RSPO RT12: New GHG emission reduction scenarios for new plantings - Bumitama and Musim Mas case studies (update 1a)

RSPO’s Melissa Chin reported on how RSPO growers need to predict emissions from different development scenarios for their new plantings. In 2013, the Emission Reduction Working Group (ERWG) was set up to help companies on this new reporting requirement. The policy to assess and predict GHG emissions reductions is in RSPO Principles & Criteria 7.8. Previously required from 1 Aug 2014 it was shifted to mandatory on 1 Jan 2015. This needs to be submitted alongside New Planting Procedure but it is not required to be made public until 1 Jan 2017. Soil carbon, above and below ground carbon estimates are needed.....

Bumitama case study. GAR and Wilmar are key buyers requiring high carbon stock (HCS) policies. A mid-year discussion led to a pilot HCS assessment using their approach. Bumitama then committed on 12 September 2014 to use this on four target concessions. Concession KML had a base case plantable area of about 12,500 but was reduced to about 6,600 hectares on the planting scenario chosen. There was no planting on any peat (base case was plant on shallow peat). Significant areas of rubber agro-forest areas could not be replanted due to social or adat issues. Local people expect economic projects. They lodged a complaint with the regional government or Bupati on why Bumitama stopped development. Aidenvironment was hired to work on participatory mapping. Locals wanted to stop access to this NGO until it was shown that it worked with company to develop the land. The halt in development it also gave third parties the opportunity to approach the masyarakat to suggest a takeover so that the concession could return to faster development and some 1,000 hectares was “lost.” Planting less than the 12,500 hectares originally envisaged also means that the 20 percent area for plasma smallholder development is so much smaller under the new planting scenario. Bumitama has also engaged a lawyer to check if it has the right to conserve area to reforest. Can this really be done. However, a company still has to be run economically.....

 

 

Musim Mas case study. Using the RSPO carbon assessment procedure, Musim Mas presented two case studies, one already in new planting status and one before planting. The result was a GHG balance of -5 and -14 respectively; which means there was carbon sequestration from the two new estates. The company notes that the current default value for conservation areas is nil, but this is being reviewed and this will likely add on to the positive carbon balance of planting oil palm. Musim Mas is also doing mill POME biogas capture for all its facilties. These efforts will minimise its net GHG emissions........

 

Note: inherent in the RSPO carbon assessment are default values that will steer new plantings to minimize planting in high carbon stock areas. Under RSPO's Palm GHG calculator for carbon assessment, the default value for the oil palm is not bad ie. well above the earlier much bandied 35tC/ha measure. It is 55-65tC/ha of above and below ground carbon over a 25 year cycle.

 

"RSPO+9", new TFT / Climate Advisers-led policies for Wilmar

New  The Forest Trust or TFT / Climate Advisers-led policies for Wilmar include these nine (9) substantive policies, which adds on to existing RSPO commitments, hence we can call it "RSPO+9" for now:

(i) non-use of peat land of any depth;
(ii) likely 35 tonnes carbon per hectare ceiling for land development;
(iii) progressive GHG reductions;
(iv) restoration and enrichment of forest and peatlands (similar to RSPO HCV compensation?);
(v) no forced labour,
(vi) 60-hour work week with 1 day off inclusive of overtime,
(vii) 3.8 square meters / 32 square feet of individual living space,
(viii) trade unions and collective bargaining;
(ix) grievance procedure where advisers and stakeholders have a say in banning suppliers.

Khor Reports blog exclusive comment: The independent advisers to Wilmar are TFT of Switzerland and Climate Advisers of the USA. TFT-Greenpeace was instrumental in putting forth the high carbon stocks ceiling principle for Golden-Agri / Sinar Mas which ran into severe NGO campaigning. This resulted in various global buyers suspending palm oil purchases from the large Singapore-based Indonesian conglomerate. Wilmar did not run into such market problems, although it was obviously facing increasingly negative comments about its "problematic" third-party purchases and land deals in the international news and NGO websites. It is notable and interesting that Wilmar also chooses to be led by the strong principles of TFT-Greenpeace. Presumably, Wilmar (also Singapore-based but with operations globally; and large plantation area in Sarawak and Indonesia and a very big refinery market share in China) expects good outcomes from adopting the approach of Golden-Agri and doing much more to boot. Climate Advisers is a relative newcomer to setting market access policy for palm oil. Palm oil companies, mostly owned by Southeast Asian entrepreneurs, have been quite readily accepting NGO-led standards on a voluntary basis. Palm oil is one of the 15 global (mostly tropical) commodities targeted by the WWF, which focuses on the very largest companies to push for more rapid change. However, WWF's Roundtable on Sustainable Palm Oil (RSPO), now finds itself superseded by the new RSPO+9 effort led by TFT-Greenpeace principles.

