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CIFOR is developing a value chain dynamic model to simulate the impacts of various global sustainable palm oil trade scenarios on Indonesia with the aim of contributing to addressing the intractable challenge of establishing sustainable palm oil trade that provides benefits for forests and economic benefits for people. Scenarios developed under this model show EUDR implementation having the potential to impact significantly on Indonesia (Purnomo et al. 2022b), as 11% of the country’s total palm oil exports go the the EU, which constitutes Indonesia’s fourth largest export destination (UN Comtrade 2021). The simulation suggests the EUDR may help to reduce deforestation and GHG emissions in Indonesia (Purnomo et al. 2022b) through its potential contribution to integrating sustainable palm oil trade initiatives into the country’s national climate change mitigation strategy. Indonesia’s FOLU Net Sink 2030 policy aims to mitigate climate change by avoiding and controlling deforestation so the forestry and other land use (FOLU) sector can absorb more carbon that it emits (MoE 2021). However, EUDR implementation also has the potential to create economic losses for Indonesia’s oil palm sector, especially in the short term (Purnomo et al. 2022b).
In December 2022, CIFOR conducted a national roundtable discussion to identify the perspectives of key Indonesian stakeholders on potential challenges posed by the EUDR, as well as pathways for addressing and adapting to the new policy. Key takeaways from the discussion were the need to recognize and integrate existing national efforts to halt deforestation and improve sustainable palm oil, which were seen as plausible pathways and win-win solutions for the EU and for Indonesia in achieving its main climate change mitigation strategy in FOLU Net Sink 2030.
This policy dialogue is part of CIFOR’s study for the Trade, Development and the Environment Hub (TRADE Hub) – a global research consortium led by the UN Environment Programme World Conservation Monitoring Centre (UNEP WCMC) and supported by the UK Research and Innovation Global Challenges Research Fund (UKRI GCRF).