions against tree removal to make room for animal grazing and growing of crops like soy, cocoa and palm oil. 

Palm oil industry is one of the industries within the agricultural sector that plays a key role in protecting the world’s forests. Leading palm oil producers recently announced their commitments to transition to net-zero emissions. This demonstrates that the industry is taking the steps necessary to improve its sustainability performance and world leaders must not overlook this factor. 

Evidence of this is, the Forest, Agriculture and Commodity Trade (FACT) Dialogue, which was launched ahead of COP26. The dialogue brought together the largest producers and consumers of internationally traded agricultural commodities (such as palm oil, soya, cocoa, beef, and timber) in order to promote trade and development while simultaneously protecting forests and other ecosystems. 

Additionally, Global food systems — and their relationship to climate change, received a new level of attention in 2021 as it became a major topic of discussion in light of several significant new government commitments at COP26. The UN Secretary-General’s Food Systems Summit, which took place during the General Assembly in September, featured food and agriculture both as a sector heavily affected by the climate crisis and as a major source of greenhouse gas emissions. 

As global attention to food and climate issues continues to grow, farmers — especially smallholder farmers in the poorest countries — will need much more attention and support to weather the challenges they face on the front lines of the climate crisis in 2022. 

The battle against climate change is a global priority and will best be solved through cooperation and partnership. Taking the pledges made at COP26 forward, an increased collaboration between producer nations and the buyer of palm oil to ensure that global markets reward practices that promote sustainability and disincentivize damaging practices is a more rational scenario. The need is that the commitments made throughout 2021 are translated into legislative action within 2022-23, with transparency, accountability and involvement of indigenous peoples and local communities from the Global South particularly.  

Looking Ahead: What’s in Store for 2022 

The two more immediate developments to watch out for in 2022 are IPCC’s sixth assessment cycle with its three reports which will contain the most up-to-date scientific assessment on the impacts of climate change and its potential solutions. Its results will deeply influence and help shape the global climate conversation toward COP27. 

While 2021 was full of studies, reports, policies and promises around climate change, not all were fulfilled or paid heed to. Progress in 2022, against climate change, deforestation, food- will al among other things will depend on greater North-South collaboration, and on partnership and sincere efforts.