Mitigating Hydrocarbon Contamination in Crude Palm Oil: Challenges, Strategic Insights and Recommendations
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Latest News Roundup A quick digest of the latest policies and market trends.
Sustainability
Sludge Drying Treatment in Palm Oil Mills 9-10 5-7
Contamination
Mitigating Hydrocarbon Contamination in Crude Palm Oil: Challenges, Strategic Insights and Recommendations
13-16 19-25
Unlocking Revenue and Sustainability: Exploring Carbon Credit Opportunities in the Palm Oil Industry
Key Palm Oil Mid & Downstream Stakeholders: Ministry, Its Agencies And Related Associations “Malaysia and Indonesia” 29 Knowledge Nugget The Palm Oil Paradox: A Zohnerism Story –How Misleading Narratives Can Shape Public Opinion 26-28
Unlocking Revenue and Sustainability: Exploring Carbon Credit Opportunities in the Palm Oil Industry 17-18 30 Back Cover Muar Ban Lee Group Berhad 1-2, 8 Maps & Globe Specialist Distributor Next Chapter Media 11-12 IAT Singapore (Technology) Pte Ltd
SD Guthrie Berhad (formerly Sime Darby Plantation Berhad) unveiled its ambitious Beyond Zero framework at the Roundtable on Sustainable Palm Oil (RT2024) conference in Bangkok. is initiative rede nes the company’s sustainability commitment by focusing on mitigating negative impacts while delivering measurable positive outcomes for people and the environment.
Built on 3 pillars— Zero, Restore, and Transform— Beyond Zero aims to create long-term value through key initiatives:
Restoring Nature: Conserving and rehabilitating 100,000 hectares of land by 2030 through stakeholder collaborations.
Regenerative Agriculture: Developing a Regenerative Agriculture Framework for Palm Oil by 2025, with pilot implementation by 2028. Empowering Smallholders: Enhancing the livelihoods of 50,000 smallholders by 2035 through yield improvements, income growth, and expanded market access.
Aligned with Science Based Targets initiative (SBTi) validated net-zero goals, SD Guthrie is the world’s rst palm oil company to achieve this validation. Group Managing Director Datuk Mohamad Helmy Othman Basha emphasised the framework’s alignment with addressing climate change and biodiversity loss while integrating sustainability into core operations. Developed through extensive consultation and external audits, Beyond Zero re ects SD Guthrie’s leadership in managing a global supply chain that includes 1,173 third-party mills and over 47,000 smallholders across four countries.
RSPO Strengthens Standards Amid Global Sustainability
Demands
(3 Nov 2024)
e Roundtable on Sustainable Palm Oil (RSPO), certifying one- h of the world's palm oil, has released a dra of its updated Principles and Criteria (P&C) to align with evolving expectations from regulators, markets, and consumers. Set to take e ect on 13 November 2025, the revised standards aim to ensure sustainable palm oil cultivation while addressing criticisms of insu cient rigor in past certi cations.
Following the annual Roundtable Conference on Sustainable Palm Oil (RT2024), RSPO Members voted to adopt the 2024 RSPO Principles and Criteria (P&C) and Independent Smallholder (ISH) Standard during the 21st RSPO General Assembly (GA21). e adoption marks a new chapter in realising the global partnership's vision to make palm oil sustainable, as the RSPO Standards outline the aims and mandatory requirements for the sustainable production and procurement of RSPO Certi ed sustainable palm oil.
is revised P&C introduces enhanced commitments to protect forests and peatlands, mitigate climate impacts, and uphold the rights of workers, indigenous groups and environmental defenders. ese updates come amid pressure from the European Union’s deforestation-free (EUDR) products regulation which demands stricter compliance and transparency than RSPO certi cation currently provides. Critics, including Greenpeace, have questioned the RSPO's credibility in light of EUDR’s stringent requirements, which may soon in uence regulations in other regions. Since its inception in 2004, the RSPO has sought to balance environmental, social and economic priorities through multi-stakeholder consensus among growers, NGOs, and consumer goods rms. While challenges remain, the RSPO describes the latest P&C as a "signi cant step forward," reinforcing its role in advancing sustainability in a sector central to global food systems and environmental health.
Deputy Minister of Agriculture, Sudaryono, expressed con dence in the future of Indonesia’s palm oil industry, underscoring its vital role in the national economy. Speaking at the 2024 Indonesian Palm Oil Conference (IPOC) held in Bali, he highlighted that Indonesia leads global palm oil production, contributing 25% of the world’s vegetable oil and 59% of global palm oil output. e industry provides 16 million jobs, with many bene ting small-scale farmers.
Sudaryono also emphasised the government's commitment to renewable energy, particularly through the B35 biodiesel program, which uses 35% palm oil. is initiative, part of President Prabowo Subianto's administration, has reduced fossil fuel imports by over US$7.9 billion in 2023 and sets the stage for a future B50 target (50% palm oil-based biodiesel). However, Sudaryono noted that increasing domestic demand for palm oil could strain supplies for other sectors.