Look out of Khor Reports' Palm Oil Newsletter #6, Jan/Feb 2014 for more! This is a sneak preview of our review of Wilmar's bold move. Many ask how they will implement this while NGOs say that this is "just the beginning..."

Deforestation detection, RSPO GHG and trade clashes

Khor Reports comments and views: 


DEFORESTATION DETECTION

All the pieces are falling in place for the global monitoring of deforestation, with the year-end launch of a platform promising near-real time satellite data combined with submitted from-the-ground data. Global Forest Watch 2.0 is an initiative of NGO World Resources Institute, Google, University of Maryland and the UN Environment Program. 

NGOs started using satellite imagery to good effect, to identify open burning incidents in plantation concessions, notably in Sumatra, Indonesia. The plantations generally attributed it to third-party burning on their land (not their doing nor by their contractors) and pledged to try to better police the situation. Open burning in peat land areas has been a key source of the annual haze in Southeast Asia. A series of academic studies of satellite imagery have also shed light on deforestation rates in the region, including peat swamp forest deforestation. It has highlighted interesting regional trends, including those in Sarawak and Kalimantan. 

Satellite imagery studies for high carbon stocks has also been done by Golden-Agri Resources with the aid of sourcing facilitator TFT and a key NGO, Greenpeace. Importantly, this included the ground-truthing of carbon stocks measures of canopies viewed from satellites. In a nasty surprise for the palm oil industry, it found pretty high carbon stocks in what has been loosely called "degraded areas." Bottom-line: even large areas of degraded scrub lands should not be planted.

Also notable in recent writings by international research organisations and in marketing of end products is the wider reference to "deforestation-free commodities." Deforestation detection is likely to be a negative for oil palm extensification (land development) by plantations in higher carbon stock areas. The logical move would be for NGOs to highlight their expansion moves to buyers in developed markets, who are most conscious of sustainability and leery of socio-environmental issues. 


RSPO GHG WILL CHALLENGE GROWERS

In a tough revision of its certification standard for growers, the RSPO will require measurement of GHG emissions from operations and new plantings. Some time will be given to develop these tools, and public reporting will only start 31 Dec 2016. Nevertheless, the implications are obvious and significant for plantations. The new P&Cs will require changes in carbon stocks to be measured against a baseline of land use in November 2005 (dig out those satellite images and peat land maps!). This could generate a list of the biggest net destroyers of carbon stocks in a recent ten year period; such retroactive reporting will also catch those who were less than fulsome in their new planting procedures reporting. Current RSPO grower members, should prepare for potential bad publicity surrounding such retrospective analysis of their land developments.

RSPO defines low carbon stock areas "as those with (above and below ground) carbon stores, that would be lost by conversion to oil palm, smaller than that which would be sequestered within an oil palm crop and other set-aside areas within the management unit over the period of one rotation." 

This is likely to mean: 

     a) low or no peat land development (negating or superseding* Principle 7.4  which allows for non-extensive planting on peat?);
 
     b) usage of the 35 tonnes carbon per hectare ceiling** (the often cited measure of carbon sequestered in oil palm; which Golden Agri has accepted for its pilot scheme) which would supersede* Principle 7.3 on non-usage of primary forest from November 2005); and 

     c) much higher set-asides (i.e. areas not to be developed).

*Why not just rewrite Principles 7.3 and 7.4 if they are set to be superseded by a new measure in Principle 7.8? 

