The Status of Palm Oil Under the European Union’s Renewable Energy Directive: Sustainability or Protectionism?

Abstract

According to the European Union’s recast Renewable Energy Directive (RED II), the EU aims to phase out feedstock biofuels that involve high indirect land-use change (ILUC) by 2030, which includes crude palm oil only. Indonesia, the world’s leading producer of crude palm oil, contests this regulation, claiming that the classification of biofuels as being produced with high- or low-risk ILUC is discriminatory and inherently protectionist. This study examines the critical ambiguities of protectionism and sustainability, using a legal framework to empirically ascertain the nature of RED II and Indonesia’s institutional response. Southeast Asian palm oil and European vegetable oils (such as rapeseed and sunflower oils) are considered ‘like products’ under World Trade Organization criteria that emphasise product-related process and production methods. RED II has the potential to qualify for exemptions under GATT article XX. However, the extraterritoriality of RED II, which aims to reduce emissions, is contested, as is the unilateral nature of the ILUC risk measurements.