(AU) Green fuel gets a black name

[Guest guest]

Green fuel gets a black name

Sydney Morning Herald

October 13, 2007

 

The race for clean energy may be doing more harm than

good, writes Marian Wilkinson.

 

It is a sickening picture. A photograph of six

soft-eyed baby orang-utans stamped with the words

" Orphaned by Palm Oil companies " . The image, along

with scores of others showing adult apes staring out

through the bars of cages, has created a public

relations disaster for global companies buying the oil

that many hoped would fuel a green energy boom.

 

This week, as Greenpeace International launched a

" Forest Defenders Camp " in the Indonesian province of

Riau, where swathes of orang-utan habitat have been

cleared by felling and fire for lucrative palm oil

plantations, the " oil for ape " scandal hit Australia.

 

Caught in the middle is a quietly spoken Sydney

businessman who walked away from the petroleum

industry several years ago convinced that price,

supply and climate change made it yesterday's game.

Barry Murphy, a former Caltex Oil chief, plunged into

the heady world of " clean " energy hoping to fuel

Australian industry with diesel made from the world's

second most popular edible oil.

 

" It would be foolish to ignore the fact that people

are anxious about fossil fuel and its effect on the

environment and that it's not sustainable, " Murphy

told the Herald last week. " People are naturally

looking to palm oil. " Why? " It has the highest yield

of any of the vegetable oils. You can get 4000 to 5000

litres of oil per hectare per year. " That is about 10

times more productive than soya beans.

 

Perhaps unfortunately, Murphy is not alone in his

thinking. In January this year, the China National

Offshore Oil company reportedly signed contracts to

develop 1 million hectares of palm oil plantations in

Indonesia and Papua New Guinea.

 

This thinking has sent palm oil stocks soaring.

European countries hoping to slash their greenhouse

gas emissions by using biofuels have also turned their

attention to palm oil. Already a ubiquitous ingredient

in supermarket products from margarine to lipstick,

palm oil's promise as a clean biofuel supercharged the

price which reached a staggering $US828 ($921) a

metric tonne last month, a leap of more than $US300 in

just one year.

 

But the palm oil boom is proving to be an ecological

disaster in Indonesia and Malaysia, which produce more

than 80 per cent of the world supply. The trade has

helped drive Indonesia's spectacular rate of

deforestation and the burning of its peatlands. Early

this year, the United Nations released a report on the

crisis, finding that the explosion in palm oil

plantations " is now the primary cause of permanent

rainforest loss " in Indonesia and Malaysia. As the

forest disappears, local environmentalists estimate

that up to 50 orang-utans are dying each week.

 

More importantly, the rate of destruction makes

Indonesia the third largest producer of greenhouse gas

emissions in the world after the US and China. With

new satellite imagery showing that South-East Asia's

rainforest is disappearing at a rate 30 per cent

faster than predicted, the implications of the palm

oil boom are now galvanising world attention from

Geneva to Canberra.

 

When the NSW Greens targeted Barry Murphy's Natural

Fuels Australia Limited this week, the federal

Environment Minister, Malcolm Turnbull, was quick to

say that the local companies using palm oil had

undertaken to get stocks from suppliers that abide by

the Roundtable on Sustainable Palm Oil. Turnbull went

a step further, pledging that Australia would push for

international action at the UN Bali climate talks in

December to establish a sustainable palm oil industry,

" as part of its efforts to curb global deforestation " .

 

Turnbull's new-found interest in the palm oil industry

attracted criticism from environmentalists as too

little too late. While Australia promised $200 million

earlier this year to fight deforestation in South-East

Asia, Canberra has yet to fully come to grips with the

destructive scale of the palm oil business just to our

north. As yet there are no accredited sustainable palm

oil suppliers.

 

As chairman of Natural Fuels Australia, Murphy has

spent the past two years working global corporations

like Unilever and Cadbury Schweppes on the Roundtable

on Sustainable Palm Oil over the vexed question of

sustainability. His company is part-owned by Natural

Fuels Ltd, chaired by the former Liberal Party leader

John Hewson, which has a big Singapore plant under

way, and Babcock and Brown Environmental Investments.