Indonesia optimistic about palm oil industry’s future
To address this, he outlined ve strategic measures to enhance domestic production, including the "Peremajaan Sawit Rakyat" (PSR) oil palm replanting program, which aims to rejuvenate 120,000 hectares annually. e government has allocated US$60 million to help small farmers replace aging trees with certi ed seedlings, improving crop quality and productivity. Additionally, Sudaryono highlighted the importance of adopting Good Agricultural Practices (GAP) and investing in agricultural R&D to ensure long-term sustainability. He also pointed to the Indonesian Sustainable Palm Oil (ISPO) certi cation as a key tool to combat negative perceptions surrounding the industry.
MPOC Unveils
Roadmap to Carbon Neutrality and Net Zero for Palm Oil Sector
(18 Nov 2024)
e Malaysian Palm Oil Council (MPOC), in collaboration with Swinburne University of Technology Sarawak, has unveiled a groundbreaking study charting the Malaysian palm oil industry’s path to carbon neutrality and net-zero emissions. is initiative underscores Malaysia's leadership in climate-smart agriculture, aligning its palm oil sector with global sustainability goals.
e study highlights signi cant greenhouse gas (GHG) reductions achieved through compliance with the Malaysian Sustainable Palm Oil (MSPO) certi cation and advanced practices, surpassing global standards. It provides a strategic roadmap to leverage proven solutions like Combined Heat and Power (CHP) systems and biogas capture, which have already cut emissions by 68.8%. Emerging technologies, such as converting empty fruit bunches (EFB) into energy briquettes and producing biochar for soil enrichment, o er pathways to close the gap and achieve net-zero.
MPOC CEO Belvinder Sron emphasised the study’s importance in maintaining Malaysia’s competitiveness while fostering climate resilience. Swinburne Sarawak’s Pro Vice-Chancellor, Prof. Lau Hieng Ho, lauded the collaboration as a model for translating academic insights into impactful sustainability solutions. Overcoming challenges like high costs and reliance on imported technology will require strategic investments in R&D and infrastructure to ensure the Malaysian palm oil industry’s sustainable leadership.
e Malaysian Palm Oil Council (MPOC) made its debut at COP29, showcasing Malaysia's leadership in sustainable palm oil production. e event highlighted the nation’s commitment to certi ed sustainable palm oil (CSPO) and alignment with the United Nations Sustainable Development Goals (SDGs).
At the Malaysia Pavilion, MPOC hosted a session, “Powering a Just Transition: Sustainable Malaysian Palm Oil”, focusing on balancing environmental stewardship with economic resilience. CEO Belvinder Sron emphasised Malaysia’s proactive role in climate-smart agriculture, aiming to set a global standard for sustainable practices through strategic partnerships with local key stakeholders like SD Guthrie, Felda Global Ventures and Malaysian Palm Oil Green Conservation Foundation (MPOGCF).
COP29: Malaysia Leads the Way in Sustainable Palm Oil
Renowned economist Je rey Sachs lauded Malaysia’s leadership, especially as ASEAN Chair in 2025, predicting signi cant strides in energy transformation and biodiversity conservation. He also highlighted collaboration opportunities with China through BRICS and ASEAN, envisioning the integration of renewable energy technologies to drive sustainable growth. Malaysia's e orts a rm its position as a global trailblazer in sustainability.
Palm Oil Mills Should Adopt AI to Reduce Costs and Increase Revenue
(19 Nov 2024)
Malaysia's Plantation and Commodities Minister, Datuk Seri Johari Abdul Ghani, has urged palm oil mills to integrate arti cial intelligence (AI) technology to improve e ciency, reduce costs and increase revenue. He highlighted that AI could streamline operations, reduce dependency on foreign labour, and enhance quality and sustainability across all stages of production, including milling, maintenance and real-time quality control.
e Minister made these remarks during the launch of the AI-based smart palm oil mill at Minsawi Industries Sdn Bhd in Perak. is project is a collaboration with AIREI Sdn Bhd, and it aims to set new standards for environmental sustainability, with a focus on energy use, water management, and waste control. e AI system is expected to reduce the workforce by 30%-35%, lowering overhead costs and allowing for the prioritisation of local labour.
e technology will not replace workers, but rather empower them with higher wages and more advanced skills, as AI automates repetitive tasks. is will allow employees to focus on more complex activities requiring human expertise. e government and industry leaders are committed to providing training to help workers adapt to these changes.
AIREI’s CEO, Surendran Kuranadan, emphasised that the AI system integrates advanced sensors, AI-powered cameras, a control system and predictive maintenance to optimise mill performance. is technological shi is seen as a signi cant step towards a smarter, more sustainable palm oil milling industry.
temperature (usually around 100°C) to create conditions for evaporation. As the temperature rises, the water in the sludge is excited and forms water vapor. With the increase in temperature, the partial pressure of the water vapor gradually increases until it reaches equilibrium with the external atmospheric pressure. At this point, the water in the sludge has been evaporated, achieving reduction, stabilisation, and harmlessness.
