Tag Archives: markets
An African Setback For The Palm Oil Industry
By Bruce Einhorn 31/05/13 Africa is the next frontier for the world’s producers of palm oil, a food ingredient that environmentalists blame for destruction of rain forests in Southeast Asia. Indonesia is the world’s biggest producer of palm oil but the government there is trying to reduce deforestation by banning development of new plantations on primary rain forest. With the world’s appetite for palm oil increasing, plantation developers are targeting territory in sub-Saharan Africa . That’s alarming some green activists worried about the industry clearing rain forests in order to plant palm trees. “The global palm oil industry is running out of land,” says Filip Verbelen, a Brussels-based senior forest campaigner for Greenpeace. “People look where the land is available and they look for Africa.” The drive into the continent suffered a setback on May 18 when Herakles Farms, a New York-based company developing a 73,000-hectare plantation in Cameroon, announced it was suspending work and laying off 690 workers there following a dispute with the government. The U.S. company needs to get the correct permits before it can proceed with the project, according to Cameroon’s Ministry of Forestry & Wildlife, which says it took action following complaints from the local community. A 2009 agreement between the Cameroonian government and Herakles subsidiary Sithe Global Sustainable Oils Cameroon does not exempt the company from respecting “legal procedure and environmental constraints,” Forestry Minister Ngole Philip Ngwesse said in the statement. Herakles Farms says it had been acting properly. “The Company had obtained permission to proceed and always has and will comply fully and transparently with government regulations in force,” the company said in a statement . “The Company is deeply distressed to see so many of its committed Cameroonian employees being left without jobs for an uncertain period of time,” Herakles Farms added. “The company finds these events especially tragic and will do all it can to achieve a positive outcome.” Greenpeace says the Cameroon project could set a precedent for other palm oil developments in Africa. “If this project isn’t stopped, investors are going to say, ‘Look at what is possible in Cameroon and the rest of the region,’” says Verbelen. “‘You can go for a free ride.’ If we can stop this or create strong safeguards, I think then new investors will become a lot more careful.” The Cameroon standoff is also significant since demand for palm oil continues to grow—thanks in part to health concerns among Americans worried about the dangers of trans fats. As consumers try to avoid unhealthy trans fats in their diets, the global food industry has been trying to reduce its reliance on hydrogenated oil, and palm oil has become an attractive option, according to Eric Decker, a professor at the University of Massachusetts and head of the school’s food science department. “Ever since the awareness that trans fats have negative effects, the food industry has had to find alternatives,” he says. “It used to use solid fats that came from hydrogenated oil, but those are high in trans fats. So they had to find another fat source that was still solid. And so they have switched to palm oil.” Developing countries are big consumers of palm oil, too. The World Bank expects demand to double by the end of the decade, thanks largely to increased consumption in China and India. Palm oil is an inexpensive ingredient in ice cream and cookies, and unlike other vegetable oil sources such as soybeans, the palm fruit produces mostly oil, so growers looking to maximize their oil production can get the most bang for their buck. “Palm is the most efficient,” says Paul Conway , vice chairman of Cargill, a major importer of palm oil from Southeast Asia. “It’s basically all oil.” Palm oil is versatile, with uses not just in food but also in soaps and detergents and, increasingly, biofuels. “Anything you can make from petrochemicals, you can also make from palm oil,” Dorab Mistry, a director of Godrej International, said in an interview with Bloomberg Television. And, he added, there aren’t a lot of big costs involved with making it. “There are very few commodities in the world which are as profitable to produce as palm oil.” Einhorn is Asia regional editor in Bloomberg Businessweek’s Hong Kong bureau. Continue reading
Carbon Market Challenges & Opportunities
London, 29 May 2013 Short-term intervention in the EU IETA members would overwhelmingly support intervention by the European Commission in the EU Emissions Trading System (ETS) within 12 months to improve the functioning of the market from its current record lows. Almost all (96%) respondents back structural reform of the EU ETS, with almost half (45%) thinking an ambitious emissions target and cap would be the most effective option. The outlook for price recovery remains weak according to members with low carbon prices expected up to 2020. EUAs are currently trading at around €3.50, only 7% of the value needed globally to shift economies onto a low carbon pathway (€47). 56% of respondents expect EUAs to trade at €5-10 between now and 2020, a 47% fall from last year’s expectations for the same time period, and a 68% fall from those in 2011. • Expectations that EUAs will trade below €10 and CERs below €5 to 2020 • Domestic or regional policies will be more important that international negotiations over the next few years Dirk Forrister, President and CEO, IETA said: “The agreement in Doha to extend the cap and trade schemes will emerge elsewhere before 2020 in Brazil (37%), Japan (36%), and Mexico (36%). Four out of five now feel that domestic or regional policy initiatives are likely to be more important than international negotiations over the next five years. Respondents particularly highlighted that linking domestic or regional carbon markets will help stimulate the growth in a global market. 94% expect that the EU and Australian carbon markets will be linked before 2020, as well as 35% for New Zealand and around a25% believe that both California and South Korea will eventually link with the EU. Dirk Forrister, President and CEO, IETA said: “Carbon Markets are the preferred policy tool for addressing greenhouse gas emissions around the world. As new systems emerge, market actors and policymakers need to work together to design these systems in a harmonized way – and to make them “linking-ready.” That way, it will be easier to create a more globally connected system and a commonly traded carbon commodity, which will allow nations to meet emissions targets and preserve economic growth.” Amongst other key findings: The new Californian carbon market, launched at the start of the year, is expected to increase its share of the global market in terms of value, with California Carbon Allowances expected to continue trading at US$10-20 over the first three years of the programme. Only 62% believe that ICAO will propose an approach to global aviation emissions regulation before 2018, and more than one respondent in ten believes that they never will. Only 1% of respondents expect the outcome of COP21 in 2015 to result in legally binding targets for all major economies that are aligned with limiting climate change to 2 degrees above pre-industrial levels. Despite the collapse of carbon prices, all regulated entities surveyed said that the carbon price is still relevant to their capital investment decisions, with four out of five saying it is an important factor. Jonathan Grant, Director, PwC , who performed analysis on the survey said: “The outlook for a global deal is for a mix of binding targets and voluntary pledges; IETA members expect that the global deal in 2015 will look more like Cancun than Kyoto, but at least it won’t be Copenhagen.” “With a sustained period of low prices expected for EU carbon permits, business looks set to face a patchwork of climate regulation over the coming years which may raise concerns about competitiveness and high administrative costs.” Ends — Continue reading
