Indonesia likely to push back green palm oil plan deadline

Indonesia is likely to push back the start of its green plan for palm oil companies beyond 2014, a top official of the country’s largest-listed palm firm said, as it struggles to finalize the certification process for the hundreds of companies involved.
Home to the world’s third-largest expanse of tropical forests, Indonesia is under intense international pressure to limit deforestation and destruction of its carbon-rich peatlands, at risk from urbanization and the rapidly expanding palm and mining sectors.
The world’s biggest palm oil producer, whose output is expected to hit around 28 million tons this year, was scheduled to have introduced the mandatory Indonesia Sustainable Palm Oil (ISPO) certification system by the end of 2014. But that is looking difficult, said Daud Dharsono, president director at PT Sinar Mas Agro Resources & Technology or SMART, a subsidiary of Singapore-listed Golden Agri-Resources.
“It is a challenge,” Dharsono told Reuters, speaking at an event to launch a new forest conservation pilot project.
He added, “They will extend the time. There are some limitations and challenges, but the government and all the industry will have to support the ISPO.”
The plan aims to regulate, audit and examine palm oil firms, forcing them to adopt green standards and sustainability policies.
Overseeing it is a commission of officials from government institutions and ministries, palm oil groups, and non-government bodies.
Palm firms that comply with the ISPO rules may benefit from more favorable export taxes, while those that do not may be forced to close, the deputy agriculture minister said last year.
Many in the industry say the ISPO is very similar to the internationally recognized Roundtable on Sustainable Palm Oil (RSPO), while others call it a watered-down version.
The RSPO is an industry body of consumers, green groups, and plantation firms assembled to promote the use of sustainable palm products.
Despite many major European palm oil buyers saying the RSPO will remain as the international sustainability marker, the Indonesian Palm Oil Association withdrew from it in late 2011, giving its full backing to the Indonesian plan instead.
Palm oil is used mainly as an ingredient in food such as biscuits and ice cream, or as biofuel, and estates growing palm in Indonesia sprawl across 8.5 million hectares.
The Indonesian Palm Oil Association says there are now about 700 palm oil plantation mills in the country.
Last year the U.S. Environmental Protection Agency visited Indonesia after ruling that palm didn’t meet green standards to qualify for the U.S. renewable fuels program. A final decision on palm oil is still pending from the EPA.
Palm oil consumption in Europe could be curbed next year, when the region introduces new labeling rules for products containing the ingredient.
To boost its green credentials, Indonesia imposed a two-year ban on clearing forests in May 2011 under a US$1 billion climate deal with Norway aimed at reducing emissions from deforestation. As the end of the term nears, the government has yet to announce whether it plans to continue with the ban.
(March 14, 2013)