** "The time averaged carbon stock in an oil palm plantation appears to be in the order of 35 tonnes carbon/ha, calculated over... 25-30 years... by various authors using different approaches... " (source: Greenhouse Gas Emissions from Palm Oil Production, Literature review and proposals from the RSPO Working Group on Greenhouse Gases, Final report, 9 October 2009) 

RSPO's new P&C is set to be ratified soon. All RSPO ordinary members will be able to vote on the revised P&C at an Extraordinary General Assembly on 25 April 2013 (Thursday week, in about 10 days time) in Kuala Lumpur, Malaysia. Oil palm growers represent 15.4% of RSPO members. If the other member categories vote by bloc, it is likely that oil palm growers views may be isolated. If palm oil processors vote as a bloc with oil palm growers, these two categories represent 52.4% of members.

Note: These statistics should represent ordinary members, eligible to vote at the EGM.

Source: RSPO website, accessed 5.30pm 14 April 2013

 

TRADE CLASHES
 
On deforestation-free palm oil concerns in end markets, Khor Reports notes that the Ferrero Group has for years been carefully sourcing palm oil from Peninsula Malaysia, a long human use area i.e. plantations there developed many decades ago. However, it faced a negative marketing blitz in the so-called Nutella Wars in France last year. It is interesting to note that it has lodged a complaint against its fellow RSPO members, Groupe Casino and Systeme U on 2 April 2013. In one, Ferrero says that "The complaint is made on ground that the Groupe Casino is undermining the objectives of the RSPO, as enshrined in the RSPO Vision and Mission, and breaching the RSPO Code of Conduct..." It has lodged a similar complaint against Systeme U. 

Palm oil sustainability has been morphing into palm-oil free in some areas. This unfortunate linkage has to be addressed. At the same time, negative health claims still abound. Strategic consultancy, Hill & Knowlton (whose clients include big brands and big banks) has been a key player in global opinion-making on palm oil acceptance recently, just as it was in yesteryear. It had roles in the clash of US soybean interests and Malaysia palm oil over 20 years ago; which ended with 1992 US non-discriminatory legislation which outlawed "no palm oil, no cholesterol" labels and the 1993 US military lifting on its ban on palm oil usage.  


We reckon that the deforestation / high carbon stocks challenge will be heating up, and it will need to be watched. With some serious challenges faced upstream and downstream, many industry players consider this a period of edible oil trade wars.


Announcements & news:

"Global Forest Watch 2.0 will enable users to track deforestation over time, including forest clearing that has occurred within the past 30 days. It will also allow users to submit georeferenced photographic evidence of forest destruction, supporting efforts by journalists and concerned citizens to report on deforestation." source: http://news.mongabay.com/2013/0409-global-forest-watch.html?goback=.gde_2007470_member_231012851

"The Groupe Casino: has initiated a campaign aimed at denigrating palm oil in general as well as products containing palm oil (the tag line of such campaign being "L'huile de palme c'est nul" which can be translated as "Palm oil is rubbish"); is fueling the negative perception of palm oil in France and other parts of the world; has launched a number of palm oil free products under its own brands and promotes them through denigrating statements about palm oil in general as well as through disparaging comparisons with competing products containing palm oil (including Ferrero Group's Nutella), refers to palm oil in a general way without making any distinction between sustainable palm oil promoted by the RSPO and non sustainable palm oil; fails to promote the use of sustainable palm oil; hasn't been willing to resolve the matter despite direct contacts made by the Ferrero Group." source: http://www.rspo.org/en/status_of_complaint&cpid=27 

"The RSPO has revised an existing Criterion on monitoring and reporting GHG emissions from existing operations and developed a new Criterion on minimising net GHG emissions from new planting developments. However, it is recognised that these significant emissions cannot be monitored completely or measured accurately with current knowledge and methodologies. Therefore, growers and millers commit to an implementation period for promoting best practices in reporting to the RSPO and after December 31st 2016 to public reporting against both of these Criteria. During the implementation period the RSPO will further develop and improve the RSPO carbon assessment and reporting tools. Growers and millers make this commitment with the support of all other stakeholder groups of the RSPO. These revisions demonstrate the RSPO’s commitment to developing credible requirements relating to GHG emissions." 

Notably in Principle 5.6: "during the implementation period, growers will start to assess, monitor and report emissions arising from changes in carbon stocks within their operations, using the land use in November 2005 as the baseline. The implementation period for Indicator 5.6.3 is the same implementation period for Criterion 7.8." 

