In a landmark decision on January 18, 2025, Indonesia, which recently became a full member of the BRICS bloc, , celebrated a major victory at the World Trade Organization against the European Union (EU) over palm oil discrimination. This ruling marks a pivotal moment for Indonesia’s energy sovereignty and its position in global trade.
Indonesia welcomed the ruling by the World Trade Organization (WTO), which found that the European Union (EU) discriminated against Indonesian palm oil-based biofuel, giving it unfair and detrimental treatment, in setting biofuel regulations which favoured EU biofuel products.
“The ruling found that in the case of palm oil and biodiesel, Europe committed discrimination against Indonesia,” said Indonesia’s Coordinating Minister for Economic Affairs Airlangga Hartarto.
Indonesia, the world’s largest palm oil producer, brought the case to the WTO dispute body in 2019 after the EU decided that palm oil-based diesel would not be considered a biofuel due to its alleged link to deforestation and its use in transport fuel would be phased out between 2023 and 2030.
“Now the world has no choice but to accept that biodiesel does not only come from rapeseed or soybean, but there are biodiesel that are based on crude palm oil,” Hartarto said.
The WTO panel report states that the EU failed to properly evaluate the data used to determine biofuels derived from high indirect land use changes (high ILUC) risk.
It also found shortcomings in the preparation and application of criteria and procedures for low ILUC-risk certification in the European bloc’s climate policy—the Renewable Energy Directive II (REDD II).
In addition, the panel ruled that the tax incentives for biofuel used in France’s transportation system are discriminatory against palm oil-based biofuel. The EU only provides tax incentives for soybean and rapeseed oil-based biofuel.
Sources:
- Bi-laterals Org, Jan 18, 2025. https://www.bilaterals.org/?indonesia-welcomes-wto-ruling-on
- Ashley Documentary, Mar 20, 2025. https://youtu.be/AkowV0oxDpk?t=89
China Environment News 