The European Parliament voted on 17 January in favour of a Renewable Energy Directive (RED II) proposal that would remove palm oil-based biodiesel from its list of renewable fuels by 2021 and froze crop-based biofuels at levels reached in 2017.

The decision to remove palm oil biodiesel from the list of biofuels that counted towards the EU’s renewable fuels targets was likely to mark the end of palm methyl ester (PME) imports from Southeast Asia from 2021 onwards, Platts wrote on 17 January.

"Today's parliament vote sends a clear message to the biofuels industry that growth can only come from sustainable advanced fuels such as waste-based biofuels, not from food crops. This compromise redirects investments into the fuels of the future and eliminates palm oil biodiesel, the highest emitting biofuel," said Laura Buffet, clean fuels manager at industry body Transport and Environment.

Indonesia and Malaysia, two of the world’s largest palm oil producers, have been increasingly critical of EU’s plans to phase out palm oil biodiesel, with both countries threatening retaliation in trade and taking the matter to the World Trade Organization (WTO).

“In a sequence of acts akin to crop apartheid, the EU Parliament has taken steps to raise trade barriers, leading to an ultimate breach of the EU’s World Trade Organization (WTO) commitments,” said Malaysian Minister of Plantation Industries and Commodities Datuk Seri Mah Siew Keong in December 2017, adding that the country would bring the matter to the WTO if needed.

With palm oil diesel now removed from the list of renewable fuels, Indonesia and Malaysia can be expected to soon make their decisions on how they will oppose the decision.

In addition to eliminating palm oil from fuels, the EU Parliament voted to limit the contributions of crop-based fuels to the level each member state had reached in 2017.

“Biomass fuels consumed in transport, if produced from food or feed crops, shall be no more than the contribution from those to the gross final consumption of energy from renewable energy sources in 2017 in that member state, with a maximum of 7% of gross final consumption in road and rail transport," the Parliament’s decision read.

Additionally, the Parliament voted for an overall renewables fuels target of 12% in transport, which contained a 10% blending mandate for “advanced” fuels, such as electricity, waste-based biofuels and recycled carbon fuels.

European renewable ethanol association ePure said the 12% overall renewables target left from for sustainable biofuels to replace fossil fuels in the EU energy supply, but argued that the decision should have done more.

“It needs a renewable energy policy that looks beyond labels like ‘conventional’ or ‘advanced’ and instead to the real sustainability credentials of biofuels,” ePure said.