The 21st Century climate challenge

Box 3.9Palm oil and biofuel development—a cautionary tale3Avoiding dangerous climate change: strategies for mitigationThe European Union’s ambitious targets for expanding the marketshare of biofuels have created strong incentives for the productionof cereals and oils, including palm oil. Opportunities for supplyingan expanding European Union market have been reflected in asurge of investment in palm oil production in East Asia. Is this goodnews for human development?Not under current conditions. Oil palm can be grown and harvestedin environmentally sustainable and socially responsibleways, especially through small-scale agroforestry. Much of theproduction in West Africa fi ts into this category. However, largescalemono-cropping plantations in many countries do not have agood record. And much of the recent surge in palm oil productionhas taken place on such plantations.Even before the European Union’s renewable energy targetsgenerated a new set of market incentives, oil palm cultivationwas expanding at a prolifi c rate. By 2005, global cultivation hadreached 12 million hectares—almost double the area in 1997.Production is dominated by Indonesia and Malaysia, with theformer registering the fastest rate of increase in terms of forestsconverted into oil palm plantations. The estimated annual netrelease emissions of CO 2from forest biomass in Indonesia since1990 is 2.3 Gt. European Union markets for biofuel materials canbe expected to create a further impetus for oil palm plantations.Projections by the European Commission suggest that importswill account for around one-quarter of the supply of biodiesel fuelsSource: Colchester et al. 2006a, 2006b; Tauli-Corpuz and Tamang 2007.in 2020, with palm oil representing 3.6 million out of a total of 11million tonnes of imports.Palm oil exports represent an important source of foreign exchange.However, the expansion of plantation production has comeat a high social and environmental price. Large areas of forest landtraditionally used by indigenous people have been expropriatedand logging companies have often used oil palm plantations as ajustification for harvesting timber.With palm oil prices surging, ambitious plans have beendeveloped to expand cultivation. One example is the KalimantanBorder Oil Palm Project in Indonesia, which aims at converting3 million hectares of forest in Borneo. Concessions have alreadybeen given to companies. While national legislation and voluntaryguidelines for industry stipulate protection for indigenous people,enforcement has been erratic at best and—in some cases—ignored. Areas deemed suitable for oil palm concessions includeforest areas used by indigenous people—and there are extensivelydocumented reports of people losing land and access to forests.In Indonesia, as in many other countries, the judicial processis slow, the legal costs are beyond the capacities of indigenouspeople, and links between powerful investors and political elitesmake it diffi cult to enforce the rights of forest dwellers. Againstthis backdrop, the European Union has to carefully consider theimplications of internal directives on energy policy for externalhuman development prospects.threat posed by climate change. As shown inprevious chapters of this Report, dangerousclimate change will lead to rising povertyin poor countries, followed by catastrophicrisks for humanity as a whole. Avoiding theseoutcomes is a human development challenge.More than that, it is a global and nationalsecurity imperative.In earlier periods of history, governmentshave responded to perceived security threats bylaunching bold and innovative programmes.Waiting for markets to generate and deploythe technologies to reduce vulnerability wasnot considered an option. In 1932, AlbertEinstein famously concluded: “There is not theslightest indication that nuclear energy willever be obtainable.” Just over a decade later,the Allied powers had created the ManhattanProject. Driven by perceived national securityimperatives, this was a research effort thatbrought together the world’s top scientists in aUS$20 billion (in 2004 terms) programme thatpushed back technological frontiers. The samething happened under President Eisenhowerand President Kennedy, when Cold Warrivalries and national security concerns led togovernment leadership of ambitious researchand development drives, culminating in thecreation of the Apollo space programme. 106Contrasts with the R&D effort to achievea low-carbon transition are strikingly evident.R&D spending in the energy sectors ofOECD countries today is around one-halfof the level in the early 1980s in real terms(2004 prices). 107 Measured as a share ofturnover in the respective sectors, the R&Dexpenditure of the power industry is lessthan one-sixth of that for the automobileindustry and one-thirtieth of that for theelectronics industry. The distribution ofresearch spending is equally problematic.Public spending on R&D has been dominatedby nuclear energy, which still accounts for justunder half of the total.144 HUMAN DEVELOPMENT REPORT 2007/2008