By the Blouin News Business staff

Nutella row spotlights palm oil’s environmental destruction

by in Asia-Pacific.

A Sime Darby Bhd. employee moves palm leaves at the company's palm oil plantation in Pulau Carey, Selangor, Malaysia, on Wednesday, Feb. 11, 2015. Bloomberg/Bloomberg via Getty Images

Moving palm leaves at a palm oil plantation in Pulau Carey, Malaysia, Feb. 11, 2015. Bloomberg/Bloomberg via Getty Images

France’s ecology minister, Ségolène Royal, caused a stir following her comments in an interview late on Monday on Canal+: “We have to replant a lot of trees because there is massive deforestation that also leads to global warming. We should stop eating Nutella, for example, because it’s made with palm oil.” She added that “Oil palms have replaced trees, and therefore caused considerable damage to the environment.” Ferrero, the Italian maker of Nutella, promptly issued a statement on Tuesday that it is committed to using 100% sustainably-sourced palm oil in its products. And rushing to the company’s defense, Italy’s environment minister Luca Galletti told Royal to “leave Italian products alone.”

If Nutella’s environmental commitments are indeed fully accurate, it is a misguided target. Most palm oil is not sustainable, and the rising numbers of plantations in Indonesia and Malaysia (which account for 85% of global palm oil production) have destroyed vast areas of tropical rain forest. This habitat loss threatens the survival of endangered species including the Sumatran tiger, the orangutan, the Sumatran elephant, and the Javan rhino. And besides contributing to global climate change, the slash-and-burn method of clearing land also results in major localized air pollution.

However, palm oil is a widely-used global commodity (complete with futures trading and spot markets), and about half of all supermarket products contain it, including many types of food and cosmetics. Oil palms are already among the most profitable cash crops for developing countries that can grow them.

The U.S. has led the strong growth in demand for palm oil; those imports climbed 352% between 2002 and 2012, to about 1 million metric tons per year. And demand is likely to keep grow in the near future, due to recent top-down regulatory changes in the U.S., Indonesia, and Malaysia. On Tuesday the U.S. Food and Drug Administration ordered food manufacturers to stop using trans fats within three years, because their main ingredients–partially hydrogenated oils– “are not ‘generally recognized as safe’ … for use in human food.” Palm oil is commonly used as a substitute for trans fats, and indeed many food manufacturers and fast-food chains have already made the switch.

Meanwhile, higher biodiesel targets are driving demand for palm oil. The U.S. Environmental Protection Agency said in May it would target a near 50% increase in the use of biomass-based diesel by 2017. Indonesia and Malaysia are also trying to raise their domestic use of palm oil in fuel, to both support the market as well as reduce expenditures on imported diesel. The Wall Street Journal reported that earlier this year, Indonesia introduced requirements to blend up to 15% of a palm oil feedstock in fuels by the end of 2015, with plans to later increase the ratio to 20%. And last week Malaysia’s government said it plans to increase the allowed blending of palm oil feedstock into biodiesel from 5% and 7% to as much as 10% by October. (However, weak crude oil prices will slow implementation of these goals, because palm oil is currently more expensive than fossil fuels.)

That said, media attention and consumer action can make a real difference. Following a public pressure campaign, the major palm oil company Astra Agro Lestari announced earlier this month a moratorium on all forest clearance in Indonesia, effective immediately. And a recent study found that consumers would be prepared to pay between 15% and 56% extra for products containing palm oil if they knew that it would help to protect the natural habitats of threatened animals and plants in Indonesia and Africa, where palm plantations have spread rapidly over the past 20 years.

Progress is still slow, but sustainably harvesting palm oil (for sale at a premium price) while conserving nearby tropical forests is looking a bit more likely.