Murphy's company began work on its Darwin biodiesel

plant this year - based on palm oil from South-East

Asia - and it is expected to be operational by

December.

 

But how do you produce palm oil in a way that does not

damage the environment, threaten endangered species

and exploit local landowners when the sheer scale of

plantation expansion is breathtaking? The

environmental activist group Palm Oil Action says

Indonesian figures show plantations there have

expanded from 600,000 hectares in 1985 to 6.4 million

last year.

 

This year's UN report, The Last Stand of the

Orang-utan, found that the drive for palm oil biofuel,

rather than helping to curb greenhouse gas emissions,

was making them worse. " Ironically, in the desire to

cut CO2 emissions, Western markets are driving

ecosystem destruction and producing vast and

significant CO2 emissions through forest burnt and

peat swamp drainage, " the report said.

 

Murphy is acutely sensitive to the debate. " We

recognised early on there were concerns about palm

oil, " he told the Herald. " They have gone up the scale

rather rapidly. They are real issues, they are world

issues and they have to be addressed. "

 

Murphy is frustrated by organisations like Greenpeace

and Friends of the Earth that are demanding a

moratorium on any new plantations. This week, the NSW

Greens MP Ian Cohen publicly called on the State

Government to block plans by Natural Fuels to build a

$30 million biodiesel plant at Port Botany because it

will be fed by palm oil.

 

Murphy is heading to Kuala Lumpur next month for a

critical meeting of the Roundtable hoping to get a

credible scheme for the certification of sustainable

palm oil. He is all too aware of the criticism that a

self-regulated industry group is unlikely to produce a

system that satisfies many environmental activists.

 

He points out, however, that the industry is not going

to disappear and controls are critical - a view echoed

by WWF.

 

" Just pointing fingers and saying palm oil is bad or

palm oil for biodiesel should not be allowed is not

the issue, " Murphy contends. " There's no free lunch. "

 

The global debate over palm oil has focused attention

on just how climate-friendly so-called " biofuels "

really are. This debate comes just as the NSW

Government introduced its scheme mandating that

ethanol-blended petrol must form 2 per cent of the

total petrol sold in the state. The oil giant BP has

taken on the challenge with fanfare, saying its E10

blend of " renewable ethanol " (10 per cent ethanol with

90 per cent petrol) is made from local wheat and sugar

byproducts - and contains no palm oil.

 

BP globally is big on biofuels but, like all energy

companies wrestling with greenhouse gas emissions, the

company is aware of the fraught debate over

" sustainable " biofuels. In the US, the

Government-backed push for corn-based ethanol is

creating friction between corn growers and cattle and

pig producers who are angry at the rising price of

their feedstock.

 

In Mexico, record corn prices early this year, driven

by biofuel production, fanned strikes and protests

when the cost of corn tortillas, a basic food, shot up

30 per cent. And with climate change also expected to

lead to longer droughts and more severe floods,

threatening food production globally, serious

questions are being raised over the use of

agricultural land for fuel crops.

 

In Australia, the fledgling industry is also battling

to overcome early difficulties outside sustainability

questions. Companies are using products such as tallow

(animal fat) that will not be hit by the price shocks

seen in corn and wheat. Even algae are under

investigation as potentially producing 40 times as

much fuel per hectare as corn.

 

The independent operator Australian Biodiesel Group,

which uses tallow, is calling on the Federal

Government to mandate a 2 per cent target for biofuel

nationally, especially for biodiesel. Its chief

executive, Martin Earp, fears the small biodiesel

industry not linked with the big oil companies " is on

the verge of collapse " . He said Federal Government

disincentives, combined with the distribution power of

the main oil companies, are pushing out the smaller

companies.

 

With climate change a key issue in the upcoming

election, both the main political parties will be

putting forward policies supporting biofuels as a way

of combating climate change. But with a more critical

spotlight on the industry, both companies and

environmental groups will be demanding a more complex

and credible approach than the one on offer so far.

 

http://www.smh.com.au/news/environment/green-fuel-gets-a-black-name/2007/10/12/1\

191696173955.html

 

 

 

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