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European Union to Revise Palm Oil Biodiesel Regulations Following WTO Ruling



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European Union to Revise Palm Oil Biodiesel Regulations Following WTO Ruling

InfoSAWIT, BRUSSELS – The European Union (EU) will revise regulations related to palm oil-based biodiesel after the World Trade Organization (WTO) ruled that part of the Renewable Energy Directive (RED III) discriminates against Indonesian palm oil exports. This decision was announced on January 10, 2025, and is considered a significant victory for Indonesia in its long-standing trade dispute with the EU regarding biofuel trade restrictions.

Indonesia filed a complaint against the EU with the WTO dispute resolution body in 2019 after the bloc classified palm oil-based biodiesel as high-risk for deforestation. Under the existing regulations, the use of palm oil as a transportation fuel is set to be phased out between 2023 and 2030.

Although the WTO upheld the classification of palm oil biodiesel as "high-risk," it found errors in the application of the regulations. Specifically, the WTO determined that Delegated Regulation 2019/807, which is part of the RED III policy, is inconsistent with international trade rules.

Additionally, the WTO highlighted France's tax incentives that exclude palm oil-based biodiesel while favoring alternative biofuels based on rapeseed and soy. This policy is deemed discriminatory against Indonesian palm oil.

In its official statement, the European Union pledged to adjust the policy to comply with international trade obligations. The revision of the regulations is expected to be completed within 60 days, unless there is an appeal against the WTO ruling.

From the outset, Indonesia has viewed the EU's RED policy as unfair, as it favors European domestic biofuel production over palm oil from producing countries like Indonesia and Malaysia. With the WTO ruling, Indonesia hopes for improvements in EU trade policies so that palm oil can compete more fairly in the global market. (T2)


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