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Southeast Asia’s newest cartel is bad news for endangered animals and people who like to breathe

Best stay inside.
By Steve Mollman
Published Last updated This article is more than 2 years old.

This month Indonesia and Malaysia confirmed the imminent establishment of a palm oil cartel, which they’re billing as a way to ensure price stability and develop downstream industry. But a cartel could help the industry in another way: by allowing them to ignore calls to adopt more environmentally friendly production practices.

Between them, the Southeast Asian nations account for about 85% of the world’s palm oil production, with Indonesia being the biggest producer. The industry they dominate is notoriously bad for the environment—it releases millions of tonnes of carbon dioxide into the air every year and is behind deforestation that’s destroying the habitats of the Sumatran tiger and the orangutan.

Four years ago the Indonesian Palm Oil Association withdrew its membership from the Roundtable on Sustainable Palm Oil (RSPO), a nonprofit association formed in 2004 to establish ethical and ecological standards for producing palm oil. Seated in Zurich, the RSPO certifies palm oil if it meets certain criteria, such as protecting and conserving the environment around the plantation and dealing with its workforce and local communities in a responsible way.

Instead, the cartel will lobby the governments of India and China to accept its own standards, which have not yet been set but are sure to be less onerous than the RSPO’s. Asian nations are bigger buyers of palm oil than Western ones, and India is by far the world’s largest importer (with Indonesia being its main supplier). China comes in third, after all of the European Union.

And these buyers, apparently, don’t care too much about the environment. “Our primary customers are not concerned about deforestation,” an Indonesian forestry minister stated in March. While Europe puts much of the pressure on Indonesia not to cut down and burn forests to make way for plantations, it only buys 8% of the country’s palm oil. Asian nations—led by India, China and Pakistan—buy 55% of Indonesia’s palm oil exports.

Part of the reason India doesn’t pressure Indonesia to adopt environmentally-friendly production practices is cost. Certified, sustainable palm oil comes at a higher price, and in a country where 21% of the population lives below the poverty line, even a small price increase can inflict pain.

If India and China throw their weight behind the cartel standards, the industry has less reason to heed tougher standards, and that could be bad news for the people, the forests, and the animals in Southeast Asia. Palm oil production contributes greatly to the persistent haze that’s covered a large part of the region over the past few months, caused by fires set each dry season on Sumatra and Borneo in Indonesia to cheaply clear land.

As palm oil producers look for more land, they often turn to peatlands—swampy areas, rich in organic matter, that must be drained and cleared for agricultural use. Drained peatlands are highly flammable, and fires set in them are not like typical forest fires. They smolder for a long time, are fiendishly hard to extinguish, and produce extraordinary amounts of smoke.

The problem is compounded by the El Niño weather phenomenon, which delays rainfall in the region. The combination of burning peatlands and El Niño can produce what’s been described as a “carbon bomb,” where incredible amounts of toxic smoke are released into the planet’s atmosphere.

One of the biggest such occurrences was in 1997, when the haze from Indonesia’s fires reached Australia and China, and released the equivalent of 13% to 40% of that year’s global man-made emissions. This year, the Indonesian fires have so far produced the rough equivalent of Germany’s annual carbon dioxide emissions, according to Guido van der Werf, a researcher at VU University Amsterdam. The resulting haze has led to health issues, school closings, and flight cancellations.

Such problems have led to building pressure over the years—especially in the West—to force the industry into more sustainable means of producing palm oil, and calls for palm oil bans. But demand from India and China have helped to push Indonesia’s production to new highs instead.

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