PALMOILMAGAZINE, BRUSSELS – The European Union (EU) will revise its regulations regarding palm oil-based biodiesel after the World Trade Organization (WTO) ruled that part of the Renewable Energy Directive (RED III) discriminates against Indonesia’s palm oil exports. This decision, announced on January 10, 2025, is seen as a major victory for Indonesia in its long-standing trade dispute with the EU over biofuel trade restrictions.
Indonesia had filed a complaint with the WTO in 2019 after the EU classified palm oil-based biodiesel as high risk for deforestation. According to the current regulations, the use of palm oil as a transport fuel was set to be phased out between 2023 and 2030.
While the WTO upheld the classification of palm oil biodiesel as “high risk,” it found errors in the implementation of the rules. Specifically, the WTO ruled that Delegated Regulation 2019/807, part of the RED III policy, was inconsistent with international trade rules.
Furthermore, the WTO also scrutinized France’s tax incentives, which excluded palm oil biodiesel while favoring alternatives made from rapeseed and soybeans. This policy was deemed discriminatory against Indonesian palm oil.
In its official statement, the EU pledged to adjust the policy to comply with international trade obligations. The revision is expected to be completed within 60 days unless there is an appeal against the WTO ruling.
From the outset, Indonesia has argued that the EU’s RED policy was unfair, as it favored domestically produced biofuels over palm oil from producer countries like Indonesia and Malaysia. With the WTO ruling, Indonesia hopes for improvements in the EU’s trade policies, allowing palm oil to compete more fairly in the global market. (P2)