During the drying process, a dry crust may form on the surface of the sludge. To further reduce the moisture content, ventilation and stirring methods can be used to turn the dried sludge and accelerate the evaporation of water. e drying process may also involve the use of di erent drying media such as air, ue gas, or steam, depending on the speci c characteristics and production e ciency requirements of the sludge.
A er the drying process, the nal step is post-treatment, which involves crushing, screening, and packaging the dried sludge to meet the requirements for resource utilisation. e dried sludge is crushed into smaller particles to facilitate subsequent resource utilisation. ese particles are then screened to separate di erent particle sizes to meet the needs of di erent applications. Finally, the screened particles are packaged for storage or transportation.
roughout the sludge drying process, strict control and monitoring are essential to ensure the stable operation of the equipment and the quality of the treated sludge. Temperature control, exhaust gas treatment, and safety protection measures must be taken to avoid material deterioration, equipment damage, and environmental pollution.
Katherine Wang (Drying Solutions) International Department Manager at TIC Technology Co., Ltd.
e author wishes to recognise the contributions of her customers and colleague, Alyson Chow, whose support has been instrumental in the development of new market opportunities.
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Mitigating Hydrocarbon Contamination in Crude Palm Oil: Challenges,
Strategic Insights and Recommendations
Hydrocarbon contamination in Crude Palm Oil (CPO) is an escalating concern within the palm oil industry, with signi cant implications for both environmental and public health. is article delves into the sources of this contamination, the permissible levels of Mineral Oil Saturated Hydrocarbons (MOSH) and Mineral Oil Aromatic Hydrocarbons (MOAH), the signi cant environmental and health impacts, and the potential measures to mitigate these risks. By focusing on strategic recommendations, this discussion aims to o er valuable insights for policymakers and industry stakeholders to develop sustainable practices that minimise hydrocarbon contamination in CPO production.
Sources of Hydrocarbon Contamination
Hydrocarbon contamination in CPO can occur at various stages of the production process. e primary sources include machine oils and hydraulic uids used in harvesting, transportation, and processing equipment. ese oils, if not properly managed, can leach into the palm oil, introducing MOSH and MOAH contaminants. e use of non-food-grade lubricants further exacerbates this issue, as they o en contain higher levels of hydrocarbons that can migrate into the oil during processing.
S ources of Contam i nati on
Challenges in Mitigating Contamination
Addressing hydrocarbon contamination is not without its challenges. One of the signi cant obstacles is the high cost associated with switching to food-grade lubricants, which small-scale producers may nd prohibitive. Additionally, there is o en a lack of awareness among these producers about the risks of hydrocarbon contamination and the importance of proper equipment maintenance. Another challenge is the limited enforcement of existing regulations related to equipment lubrication and maintenance, which hinders consistent adherence to best practices across the industry. ere were also challenges in implementing quality control measures, such as poor communication and coordination between workers, reliance on third party suppliers for input, and high turnover rates and sta ng shortages.
Permissible Levels and Regulatory Insights
While there are no global regulatory standards that establish maximum levels for MOSH and MOAH, European authorities have set stringent guidelines. e European Food Safety Authority (EFSA) and the Scienti c Committee of the Federal Agency for the Safety of the Food Chain (FASFC) recommend a limit of 20 mg/kg for MOSH and 2 mg/kg for MOAH in food products, including palm oil. ese guidelines are critical benchmarks for the industry, as they help ensure that CPO meets international safety standards, especially for export markets.
Environmental and Health Impacts
e presence of MOSH and MOAH in CPO is not merely a quality control issue but a signi cant environmental and public health concern. ese hydrocarbons have the potential to accumulate in human tissues, leading to long-term health risks, including organ damage and increased cancer risk. Environmentally, the improper handling of lubricants and other hydrocarbon sources can lead to soil and water contamination, a ecting local ecosystems and communities dependent on these resources.
Mitigation Strategies
To address these challenges, a multifaceted approach is necessary. First, the industry must adopt food-grade lubricants and hydraulic uids that minimise the risk of contamination. Additionally, the implementation of rigorous maintenance protocols, including regular inspections and timely replacement of oils, is crucial. It is recommended to establish a comprehensive system of record keeping in order to e ectively monitor and hold accountable maintenance activities. It is essential to reduce lubricant leaks in the mill, particularly at the loading ramp and steriliser. ese measures, coupled with adherence to Good Manufacturing Practices (GMP) and HACCP principles, can signi cantly reduce the risk of hydrocarbon contamination.
