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European Policies towards Palm Oil - Sorting Out some Facts


  • Gernot Pehnelt

    () (GlobEcon)

  • Christoph Vietze

    (Friedrich Schiller University Jena, School of Economics and Business Administration)


This paper analyses the role of palm oil and its sustainability from different perspectives. We consider the role of palm oil within the GHG context. We discuss the impact of palm oil on biodiversity and analyse how palm oil can contribute to economic growth and development in tropical countries. Finally, based on this analysis, we assess the current concerns about and politics towards palm oil with special focus on the EU. Palm oil is a low-energy and low-fertilizer crop that offers much higher yields per hectare than other oil crops. Furthermore, if the energy obtained by the residuals in the production process is used properly, the energy balance of palm oil production is much more favourable compared to other biofuels. Overall, palm oil turns out to be much more efficient than other oil crops and therefore offers significant advantages within the context of GHG savings. Contrary to some recent campaigns and the perception among European citizens, oil palm plantings are not a major contributor to deforestation in tropical countries. Deforestation associated with oil palm plantings is much less significant than postulated by some recent campaigns. Furthermore, biodiversity in oil palm plantations is much higher than in most monocultures in the EU. Palm oil is an important driver of economic development and growth in tropical countries and contributes to the reduction of poverty and hunger in the developing world. The EU Renewable Energy Directive is discriminatory from the outset and the GHG saving values and their interpretation are based on wrong assumptions and faulty calculations. Therefore, the EU should reshape its policies towards palm oil, conduct objective and non-discriminatory calculations regarding the GHG emissions saving values and support palm oil imports from developing countries rather than restricting them. Together with certain initiatives to further enhance energy efficiency and to protect precious habitats combined with strategies to strengthen property rights and encourage efficient land use and successful strategies of agricultural development, this would not only prevent political conflicts and trade disputes in conjunction with the issue of palm oil but also foster economic growth and development, reduce poverty and - not least - contribute to the ambitious GHG emissions savings goals on a fair and reasonable basis.

Suggested Citation

  • Gernot Pehnelt & Christoph Vietze, 2009. "European Policies towards Palm Oil - Sorting Out some Facts," Jena Economic Research Papers 2009-086, Friedrich-Schiller-University Jena.
  • Handle: RePEc:jrp:jrpwrp:2009-086

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    References listed on IDEAS

    1. Robert Sugden, 2004. "The Opportunity Criterion: Consumer Sovereignty Without the Assumption of Coherent Preferences," American Economic Review, American Economic Association, vol. 94(4), pages 1014-1033, September.
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    6. Cass R. Sunstein & Richard H. Thaler, 2003. "Libertarian paternalism is not an oxymoron," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 48(Jun).
    7. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-291, March.
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    Cited by:

    1. Gernot Pehnelt & Christoph Vietze, 2012. "Uncertainties about the GHG Emissions Saving of Rapeseed Biodiesel," Jena Economic Research Papers 2012-039, Friedrich-Schiller-University Jena.
    2. Gernot Pehnelt & Christoph Vietze, 2013. "Recalculating GHG emissions saving of palm oil biodiesel," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 15(2), pages 429-479, April.
    3. Cho, Hyun Jun & Kim, Jin-Kuk & Ahmed, Faisal & Yeo, Yeong-Koo, 2013. "Life-cycle greenhouse gas emissions and energy balances of a biodiesel production from palm fatty acid distillate (PFAD)," Applied Energy, Elsevier, vol. 111(C), pages 479-488.
    4. Gernot Pehnelt & Christoph Vietze, 2011. "Recalculating Default Values for Palm Oil," Jena Economic Research Papers 2011-037, Friedrich-Schiller-University Jena.

    More about this item


    Renewable Energy; Palm Oil; Biodiversity; Sustainable Development; Environmental Policy;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F18 - International Economics - - Trade - - - Trade and Environment
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q27 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Issues in International Trade
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics

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