Last week, legislation was agreed at the European Union level, imposing a ban on companies to import commodities linked to deforestation into the EU market. Companies that fail to produce a due diligence statement proving that their supply chains are not contributing to the destruction of forests could face hefty fines.
The deal was agreed between negotiators from EU member states and the European Parliament. The EP’s plenary still need to officially vote for it, but that should be a formality. The new bureaucratic requirements will apply to soy, beef, palm oil, wood, cocoa and coffee, as well as a number of derived products, which includes leather, chocolate and furniture. After pressure by MEPs, rubber, charcoal and a number of palm oil derivatives were also included.
EU deforestation law bans import of goods linked to loss of forests https://t.co/FRjbVSXG81
— BBC News (World) (@BBCWorld) December 6, 2022
It is more than questionable whether this legislation will be effective to counter deforestation. It may well have the opposite effect, given how alternatives to for example palm oil – think of sunflower or rapeseed oil -actually require more land, water and fertilisers. Researchers at the University of Bath have come to conclude this in a research paper, published in Nature, thereby warning that “palm oil is challenging to replace as a product because it is very versatile – it is used in a wide range of cooking, food and other consumer goods products, as well as fuels – but it’s also cheap to produce compared to the alternatives.”
Think tank Chain Reaction Research (CRR) has moreover noted that palm oil deforestation in Indonesia, Malaysia and Papua New Guinea has fallen to its lowest level since 2017. An industry, often composed of small family farms and which has made great headway, is therefore now facing great damage. Why would industries that export to the EU in the future make any efforts to improve care for the environment, when in the end, the EU opts for a brash approach anyway, lumping together both producers that have been responsible with those less responsible?
The initiative also comes at a time when the EU is also keen to strengthen trade ties with the ASEAN trade bloc, which includes Indonesia and Malaysia, where this is simply seen as EU protectionism under a green pretext. Some of the plans seem almost designed to offend and alienate allies and trading partners. The European Commission plans to unilaterally and publicly denigrate some countries as “high risk” sources of commodities. What progress can possibly made on trade, security or economic relations with Indonesia, for example, if the EU publicly shames 260 million Indonesians as “high risk”? By contrast, other countries – like Norway – are pursuing constructive engagement with southeast Asia, via cooperation and funding agreements that incentivize reducing deforestation. Those have worked in the past, and are likely to continue to succeed. The EU’s approach of tarring-and-feathering will only stir resentment.
The EU and @ASEAN have behind them over four decades of partnership.
We share the same unyielding commitment to multilateralism and the international rule of law.
And we will continue championing peace, stability and prosperity.
— Ursula von der Leyen (@vonderleyen) December 14, 2022
Not unimportant in all of this is the effect of such measures on already hard-pressed EU consumers that suffer from inflation. The EU seems to be ignoring such concerns. Another recent EU agreement was just reached on the so-called Carbon Border Adjustment Mechanism (CBAM). This really is an external EU climate tariff, which involves imposing a CO2 emissions levy on imports of iron and steel, cement, fertilisers, aluminium and electricity into the European Union.
In March, Europe’s construction sector warned for steel shortages, and over the last year, the cost of construction materials has gone through the roof, but clearly, in the parallel world of EU policy making, that is not counted as particularly relevant.
Also domestically, the EU is expanding the reach of its emission trading system, a “climate tax” in all but name, to buildings and road transport. Ironically, many of the leftist groups clamoring for these kinds of policies also tend to complain about high rental prices and housing shortages. Then, they are not exactly renown for economic literacy.
Fundamentally, serious question marks should also be raised as to whether the EU policy level even has the legal competence to introduce these policies. Taxation is after all a national competence. It can certainly be questioned whether introducing climate taxation through the backdoor of the EU’s emission trading system, whereby part of the income flows to the EU budget, is in line with a strict interpretation of the EU Treaties, which foresee no EU Treasury.
Also “deforestation” is not exactly a clearly defined EU competence. Swedish MEP Charlie Weimers, a solid opponent of EU power overreach, has stressed in a parliamentary question to the European Commission that “despite a lack of provisions in the EU treaties for a common forest policy, the EU has gradually expanded its powers in this policy area since a 1999 Court of Justice of the European Union ruling recognised EU competence on environmental action in forests.» In that regard, it is useful to mention a warning by Dr. Björn Hägglund, the former Director General of the Swedish Forest Agency, who stated that “the EU Commission got its forest strategy wrong,” as it “will have negative implications for Nordic forestry.”
Last year, diplomats from EU member states raised concerns about the scope of the EU’s “forest strategy”, stressing that “the responsibility for forests lies with the member states and all forest-related decisions and policies in the EU must respect the principle of subsidiarity.”
In any case, the EU’s forests are not doing all that great. A New York Times special report recently lamented that “Europe is sacrificing its ancient forests for energy.” It added: “Across Central Europe, companies are clear-cutting forests and grinding up centuries-old trees in the name of renewable energy”, as “pellets are shipped across Western Europe, helping countries reach their renewable-power commitments.”
EU promotion of deforestation
The dirty little secret of Europe’s renewable energy mix is that biomass for energy continues to be the main source of renewable energy in the EU, with a share of almost 60%.
In other words, the same EU that is using concerns about “deforestation” outside of Europe as a reason to impose drastic bureaucracy on importers while attempting to micromanage the forest policies of EU member states is also imposing minimum targets in the energy mix for “renewable energy”, which is mostly biomass, not wind or solar energy, as many would think.
Researchers from the Oeko-Institut in Berlin and the Finnish Environmental Institute have pointed out how the EU’s Renewable Energy Directive “encourages using primary woody biomass from forests as an energy source”, despite the fact the measuring methodology “gives a completely wrong picture of the associated greenhouse gas emissions.” As a result, “no longer classifying primary woody biomass as renewable energy” should be the way forward.
Why burning primary woody biomass is worse than fossil fuels for climate https://t.co/mMOvAFbTHZ
— EURACTIV (@EURACTIV) December 13, 2022
One does not need to be an energy expert to understand that this would further undermine the idea that Europe can cope without fossil fuels – which still happen to be better for the climate than biomass, according to the researchers.
This all makes clear that to fight deforestation, the EU could maybe start by not promoting it.