EU directive not likely to affect Malaysia’s palm oil exports

24 May 2010 10:45  [Source: ICIS news]

SINGAPORE (ICIS news)--The European Union’s (EU) new renewable energy directive, likely to be effective on the 5 December 2010, will have little impact on Malaysia’s total palm oil export to the region, traders said on Monday.

The EU would not impose any new tariffs, quotas, restrictions or conditions on any palm oil being imported into the region, the traders added.

“The current status quo will remain the same,” a palm oil trader said.

While the EU would not impose any restrictions for palm oil being imported into the EU market for consumer products such as food, cosmetics and detergent applications - which account for almost 90% of Malaysia’s palm oil exports to the EU - the new directive might impact the biofuels sector, market sources said.

The initiative includes a 10% binding target for renewable energy in transport, including biofuels, by 2020.

While this new initiative would provide an opportunity for developing countries to supply biofuels to the EU market, all vegetable oil exports for biofuel applications would be required to meet the criteria set out in the directive, the sources added.

It also provides incentives for sustainably produced biofuels.

However, biofuels that do not meet the criteria would be allowed to be imported and marketed in the EU, but would not be eligible for any incentive under the new directive, market sources added.

Incentives include tax exemptions, subsidies or other incentives from EU member states. Full details had not been disclosed, they said.

According to the Malaysian Palm Oil Council, palm oil exports to the EU, between January to April 2010, totalled 684,057 tonnes, up 16.5% from the same period last year.

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By: Serena Seng

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