Paper presented at the International Palm Oil Life Cycle Assessment Conference 2009 “Harmonizing

Palm Oil’s Life Cycle GHG Savings”

18th – 20th October 2009

Crowne Plaza Mutiara Hotel,

Kuala Lumpur.

Overview

What is RSPO?

Why do we need sustainable palm oil?

Where we are today

What are the requirements on GHG in RSPO P&C?What are the requirements on GHG in RSPO P&C?

Why the sudden interest in GHG within RSPO ?

Challenges of GHG to RSPO – my perspective

Key areas of concern

Where we go from here?

� Started in 2003, with 7 members, voluntary B2B; registeredon 8 April 2004 as a multi-stakeholder not-for-profit Associationunder Article 60 of the Swiss Civil Code.

� Aims to “To promote the growth and use of sustainable palm

The Roundtable

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� Aims to “To promote the growth and use of sustainable palmoil through co-operation within the supply chain and opendialogue with its stakeholders”.

� Secretariats in Kuala Lumpur (4 staff) and Jakarta (2 staff)

� Annual budget of USD 1m

Sector No of seats

Oil Palm Growers 4

General General General General Assembly (Assembly (Assembly (Assembly (GA)GA)GA)GA)

RSPO GOVERNANCE

Executive Board (EB)

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Oil Palm Growers 4

Palm Oil Processors 2

Consumer goods manufacturers 2

Retailers 2

Banks/investors 2

Environmental NGOs 2

Social/development NGOs 2

16

RSPO Members

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Why sustainable palm oil?

Environmental issues in oil palm cultivation

Forest, peatland conversion

Climate change

Biodiversity loss

Why sustainable palm oil?

Social issues in oil palm cultivation

Land ownership conflicts

Worker’s rights and conditions

Treatment of smallholders

5 billion people use it

Large revenue earner for Indonesia

and Malaysia, and largest for many

rural regions

Why sustainable palm oil?

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Significant share of market

capitilisaton in large producer

countries

Quarter billion people employed

More than 5 million smallholders

Global Warming

Peat CO2

Why sustainable palm oil?

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Fires & Haze

Why sustainable palm oil?

Other Similar Initiatives

� FSC : Forest Stewardship Council (FSC) � MSC: Marine Stewardship Council (MSC) � 4C: Common Code for the Coffee Community � RSCE: Roundtable for a Sustainable Cocoa Economy� RTRS: Roundtable for Responsible Soy

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� RTRS: Roundtable for Responsible Soy� Sugar: Better Sugar Cane Initiative� Salmon and Shrimp: Better Aquaculture Dialogue� BCI: Better Cotton Initiative� RSB: Roundtable on Sustainable Biofuels

Today* : 289 RSPO Ordinary members

111 palm oil processors, traders (38.4%)

78 oil palm growers (27.0%)

45 consumer goods manufacturers (15.6%)

Where we are today

45 consumer goods manufacturers (15.6%)

23 retailers (8.0%)

13 environmental NGOs (4.5%)

10 social, developmental NGOs (3.5%)

9 banks and investors (3.0%)

* July 2009 (excluding 87 affiliate members)

By end of 2009:

� ± 18 certification bodies approved by RSPO

� 350,000 hectares certified

� Four supply chain certification systems operational

Where we are today

� Four supply chain certification systems operational

� Capacity to supply 1.5 million tonnes of RSPO-certified sustainable palm oil (CSPO) per year

2213 Financial viability

10932 Legal

8821 Transparency

Indicators

Oct 2007

Indicators

Oct 2005

CriteriaPrinciples

RSPO P&C for Sustainable Palm Oil RSPO P&C for Sustainable Palm Oil RSPO P&C for Sustainable Palm Oil RSPO P&C for Sustainable Palm Oil ProductionProductionProductionProduction

