Thoughts on climatetech in the plantation industry in Asia

The image of palm oil is generally painted with very negative tilt by media given that it is largely done in South East Asia and also its importance in the global food supply chain – accounting for around 38% of total food oil exports. It is true that palm oil are responsible in the past for wildfires, deforestation, the drainage of peatland, human rights violations and the loss of biodiversity.  However, the situation seems to have improved and livestock and soybean are more important contributors to deforestation now (see table). Equally important is the way forward for the plantation industry in Asia and steps that can be taken.
  
Cleaning up its act
Despite the rise of palm oil in the early 2000’s, available data seems to suggest that its impact on deforestation has been significantly lesser since 2013.  This could be due to the adoption of No Deforestation, No Peat, No Exploitation (NDPE) commitments by downstream refineries.   Due to the consolidation of the refinery industry, they are gaining enormous bargaining power over the plantation owners (40% are run by small holders according to our estimates). 

The next challenge is two-fold:
 
·     Palm oil refinery continues to rely on a process of industrial chemical separation to separate and purifying liquids using heat. Industrial separation takes up a whopping 15% of the entire world energy consumption. If this separation can be done without the use of heat, it is not only game-changing to the industry, it is environment saving.
 
·     Despite the consolidation of the refineries, only 19.3% of palm oil production is estimated to be RSPO-certified. The reason being, while traceability back to a mill’s own plantations is easy, almost all will also source from third-party smallholders without RSPO-certification.  Smallholders play an important role within both Malaysia’s and Indonesia’s palm oil industries, accounting for up to 40% of total plantation area (possibly higher in Indonesia). Trying to align approaches across this many smallholder families is no easy task. The key to this is traceability and tracking.
 
Interestingly, the only two East Asian companies in the Top 15 of the COP27 UN Climate Change Climatetech Run 2022 finalists are:
 
·     Seppure: a company in industrial separation without heating. Mohammad H. D. A. Farahani SEPPURE
 
·     Koltiva: a company in agriculture traceability. Koltiva
 
 
Welcome any comments or rectification of the data.

#climatechange #environment #biodiversity #food #agriculture #indonesia#agritech #rspo #ndpe #smallholderfarmers #cop27 #palmoil