NCPA - National Center for Policy Analysis


January 31, 2007

Just a few years ago, politicians and environmental groups in the Netherlands were thrilled by the early and rapid adoption of "sustainable energy," achieved in part by coaxing electrical plants to use biofuel -- in particular, palm oil from Southeast Asia.

Spurred by government subsidies, energy companies became so enthusiastic that they designed generators that ran exclusively on the oil, which in theory would be cleaner than fossil fuels like coal because it is derived from plants:

  • This versatile and cheap oil is used in about 10 percent of supermarket products, from chocolate to toothpaste, accounting for 21 percent of the global market for edible oils.
  • Palm oil produces the most energy of all vegetable oils for each unit of volume when burned; in much of Europe it is used as a substitute for diesel fuel, though in the Netherlands, the government has encouraged its use for electricity.
  • Supported by hundreds of millions of euros in national subsidies, the Netherlands rapidly became the leading importer of palm oil in Europe, taking in 1.7 million tons last year, nearly double the previous year.

But last year, when scientists studied practices at palm plantations in Indonesia and Malaysia, this green fairy tale began to look more like an environmental nightmare, says the New York Times:

  • Rising demand for palm oil in Europe brought about the clearing of huge tracts of Southeast Asian rainforest and the overuse of chemical fertilizer there.
  • A Dutch study estimated that the draining of peatland in Indonesia to make room for palm oil plantations releases 660 million ton of carbon a year into the atmosphere and that fires contributed 1.5 billion tons annually.
  • The total is equivalent to 8 percent of all global emissions caused annually by burning fossil fuels, the researchers said.

Source: Elisabeth Rosenthal, "Once a Dream Fuel, Palm Oil May Be an Eco-Nightmare," New York Times, January 31, 2007.

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