Beyond technical solutions, increasing awareness among producers and processors about the risks associated with hydrocarbon contamination is essential. Training programs should be established to educate workers on best practices for equipment maintenance and the importance of using safe lubricants. Moreover, collaboration among industry stakeholders, including government agencies, is vital to ensure the enforcement of regulations and the adoption of sustainable practices across the supply chain.
Strategic Recommendations and Industry Implications
e ndings from this study underscore the need for a proactive approach to managing hydrocarbon contamination in CPO production. Industry stakeholders, from mill managers to policymakers, must prioritise the development and implementation of stringent quality control measures. Periodic testing and monitoring of CPO for impurities, speci cally MOSH and MOAH contaminants should become standard practice, with results guiding continuous improvements in production processes.
Furthermore, the industry must advocate for the establishment of local regulatory standards that align with international guidelines. is alignment will not only enhance the safety and quality of CPO but also strengthen the country's position in the global market. By embracing these recommendations, the palm oil industry can move towards a more sustainable future, where the production of high-quality CPO is achieved without compromising environmental integrity or public health.
Conclusion
Hydrocarbon contamination in CPO presents a complex challenge that requires a comprehensive and strategic response. By focusing on the sources of contamination, adhering to permissible levels, understanding the environmental and health impacts, and implementing e ective mitigation measures, the palm oil industry can safeguard its products and contribute to a more sustainable future. e insights provided in this article o er a roadmap for industry leaders and policymakers to take decisive action in minimising hydrocarbon contamination, ensuring the continued success and sustainability of the palm oil sector.
QUALITATIVE STUDY ON HYDROCARBON CONTAMINATION IN CPO: A CASE STUDY OF PALM OIL MILL BASED IN SUMATERA INDONESIA
Date : ______________
Mit iga t ion S t ra t egy Chec k l ist
1 . Use F ood-G rade Lubric ant s
R epla ce a ll lubri ca n ts w i th f ood-g ra de opti on s .
En s ure a ll m a ch i n ery us es a pproved s a f e lubri ca n ts
2 . Enhanc e Maint enanc e P rot oc ol s
Sch edule reg ula r i n s pecti on s .
Set up ti m ely oi l repla cem en t routi n es .
T ra i n s ta ff on m a i n ten a n ce procedures
3 . I mpl ement Rec ord-Keeping
Set up a m a i n ten a n ce record s ys tem .
Audi t records reg ula rly.
En s ure a ccoun ta bi li ty i n record a ccura cy
4 . Reduc e Lubric ant Leak s
M on i tor a n d fi x lea k -pron e a rea s .
R epa i r or repla ce f a ulty s ea ls .
In s ta ll lea k detecti on s ys tem s
5 . F ol l ow G MP and H ACCP
Upda te GM P a n d HACCP pla n s f or con ta m i n a ti on preven ti on .
Con duct reg ula r com pli a n ce a udi ts .
T ra i n s ta ff on GM P a n d HACCP pra cti ces
6 . Raise Awareness
Sh a re i n f orm a ti on on con ta m i n a ti on ri s k s .
O rg a n i s e tra i n i n g on m a i n ten a n ce a n d lubri ca n t s a f ety.
7 . P romot e Col l aborat ion
Work w i th s ta k eh olders to en f orce bes t pra cti ces .
En g a g e g overn m en t a g en ci es f or reg ula ti on com pli a n ce.
Support s us ta i n a ble pra cti ces i n dus try-w i de.
Unlocking Revenue and Sustainability: Exploring Carbon Credit Opportunities in the Palm Oil Industry
is article is written by
Dr. David Lim Lian Keong President of e Federation of Palm Oil Millers Associations (POMA)
e Federation of Palm Oil Millers Associations (POMA), alongside the Malaysia Palm Oil Association (MPOA), Malaysia Estate Owners Association (MEOA), and Sarawak Oil Palm Plantation Owners Association (SOPPOA), recently hosted a “Unlocking Revenue and Sustainability: Exploring Carbon Credit Opportunities in the Palm Oil e event, organised by Maps and Globe Specialists (MGS) and held at the Genting International Convention Centre (GICC), brought together leaders and stakeholders across Malaysia’s palm oil sector and related industries to explore carbon credit opportunities. e seminar’s central aim was to highlight how carbon credit markets can provide a pathway
Traditionally, Malaysia's palm oil industry has focused on the production of palm oil, palm kernel oil, and palm kernel cake. However, the sector also produces signi cant by-products, including empty fruit bunches (EFB), palm kernel shell (PKS), and palm oil mill e uent (POME). If not managed e ectively, these by-products pose environmental risks; however, recent research indicates that these materials can serve as renewable energy sources, e ectively replacing fossil fuels such as coal and petroleum. By leveraging these by-products, the industry has the potential to reduce greenhouse gas (GHG) emissions and earn carbon credits.
