Let’s start with the lie

TURNING THE DEBATE AROUND – How “green” can be profitable. Julian WilsonEU Ambassador to Indonesia, Brunei Darussalam and ASEANJakarta, 29th February 2012

“…Talk of boycotting the commodity over the negative impacts of CPO production on the environment..” “..The EU is proposing a ban on the use of CPO for biofuel..” JG 22.6.2009 Let’s start with the lie “… amid the intensive boycott threat against Indonesian CPO products in developed countries, the European Union countries… kept importing Indonesian CPO products” BI 22.6.2009 Palm oil exports at risk from overseas buyers boycott “Government's proposed palm oil expansion program for north Kalimantan … has triggered calls for a boycott of Indonesian crude palm oil (CPO), particularly in European Union countries JP18.5.2009

Now let’s dispel that lie There is no “ban” on your CPO to EU. It is a lie. You enjoy free unrestricted access to EU markets for your palm oil because: IT IS POPULAR. We like your product in our food and cosmetics IT IS PROTECTED: WTO and EU free trade practice protects your trade Next time you hear someone talk about that ban – ask the obvious question: if there is a ban, how can the market be expanding for Indonesian CPO in EU at over 20% per year? (and ask them to ring me or my lawyer!) Let’s not waste time on this. It stops us addressing the real issue – persuading consumers that a great product and industry is in harmony with the environment.

Now let’s address the reality… You have a great product - quality, revenue, development of hinterland, high consumer demand. But it has an environmental impact – primarily, forest clearing and methane emission. Consumers have picked this up – Greenpeace, Unilever, Sinarmas and so on. Government ISPO law also recognises this impact. Throughout history, producers adapt to consumer taste if they want to sell to those consumers: Power generation: sulphurous coal stations in UK, my grandmother and the London “pea soup” smog Car safety and emissions: Lead in petrol. Car seat belts in 1960 (“They will break your neck”). But people wanted them and the companies who gave them what they want secured the market. So history is full of examples where profit and environment go hand in hand. To EU industry, sustaining the environment is synonymous with sustaining profits.

Are you satisfied with the debate so far? I have witnessed three years of debate on this issue between industry, civil society and government Not very constructive – full of mistruths, mistrust, accusation and counter-accusation: Inaccurate debate promotes inaccurate policies. Negative debates produce negative conclusions. EU is a side player but look at the lie of our “ban” I am here today: To identify positive aspects of the industry and environment positions. To build on those positives to create a more constructive dynamic that leads to positive solutions Only then can we bring producer and consumer into harmony and assure the industry continues to flourish and consumers keep enjoying your great product.

Positive case studies to build on Four examples I am interested in: ISPO ISPO and RSPO Green business policies Methane capture

ISPO ISPO is logical – legally binding and national coverage. But it now lacks the credibility of RSPO. And without that credibility, it will not persuade the consumers. So how to boost ISPO credibility? Perhaps borrow from IDN illegal timber policy: IDN strengthens SVLK law against illegal timbering – standards, independent auditors, industry oversight, civil society monitoring and sanctions. EU accredits the SVLK system as meeting its standards for assuring legal origin (VPA). With EU and IDN stamp of approval, IDN timber imports without further control or question. Problems – reports of bribery? will EU consumers listen? So we must prove ourselves. But it is a solution, the alternative is worse and there is a potential premium as EU market closes for others.

RSPO + ISPO for the serious Do both RSPO and ISPO (large co’s): Time lag: ISPO takes time to implement and gain consumer confidence Market niche: greener than green Car seat belt case study again: Some companies just fitted the belts and stayed in business (ISPO) But some turned passenger safety into a corporate strategy - Volvo (crash cages etc) cars may not be as pretty as Ferraris but they are the safest car on the planet. Volvo has made millions from that consumer niche for its share holders.

Business incentives for the green economy Industry responds best to a balance of incentives, profit motive and legal requirements Indonesia is already pursuing green incentives: VAT Cheaper loans How can these be built upon?

Methane capture – profitably green A major emission from palm oil processing. Capturing methane is simple (large plastic bag and a pipe)…and it is a win-win for both the environment and for the balance sheet: It cuts green house gas emission (IDN targets) The methane can then power the boilers. This cuts the company’s fuel bill. Many companies are doing this already. How far can it be up-scaled? Incidentally, the EU has a subsidy to help promote bio-fuel imports. Normal CPO has a high threshold that is difficult for companies to meet. But with methane capture, the threshold is easier. And then the EU governments will even subsidise your “CPO as bio-fuel” sale to the EU power producers.

Task Force to continue the work The Ministry of Agriculture will launch a Sustainable Agriculture Task Force which will develop the incentives framework and develop collaborative projects The EU will engage and help in any effort that makes the debate more constructive promotes practical improvements, especially simple win-win solutions like methane capture shows the way to bring a great industry into more harmony with your great environment and then our green conscious consumers

Thank-you

Let’s start with the lie