The New York Times has a good piece on the environmental problems associated with palm oil production. Palm oil can be thought of as the European equivalent of ethanol, to the extent that it is increasingly sought after as a substitute and additive for petrol. Unlike ethanol–which in the US is primarily produced domestically–Europe requires extensive imports of plam oil, given that it is a tropical crop.
The article points out that Indonesia and Malaysia have been expanding their production of palm oil as the demand for biodiesel increases in Europe. As a result, more rainforests and peatlands are being transformed into palm plantations, causing significant localized environmental problems, while the big European importers reap the benefits of a so-called “green fuel.”
Given dwindling global fossil fuel supplies and increasing demand for alternatives, it remains unclear what types of policy shifts can take place. Large multinational agribusinesses like Cargill are building European refineries to facilitate the processing required to turn the raw oil into biodeisel. The governments of Malaysia and Indonesia show little resolve to adequately regulate the production and other countries, like Venezuela, are getting into the palm oil game.
As the discussion in the US turns to ethanol as a replacement for petrol, it is important to recognize that there are significant ecological consequences associated with the production of biofuels.