Investment in renewable energy technologies has spurred interest in transforming palm oil plantations into
Seminar Highlights: Key Insights for Industry Stakeholders
e seminar provided critical insights for industry players on how to engage with carbon credit markets. Speakers from Malaysia’s Ministry of Natural Resources and Environmental Sustainability (NRES), the Malaysian Palm Oil Board (MPOB), Bursa Malaysia, and other experts discussed a range of topics essential for understanding carbon credit market dynamics:
Aligning with the Paris Agreement on Climate Change: A key component involved understanding the role of palm oil practices within the context of international climate goals.
Malaysia’s National Carbon Market Strategy: is included insights on government support for carbon credit initiatives, emphasising that industry alignment with national strategies can maximise bene ts.
e Bursa Carbon Exchange Platform: Recently introduced, this platform allows the palm oil sector access to carbon trading markets, facilitating participation in emissions trading and supporting broader sustainability goals.
Exploring Carbon Credit Revenue: is topic underscored the potential for nancial gains through GHG reduction practices, which o er companies additional revenue streams while fostering sustainability.
ese sessions illustrated the nancial and environmental potential of carbon credits, revealing how the Malaysian palm oil industry could be rewarded for reducing emissions in line with international climate targets, such as those established by the Paris Agreement.
Regulatory Impacts from Europe and the Need for Regional Carbon Veri cation Standards
Despite the positive outlook, regulatory hurdles persist. Under the European Union Deforestation Regulation (EUDR), Europe has raised concerns about deforestation associated with palm oil production, suggesting that industry expansion may contribute to carbon emissions. However, Malaysian studies challenge these perceptions, demonstrating the signi cant carbon sequestration capacity of oil palm plantations.
An essential discussion at the seminar addressed the importance of veri ed carbon credits for the Malaysian palm oil industry. By engaging in a transparent carbon credit system, the sector can better illustrate its sustainability e orts and counter deforestation concerns. Shenzhen GDR Carbon Co., Ltd. presented a compelling case for establishing a regional carbon veri cation body to address the Asia-Paci c’s speci c needs, given the present dominance of Western veri cation standards.
e proposed China-ASEAN regional carbon veri cation system would establish localised Monitoring, Reporting, and Veri cation (MRV) standards tailored to the Asia-Paci c region’s unique industrial and environmental dynamics. is approach would reduce certi cation costs, thereby increasing accessibility for smaller producers, particularly smallholder farmers in emerging markets like Malaysia. By enhancing credibility, e ciency, and a ordability, the Asia-Paci c-speci c MRV system could foster more extensive participation in carbon credit trading and boost trust in the region’s carbon markets.
A Promising Path Forward for Malaysia’s Palm Oil Sector
e seminar concluded on an optimistic note, with stakeholders expressing con dence that a deeper understanding of the carbon credit ecosystem could help the palm oil industry navigate emissions challenges while capitalising on new revenue opportunities. By advancing sustainable practices and engaging with carbon credit markets, Malaysia’s palm oil sector has the potential to strengthen both its economic contributions and environmental leadership on a regional and global scale.
As global demand for carbon credits grows, the Malaysian palm oil industry is positioned to demonstrate how a key agricultural sector can align with sustainable innovation, bene ting both the economy and the environment. is path holds signi cant promise, not only for Malaysia’s economic landscape but also for global climate goals, illustrating a viable model for achieving nancial success through sustainable practices.
Opening remarks by Dr David Lim Lian Keong President of e Federation of Palm Oil Millers Associations (POMA)
Unlocking Revenue and Sustainability: Decoding Carbon Market Opportunities for the Palm Oil Industry
By Joseph Tek
Paris Agreement on Climate Change
As GHG emissions blanket the Earth, they trap the sun's heat. is leads to global warming and climate change. e main gases responsible for the greenhouse e ect include carbon dioxide (CO2), methane (CH4) and nitrous oxide (NO2). Methane is 28 times more potent than carbon dioxide at trapping heat in the atmosphere. e scientists are telling us that the world is now warming faster than at any point in recorded history. Warmer temperatures over time are changing weather patterns and disrupting the usual balance of nature.
e Paris Agreement is an international treaty aimed at tackling climate change, and it was adopted by 196 countries at the United Nations Climate Change Conference - the Conference of the Parties (COP21) in Paris on 12 December 2015 which o cially came into force on 4 November 2016.
e main goal of the Paris Agreement is to limit global temperature rise to well below 2°C above preindustrial levels, with an even more ambitious target of 1.5°C. is is important because, according to the UN’s Intergovernmental Panel on Climate Change (IPCC), going beyond the 1.5°C threshold could trigger severe climate impacts, such as more frequent and intense droughts, heatwaves, and storms.