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12611739

5518 Continuous improvement

201577 Responsible development

2827116 Social consideration

171765 Environmental responsibility

363484 Best practices

National Interpretation (PNG, Malaysia & Indonesia) -

RSPO P&C RSPO P&C RSPO P&C RSPO P&C ---- National InterpretationRSPO

Ensuring congruence between P&C and national laws, norms and values

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National Interpretation (PNG, Malaysia & Indonesia) -2008

NI (Colombia, Ghana, Thailand & Solomon Islands) inprogress

The Roundtable on Sustainable Palm Oil (RSPO)

Among its Principles & Criteria :

Respect for rights of land owners, farm workers,smallholders and their families

No primary forests or high conservation value areas aresacrificed for new palm oil plantationssacrificed for new palm oil plantations

Social & Environmental Impact Assessments & plans to minimize pollution & emissions including GHG

RSPO RSPO RSPO RSPO –––– Challenges aheadChallenges aheadChallenges aheadChallenges ahead

CRITERIA BEING REVIEWED

• Green House Gas Emissions

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• HCV and Biodiversity indicators

• Integrated Weed Management

What are the requirements

on GHG in the RSPO P&C?

Current requirement on GHG in RSPO P&C

� Criterion 5.6 states : “Plans to reduce pollution and emissions,including GHG are developed, implemented & monitored”.

� Indicators :-� 5.6.1 : Documented plans to mitigate all polluting activities

� 5.6.2 : Plans are reviewed annually� 5.6.2 : Plans are reviewed annually

� 5.6.3 : Monitor & reduce peat subsidence rate through water tablemanagement within ranges specified

Guidance : Pollutants and emissions are identified and plans to reduce them aredeveloped in conformance to national regulations and guidance.

Reference : Malaysian National Interpretation of RSPO P&C, April 2008.

Why the sudden interest

on GHG within RSPO?on GHG within RSPO?

Formation of GHG Working Group in RSPO

� The reduction of GHG emissions and the avoidance of deforestation in theestablishment of new plantations are increasingly being highlighted in theRSPO as an emerging and critical issue that require further investigation andadjustments to the existing RSPO P&C, which were adopted in November2005.

� The issue was raised by a number of stakeholders in the P&C review processin Oct 2007, but the RSPO Criteria Working Group (CWG) was not able toincorporate GHG issues into the revised P&C to be presented to the RSPOincorporate GHG issues into the revised P&C to be presented to the RSPOGeneral Assembly 4 in November 2007.

� The CWG made an urgent recommendation to the RSPO Executive Board(EB) for the establishment of a GHG Working Group (GHG-WG).

� The EB at its meeting in November 2008 called for the development of aTerms of Reference (ToR) to guide the establishment of the GHG-WG.

� A consultant was engaged to facilitate the GHG-WG process & the GHG-WGstarted work in March 2009.

How is the GHG-WG supposed to work?

� Short-term, multi-stakeholder expert panel to review the current P&C in relation to GHGemissions in the production of PO and to advise the Executive Board on options for adjustmentof the RSPO P&C

� GHG-WG not envisaged to develop a separate certification or auditing scheme or develop acomprehensive methodology for assessment and monitoring of biomass and GHG emissionsfrom PO operations.

� GHG Working Group will incorporate key features into the existing P&C framework to providecredible proxy measures for GHG emissions, including those originating from above andcredible proxy measures for GHG emissions, including those originating from above andbelow-ground carbon pools from natural and anthropogenic land cover types that areconverted to OP plantations.

� The proposed changes to the RSPO P&C will enable managers and certifiers to assess GHGemissions associated with the establishment of new plantations, ongoing operations inplantations and processing facilities, as well as identify lands where new OP plantations areinappropriate.

� While doing so, it will strive to align and coordinate the RSPO P&C for PO production withcomplimentary standards to promote the use of biomass for fuel applications and sustainableforest management.

What are the objectives of GHG-WG?

