Green group wary of plans for "eco-friendly" palm

By Niluksi Koswanage

KUALA LUMPUR (Reuters) - An environmental group has threatened to withdraw its support for a plan to certify "eco-friendly" palm oil, accusing the world's two biggest producers of cynically exploiting the initiative.

Friends of the Earth said the Malaysian and Indonesian governments appeared to be using the program, a voluntary industry-led initiative, as an excuse not to legislate to protect rainforests from the rapid expansion of palm-oil estates.

The certification system is set to be unveiled in Kuala Lumpur this week at a meeting of the Roundtable on Sustainable Palm Oil, which groups producers, consumers and green groups such as Friends of the Earth and WWF.

If green groups walk out of the roundtable, it could deal a blow to the industry, which is trying to promote palm oil as a sustainable alternative to petroleum. Demand for palm-based biofuel has sent demand and prices for the commodity soaring.

"The governments in Malaysia and Indonesia use the roundtable as an excuse not to undertake strong legislation to protect their environments and the rights of indigenous people," said Ed Matthews, head of new economics for Friends of the Earth.

"That is beginning to happen now and if that continues to happen over the next year or two, then I think we would be deeply concerned about that and at that point we will have to walk away," he told Reuters last Friday.

Malaysia and Indonesia, home to more than 4 percent of the world's rainforests, produce nearly 85 percent of total palm oil.

Both nations have laws to protect tracts of rainforests against illegal logging, but green groups say penalties should be stiffened and that more rainforest should be locked away. They also say existing laws are not properly enforced.