To avoid these catastrophic e ects, global GHG emissions must peak no later than 2025 and then decline by 43% by 2030. Submission of countries national climate action plans, known as nationally determined contributions (NDCs) commenced in 2020. In light of the urgent need for action, the COP27 decision called on countries to strengthen their NDCs targets by the end of 2023, ensuring they are aligned with the Paris Agreement's temperature goals, while considering each country’s unique circumstances.
e Paris Agreement is a groundbreaking deal because it is the rst legally binding international pact that brings all countries together to both reduce emissions and adapt to the e ects of climate change. It also provides a framework for nancial and technical support to help countries—especially those with fewer resources—take action against climate change. In short, the Paris Agreement sets clear global targets for reducing emissions and ghting climate change, but it also recognises that di erent countries will need di erent levels of support and exibility to meet those goals. us, there is a Common but Di erentiated Responsibilities and Respective Capabilities (CBDR–RC) principle within the treaty for individual countries in addressing climate change.
Malaysia’s National Carbon Market Strategy
Imagine a future where Malaysia leads the charge against climate change, cutting down its GHG emissions while fostering economic growth. is aspiring vision is becoming a reality through Malaysia's National Carbon Market Strategy, which connects local e orts to global initiatives and embraces innovative solutions for reducing emissions.
Malaysia in joining the global climate e ort is committed to the Paris Agreement. In 2016, Malaysia pledged to reduce its GHG emissions by 45% by 2030 compared to 2005 levels, with an ambitious goal of reaching net-zero emissions by 2050. is commitment positions Malaysia as an active participant in the global ght against climate change.
To meet these targets, Malaysia has developed a detailed and comprehensive action plan supported by various committees: Malaysia Climate Change Action Council (MTPIN) led by the Prime Minister. is council sets the overall direction for Malaysia's climate policies; National Decarbonisation Committee which was established in 2024, to work on strategies to lower emissions in key industries; and the National Steering Committee on Climate Change (NSCCC) to help guide policy development to ensure compliance with the Paris Agreement. ese committees will pursue to collaborate in creating a cohesive and e ective climate strategy that promotes sustainable growth.
At the heart of the strategy is the National Carbon Market Policy, designed to create a market where companies can buy and sell carbon credits. e carbon credits or carbon o sets, are tradable credits linked to activities that lead to reduction/avoidance/removal of GHG, measured in tonnes of carbon dioxide equivalent (tCO2e). is approach provides nancial incentives for businesses to lower their emissions. Here’s how it works, either by Voluntary or Compliance Carbon Markets.
Voluntary Carbon Market is where companies can choose to buy carbon credits to o set their emissions. Towards this, in December 2022, Bursa Malaysia launched the Bursa Carbon Exchange (BCX), making it easier for businesses to trade these credits domestically. On the other hand, with the Compliance Carbon Market, companies will be required to meet legally mandated emissions reduction targets. Malaysia is developing a Domestic Emission Trading Scheme (ETS) to help businesses comply with these requirements.
Establishing Clear Rules for the Carbon Market
Malaysia's carbon market will follow international guidelines established under the Paris Agreement. is includes: Institutional Frameworks by creating opportunities for organisations to manage emissions projects and monitor progress; Transparent Procedures by ensuring a clear process for trading carbon credits and reporting emissions reductions; and Cooperative Approaches in exploring partnerships with other countries to enhance climate initiatives. ese measures will help ensure that Malaysia’s carbon market supports its national goals without “double counting” emissions reductions.
“Double counting” in carbon trading is a key issue for global climate goals, especially under the Paris Agreement. It occurs when the same emissions reduction is counted both by the country that made the reduction and by the country that buys it. is can happen if there are no rules to prevent it. For example, if Country A reduces its emissions and sells those reductions to Country B, both countries might count the same reduction toward their climate targets. is results in the appearance of two reductions when only one has occurred, undermining the e ectiveness of carbon trading. Double counting can falsely in ate climate progress, making it seem like more emissions are being cut than actually are. is could even negate the bene ts of emissions trading altogether. To avoid this, clear rules are essential. Without proper safeguards, carbon trading could lead to in ated climate claims, making it harder to track real progress in reducing emissions. In short, carbon trading can help ght climate change, but only if reductions are counted correctly.
Introducing Emissions Trading and Carbon Taxes
To further drive down emissions, Malaysia is planning to implement an ETS. ETS will be a market-based approach that sets a cap that allows companies to buy and sell emission allowances, providing an economic incentive to reduce emissions. Under this scheme, companies that emit less than their allowed limit can sell their extra credits, while those that exceed their limit must purchase additional credits. is creates nancial rewards for businesses that reduce their emissions.
Additionally, Malaysia will introduce a carbon tax for high-emission industries such as iron, steel and energy by 2026. A carbon tax is a type of penalty that businesses must pay for excessive GHG emissions. e tax is usually levied per tonne of GHG emissions emitted. e government sets a price that emitters must pay for each tonne of GHG emissions they emit. is tax will charge companies based on their emissions, with the revenue directed toward research and green technology to support Malaysia’s low-carbon transition.