� Review and synthesize relevant information on PO production and GHG emissions,particularly related to the development of plantations, but also including plantationoperations, industrial processing and the transport of PO

� Identify options for avoiding or mitigating GHG emissions at all stages of the production chain

� Provide technical guidance and recommendations on how to address GHG emissions from POproduction and processing within the RSPO P&C

� Provide specific recommendations for modifying of the existing RSPO P&C terminology inorder to establish auditable and achievable indicators for units of certification

� Coordination with similar certification schemes under development in forestry, agro forestryand biofuel industries

� Provide objective information from peer-reviewed sources to guide communication related tothe sustainability of PO in the context of biofuel and bioenergy

Challenges of GHG to RSPO –from my perspective

Challenges – part one

� Literature review of key issues regarding GHG emissions and the oil palmindustry – How comprehensive can this be within the short time allocated?

� LCA for OP and other relevant information to identify the main sourcesof GHG emissions from PO production (including land development,drainage, fertilization, plantation operation, processing, and thetransport of palm oil) – are these info readily available?transport of palm oil) – are these info readily available?

� The social dimensions of carbon accounting including “leakage”(displacement of land use) and “permanence” (long term vs. short termland use impacts), market-driven crop displacement, impact on food pricesand other social implications, as well as the potential role of smallholders inPO production - these objectives appear far fetched given the current remitof the GHG-WG

� The availability, accuracy and cost of existing and newtechnologies that can be used to estimate carbon stocks onlandscapes prior to and following the establishment of OPplantations – who is going to bear these additional costs?

� Existing methodologies and approaches for calculation ofGHG emission from OP plantations and processing and

Challenges – part two

GHG emission from OP plantations and processing andoptions of use of proxy indicators (e.g. energy, fertilizer use,previous land use) – need for all stakeholders to agree on anappropriate existing methodology / approach – ISO 14064?Global Observation of Forest and Land Cover Dynamics(GOFC-GOLD, www.fao.org/gtos/gofc-gold/), technicalpanel of the Global Terrestrial Observing System (GTOS)?Other standards?

Challenges – part three

� Develop a “Carbon Score Card” that can aid reporting on thedimensions of total GHG emissions related to PO production –need a comprehensive GHG monitoring system that isapplicable (practical) to the PO industry

� Identify measures that will allow producers to avoid GHG� Identify measures that will allow producers to avoid GHGemissions originating from the establishment of newplantations:

� Site selection criteria that will avoid GHG emissions byensuring that all new plantations are established on lowbiomass landscapes – what is an acceptable low carbonlandscape? This will severely restrict OP expansion even intoareas deemed agronomically suitable!

Challenges – part four

� Special recommendations and measures that can assistsmallholders to reduce GHG emissions either individuallyvia producer cooperatives or in partnership with processors– this is welcomed if accessible by smallholders &acceptable to other stakeholders

� Review the current RSPO P&C and recommend� Review the current RSPO P&C and recommendadjustments to incorporate GHG issues – need similarendorsement from stakeholders concerned

� Develop indicators and systems that are auditable andachievable in order to facilitate the certification processand which produce real and meaningful reduction in GHGemissions – this will take time due to tedious process ofconsultations within & outside RSPO

Progress of GHG-WG todate

� The GHG-WG has met twice in May & Sept 2009

� Draft document for public comments (current version open until 3oth Sept 2009) at RSPO website www.rspo.orgwww.rspo.org

� Two public consultations at Jakarta & Sibu, Sarawak on 7th & 9th Sept 2009.

� Proposed changes to P&C discussed by RSPO EB on 28th Sept 2009

Proposed changes to RSPO P&C

� “Specific plans to reduce GHG emission are developed, implemented andmonitored”

� “Use of sustainable biofuel on plantations should be considered as analternative to the use of fossil fuel”

� “Types of artificial fertilizers applied shall be monitored. Quantities of� “Types of artificial fertilizers applied shall be monitored. Quantities offertilizers per tonne Crude Palm Oil (CPO) or per tonne of Fresh FruitBunches (FFB) shall be calculated”

� “Land-filling of Empty Fruit Bunches (EFB) and other palm oil mill residuesshall be avoided”

� “Emission reduction from Palm Oil Mill Effluent (POME) shall be dealt withunder the umbrella of the ISO 14064 based framework methodology forreducing GHG emissions.