And in Principle 7.8: "Growers are strongly encouraged to establish new plantings on mineral soils, in low carbon stock areas, and cultivated areas, which the current users are willing to develop into oil palm. Millers are encouraged to adopt low-emission management practices (e.g. better management of palm oil mill effluent (POME), efficient boilers etc.) in new developments... Public reporting is desirable, but remains voluntary until the end of the implementation period. During the implementation period until December 31st 2016...Thereafter growers and millers will ensure that new plantation developments are designed to minimise net GHG emissions and commit to reporting publicly on this."

In Annex 2: "Definition of Low carbon stock areas: As per the recommendation of the RSPO GHG WG2 the total carbon emissions (above and below ground) from new developments should ideally not be greater than the carbon which can be sequestered in the period of one rotation over the whole new development (i.e. the average of oil palm, riparian areas, forest set-aside etc.). To help achieve this the expansion of plantations should be on low carbon stock areas (i.e. mineral soils, areas with low biomass etc.) or on land which is in current intensive agricultural or plantation use where the current users agree to its conversion to oil palm. An agreed methodology for assessing and reporting carbon stocks and sources of emissions as well as default figures for estimates of both are being developed by the RSPO. As guidance to growers low carbon stock areas are defined as those with (above and below ground) carbon stores, that would be lost by conversion to oil palm, smaller than that which would be sequestered within an oil palm crop and other set-aside areas within the management unit over the period of one rotation."




More background on the palm oil sustainability movement (upstream impacts) here:

ISEAS Perspectives: Struggle for sustainability in palm oil industry shows results By Khor Yu Leng ; Just published by ISEAS Perspectives, my paper on the shift of the Malaysia and Indonesia palm oil sectors to sustainability efforts. One group of transnational NGOs, led by the WWF, has pressured large corporate growers as well as multi-national consumer brands to accept Europe-centric voluntary certification standards. Thus, since about 2003, the net impact of various NGO pressures has helped to rein in the speed and prospects for oil palm expansion in Indonesia and Malaysia by large corporate growers. The authorities in Indonesia and Malaysia have reacted by creating their own certification schemes.

45% area usable for Kalimantan plantations?

Khor Reports: HCS implies net area of 45% for Kalimantan plantations?

This morning, GAR and SMART made an announcement on its implementation of its pilot on High Carbon Stock (HCS) forest conservation. Here is Khor Reports’ quick review of GAR/SMART’s HCS issues and implications for the palm oil industry.

For the pilot, “HCS is defined as comprising BT, HK1, HK2 and HK3 areas”. Thus, all types of forest (high, medium and low density) as well as old scrub lands cannot be developed. Only “young scrub” and “cleared / open land” can be utilized. Thus, despite industry rumours of a higher ceiling that would be less of a constraint for oil palm development, it appears that the NGO-preferred 35tC/ha ceiling still applies. GAR/SMART’s preliminary study in June 2012, which was done together with certification facilitator The Forest Trust and Greenpeace, found the weighted average carbon stock in four Kalimantan concessions in degraded lands in tC/ha: 17 in cleared / open land, 27 in young scrub, 60 in old scrub, 107 in low density forest, 166 in medium density forest, and 192 in high density forest.

The indicative numbers for GAR/SMART’s pilot in eight concessions areas:

a)      In unplanted areas, 19,103 ha to be set aside for HCS (highlighted with yellow marker on slide #18). Add on 25,567 ha unplantable for reasons of HCV, peat and government regulations (slide #17). Total of 35% set-aside area of total concession.

b)      Add on (minimum) 20% area for smallholder / plasma schemes. The net area for the plantation / nucleus could be 45%?*

* And this is in partially developed concession areas; area usable in “new” concession areas could be lower assuming some HCS inadvertently cleared in the past.

source: "GAR and SMART implement pilot on High Carbon Stock forest conservation"  

With this ground-truthing of satellite image mapping for Kalimantan degraded areas, NGOs may be more confident to make advanced (and even historical) studies to inform plantation companies on estimated HCS set asides they should have (or might have had) in place. As we have mentioned before, we think this is a pre-cursor to a push for rural land use planning which has been generally lacking in Southeast Asia. NGOs appear well advanced in using satellite imagery for studying oil palm developments. Other issues arising would be connectivity of HCS areas and the need for 100 meter connectivity buffer corridors (see slide #31 below).