Learning from the Past, Making Informed Decision and Going Forward
Malaysia has experienced with carbon-reducing projects through the Clean Development Mechanism (CDM) from 1st Kyoto Protocol to Doha Agreement, which ran until 2020. ese projects—covering areas like renewable energy and waste management—helped reduce emissions in the form of certi ed emission reduction (CER) credit. Malaysia plans to transition these initiatives to the new UN framework under the Article 6.4 mechanism of Paris Agreement to maintain their e ectiveness in combating climate change - if they meet all required conditions.
To prioritise its emission reduction e orts, Malaysia will use the Marginal Abatement Cost Curve (MACC). In this context, ‘abatement’ means ‘reducing’. A MACC presents the costs or savings expected from di erent opportunities, alongside the potential volume of emissions that could be reduced if implemented. MACCs measure and compare the nancial cost and abatement bene t of individual actions. ey use the metric of dollars per tonne of carbon dioxide equivalent – usually represented as $/tCO2e. is tool helps identify the most cost-e ective projects for reducing emissions, guiding policymakers on where to focus their e orts for the best results.
Malaysia’s carbon market strategy includes several key priorities such as Finalising International Cooperation to ensure e ective carbon trading through international arrangements; Aligning with Broader Goals that will integrate climate policies with national energy strategies and long-term development plans; and Building Knowledge and Capacity by engaging government, industry and civil society to support climate actions. rough these initiatives, Malaysia is on the way to create a carbon market that not only helps reducing global emissions but also strengthening national economy. is forward-thinking strategy highlights Malaysia's commitment to transforming its climate action approach, paving the way for a low-carbon future while supporting its communities and businesses. As Malaysia moves forward, it aspires to continue to build partnerships and inspire others to join in the journey toward sustainability.
To boost investment, Malaysia introduces the Further Tax Deduction for Carbon Projects (FTC), allowing companies to deduct up to RM300,000 for qualifying expenses from January 2024 to December 2026. is incentive encourages participation in BCX, which plans to expand its o erings with more RECs, including international ones by 2025. Upcoming auctions will showcase diverse renewable sources, and collaborations with organisations like the Malaysian Green Technology and Climate Change Corporation (MGTC) will promote best practices and knowledge sharing. BCX is a transformative initiative positioning Malaysia as a leader in Southeast Asia’s carbon market, supporting transparent trading, sustainable projects and contributing to net-zero goals. As it grows, BCX is set to signi cantly in uence regional carbon reduction and create economic opportunities.
BCX Going Forward
e Palm Oil Paradox: A Zohnerism Story –How Misleading Narratives Can Shape Public Opinion
By Joseph Tek
e twist?
In 1997, Nathan Zohner, a 14-year-old student from Eagle Rock Junior High School in Idaho Falls, Idaho in USA became the center of attention at a science fair with his compelling presentation about a dangerous chemical. e chemical in question was dihydrogen monoxide. Zohner’s presentation cited several scienti cally accurate about this chemical:
• It causes severe burns in its gaseous form.
• It corrodes and rusts metal.
• It is present in tumours and acid rain.
• It causes excessive urination and bloating when consumed.
Dihydrogen monoxide is just water (H2O).
Zohner's experiment, while accurate in its individual claims, used these facts out of context to lead his audience to a false conclusion. is tactic led journalist James K. Glassman to coin the term "Zohnerism" - the use of true facts to mislead a scienti cally and mathematically uninformed public. Zohnerism highlights how presenting accurate information selectively can skew perceptions and decisions.
e Palm Oil Narrative: A Contemporary Case of Zohnerism
Let’s consider a potential scenario involving a young environmental activist. Let us call her Isabelle. At her school’s science fair, Isabelle passionately argues for a ban on palm oil, citing several critical issues:
Deforestation: Isabelle asserts that palm oil production is responsible for the destruction of millions of hectares of rainforests. is deforestation is o en portrayed as catastrophic for biodiversity and climate stability.
Endangered Species: She highlights the plight of endangered species such as orangutans, whose habitats are being ravaged by the expansion of palm oil plantations. Many animals are displaced or killed due to habitat loss.
Carbon Emissions: Isabelle claims that palm oil production signi cantly contributes to global warming, exacerbating climate change through increased carbon emissions.
Labour Exploitation: She points to numerous allegations of poor working conditions and child labour within oil palm plantations, framing the industry as unethical.
Health Risks: Finally, Isabelle argues that palm oil’s high saturated fat content poses health risks, potentially leading to heart disease.
With her alarming points, 90% of Isabelle’s audience votes in favour of banning palm oil. However, Isabelle’s narrative overlooks several important aspects:
Land E ciency: Oil palm is the most land-e cient edible oil crops, producing more oil per hectare than alternatives like soybean or sun ower oil. Banning palm oil could lead to the expansion of other crops that require more land, potentially causing even greater environmental damage. is unintended consequence is an example of the Cobra E ect, where an attempted solution worsens the original problem.