Key areas of concern & challenges

GHG emissions from indirect land use change

� GHG-WG unable to come to agreement on its significanceregarding the PO industry.

� Difficult to address within the current framework of the� Difficult to address within the current framework of theRSPO P&C system (based on measures taken by individualcompanies within the context of their operations, whereasindirect land use change, by definition, occurs outside ofthose operations and are beyond their control)

� Issue highlighted in current policy discussion in internationalforums but needs further study by GHG-WG.

Yield increases

� Increasing yields can significantly reduce the overallcarbon footprint of PO production, as it reduces the needfor expansion and carbon stock conversion, and lowersthe average GHG emissions per tonne CPO/FFBproduced.

� GHG-WG recommends that RSPO studies andimplements mechanisms which facilitate significant yieldincreases, in particular from smallholders.

� Intended and accidental fires related to the clearanceof land for OP are a significant source of GHGemissions, in particular when occurring on drainedpeatlands.

Fires

peatlands.

� The GHG-WG recommends that RSPO studies whichfurther measures are required, within or outside theframework of RSPO, to reduce occurrence of fires.

� GHG-WG concluded that the development of asignificant and fair CSPO market is a financialincentive for further steps towards decreasing thecarbon intensity of PO production.

Development of a CSPO Market

carbon intensity of PO production.

� Calls upon RSPO members buying palm oil tocontribute to the development of this market.

Qualification of CSPO

for the EU biofuel market

� GHG-WG concluded that its currentrecommendations are insufficient to allow CSPO tomeet the sustainability requirements of the EUmeet the sustainability requirements of the EURenewable Energy Directive

Summary of relevant sustainability requirements in

EU Renewable Energy Directive

� Art. 17.2 The greenhouse gas emission saving from the use of biofuels and bioliquids taken intoaccount for the purposes shall be at least 35% (and target increases step-wise)

� Art. 17.4 Biofuels and bioliquids shall not be made from raw material obtained from land withhigh carbon stock, namely land that had one of the following statuses in January 2008 and nolonger has that status i.e.� wetlands, namely land that is covered with or saturated by water permanently or for a

significant part of the yearcontinuously forested areas, namely land spanning more than one hectare with trees� continuously forested areas, namely land spanning more than one hectare with treeshigher than five metre and a canopy cover of more than 30%, or trees able to reach thosethresholds in situ

� land spanning more than one hectare with trees higher than five metre and a canopy coverof between 10% and 30%, or trees able to reach those thresholds in situ, unless evidence isprovided that the carbon stock of the area is such that, when the methodology laid downin part C of Annex V is applied, the emission saving reductions are fulfilled

� Art. 17.5 Biofuels and bioliquids shall not be made from raw material obtained from land thatwas peatland in January 2008, unless evidence is provided that the cultivation and harvestingof that raw material does not involve drainage of previously un-drained soil

� Art. 19.6 The European Commission shall, by 31st December 2010, submit a report reviewingthe impact of indirect land-use change on greenhouse gas emissions and address ways tominimize that impact

Where do we go from here?

� Accept the recommendations from the GHG-WG on thespecific, non LULUC criteria?

� Develop ToR for a WG which will scope how RSPO candevelop voluntary GHG emission reduction program?

� Develop ToR for an expert group to make a reliable� Develop ToR for an expert group to make a reliablecompilation of available literature on GHG emissionsfrom LULUC for oil palm?

� Develop ToR for a WG to consider economic impacts ofany kind of "climate constraints" on the oil palm sector?

THANK YOU

Chew Jit Seng (VP – Sustainability)

Genting Plantations BerhadGenting Plantations Berhad

Email : jitseng.chew@genting.com

References : RSPO documents.