 

source: "GAR and SMART implement pilot on High Carbon Stock forest conservation" 

The HCS ceiling is fundamental to arresting deforestation. It seems a low key issue, but it will be a thorny question for plantations on the usability of their land banks. Elsewhere, Norway (population 4.9 million) has also been highlighting concerns about palm oil’s impact on deforestation, perhaps in less impactful but highly symbolic ways; weblink:/khorreports-palmoil/2013/03/norway-goes-cold-on-palm-oil.html

Also refer to Khor Reports on details of preliminary HCS report findings in GAR/SMART-TFT-Greenpeace report: Khor Reports Palm Oil Strategic Analysis #7, 11 June 2012, "Carbon Stocks Study Presages Problems for Plantations." Ask for a copy if you don't have it yet.
 

Info source: Golden Agri-Resources Ltd: "GAR and SMART implement pilot on High Carbon Stock forest conservation," 13 March 2013.

Golden Agri -TFT deal sets 35 tonnes carbon stored per ha ceiling

I sent out an alert via email to readers on 9 Feb 2011: BBC article on GAR deal with TFT. Weblink: http://www.bbc.co.uk/news/science-environment-12397427 (please scroll down for excerpts).

This initially sets the ceiling on land bank development at 35 tonnes of carbon stored per hectare.

Feedback to Khor Reports: Subsequently, we hear that the deal may be dependent on a) further research to validate claims that there is plenty of degraded land available for new plantings and b) the creation of a mechanism for Golden Agri to swap out of current licenses on forested land for degraded land. *This information needs to be checked and validated.

Khor Reports comment: Analysts of plantation land banks will find publicly available information to be frustratingly limited. The companies do not disclose the high risks to the 'usability' of their land banks for plantation development i.e. what proportion is on forested land, on peat land, with high biodiversity and so forth?



Snippets from "Palm oil deal aims to save forests and carbon," 9 Feb 2011, BBC news :

"A major palm oil producer is joining forces with environmental campaigners in a bid to ramp up forest protection. The giant Indonesian company Golden Agri-Resources (GAR) has agreed to work within new standards aimed at saving forests that store a lot of carbon. International environment group The Forest Trust (TFT) is partnering the company and will monitor compliance. The palm oil industry has regularly been accused of destroying old-growth forest as demand rockets. The new deal expands on existing standards agreed under the Roundtable on Sustainable Palm Oil (RSPO), an international alliance of producers, processors, retailers and environment groups...."

"...Already, RSPO rules forbid clearing old-growth forest or land with high conservation value, and developers are also supposed to obtain informed consent from local people before initiating new plantations. Under the new deal, GAR will go further, vowing not to plant on peat, and not to clear forest where significant carbon is locked up in trees. This should mean that large tracts of forest that have been partially logged will now be off-limits to the company. Initially, the figure of 35 tonnes of carbon stored per hectare will be used as a ceiling; but that could change as research progresses. "We're not trying to undermine the RSPO - we're saying 'this is something you guys need to look at and maybe move towards,'" said Scott Poynton, TFT's executive director...."

"...Earlier in the year, TFT finalised a deal with Swiss-based food giant Nestle designed to "ensure that its palm oil procurement had no deforestation footprint". This led to discussions with suppliers such as GAR - and the conclusion that in order to preserve their markets, growers would have to purify their operations. Greenpeace, which has taken the lead on the issue among international NGOs, sees the deal as a potential step forwards. "This is really throwing a gauntlet down to the rest of the palm oil sector, and to other players," said campaigner Phil Aikman. "It's setting a threshold for carbon, and that's pretty good - it'll protect a lot of orangutan habitat and other important areas that have been threatened by palm oil plantations. "It challenges the rest of the sector to increase its productivity rather than target new areas over and over again, and that's been the main issue." With RSPO, another issue has been compliance, with a number of companies accused of failing to live up to their promises...."

Source: BBC news article.