Economic Impact: Millions of smallholder farmers depend on palm oil for their livelihoods, especially in developing tropical countries. A ban on palm oil could have devastating e ects on these communities, eliminating jobs, education and healthcare bene ts. Furthermore, palm oil cultivation can be instrumental in poverty alleviation and economic development. e tax revenues generated from palm oil production also support national development in these countries.
Sustainable Practices: ere are numerous best practices for sustainable palm oil cultivation, such as zero-burning techniques, integrated pest management, nutrient recycling etc. Certi cation schemes like the mandatory national MSPO and the B2B RSPO are working to ensure that palm oil production meets high sustainability standards. ese assurances and certi cations promote environmentally and socially responsible practices within the industry.
Broader Emissions Context: While palm oil production does contribute to carbon emissions, it is part of a larger landscape of global emissions. Other agricultural practices, livestock farming and industrial activities also contribute signi cantly to greenhouse gas emissions. For example, livestock farming produces signi cant amounts of methane, a potent greenhouse gas - should we then consider an outright boycott of beef? Addressing global warming requires a comprehensive approach that includes reducing emissions across all sectors, improving energy e ciency, and transitioning to renewable energy sources. In the case of palm oil, there are established greenhouse gas mitigation measures, such as biogas capture, biomass utilisation, and renewable energy integration, which should be actively promoted and supported to advance a green economy and enhance industry sustainability.
Nutritional Balance: Leading a healthy lifestyle involves making informed choices about diet and exercise. Health experts emphasise that fats are essential for a balanced diet as they facilitate the absorption of crucial fat-soluble vitamins. Palm oil stands out among edible oils due to its unique balance of fats. It contains roughly equal proportions of unsaturated fats, which are generally considered bene cial, and saturated fats. Importantly, the primary saturated fat in palm oil is palmitic acid. Unlike some other saturated fats, such as myristic acid, which can raise cholesterol levels, palmitic acid does not signi cantly a ect blood cholesterol levels. Furthermore, palm oil has been recognised for its heart-healthy properties, as it can help increase bene cial HDLcholesterol levels, which are important for cardiovascular health. Additionally, palm oil is rich in bene cial nutrients like Vitamin E and tocotrienols, which possess antioxidant properties and contribute to overall well-being.
Power of Selective Facts
Isabelle’s presentation exempli es Zohnerism by presenting true but incomplete information to create a biased narrative. By focusing solely on negative aspects and omitting crucial context, she leads her audience to a simplistic and potentially harmful conclusion. is manipulation of facts, while not outright false, fails to provide a balanced view of the issue.
Critical inking and Informed Decision-Making
is case illustrates the importance of critical thinking and seeking a balanced perspective. e palm oil debate is complex and multifaceted, involving economic, environmental, and social dimensions. Solutions require a nuanced understanding that considers both the bene ts and drawbacks of palm oil production. In the digital age, where sensationalism o en overshadows substance, it is essential to question the information presented and seek out multiple viewpoints. By doing so, we can avoid the pitfalls of misleading narratives and work towards solutions that address both environmental sustainability and socio-economic development.
Final oughts
e palm oil paradox highlights a broader challenge in addressing complex global issues. Instead of resorting to simplistic bans or blanket endorsements - o en masked as non-tari trade barriers or protectionism - we should advocate for a more nuanced and balanced approach. is means considering all aspects of the issue and working toward sustainable practices that genuinely bene t both people and the planet. By avoiding Zohnerism and understanding the full scope of the problem, we can make more informed and e ective decisions. As mankind, we must try harder to approach these challenges with a commitment to balanced solutions, recognising the complexities involved and striving to achieve a harmonious integration of economic, environmental and social goals.
Quote by Ban Ki-Moon, Secretary General of United Nations (2012)
“Ours is a world of looming challenges and increasingly limited resources. Sustainable development o ers the best chance to adjust our course. Saving our planet, li ing people out of poverty, advancing economic growth... these are ONE and SAME FIGHT”.
KEY PALM OIL MID & DOWNSTREAM STAKEHOLDERS: MINISTRY, ITS AGENCIES AND RELATED ASSOCIATIONS
MALAYSIA
Ministry of Plantation and Commodities (KPK) www.kpk.gov.my
Malaysian Palm Oil Green Conservation Foundation (MPOGCF) www.mpogcf.org
Malaysian Oleochemical Manufaturers' Group (MOMG) www.momg.org.my
Badan Pengelola Dana Perkebunan Kelapa Sawit (BPDPKS) Indonesian Palm Oil Plantation Fund Management Agency https://www.bpdp.or.id/
Asosiasi Produsen Oleochemical Indonesia (APOLIN) Indonesian Oleochemical Producers Association https://apolin.org/
Malaysian Palm Oil Board (MPOB) www.mpob.org.my
Malaysian Palm Oil Association (MPOA) www.mpoa.org.my
