What new initiatives is YTL-SV Carbon currently involved in?
DIXON: We recognize the need to move away from Clean Development Mechanism (CDM) projects. We have started moving towards carbon mapping. We see this as an essential part of a business’s first steps to establish a baseline for their greenhouse gas inventory. This can help them compare themselves to their peers in the industry and see where they are going. This will allow them to identify projects for energy efficiency, and install renewable energy programs. There are many opportunities, but you have to first establish where you are. This will enable you to decide what type of initiatives to embark on, in order to make a meaningful cut into your carbon footprint.
What geographic areas have provided strong business opportunities for YTL-SV Carbon?
DIXON: The majority of our work is in Southeast Asia. We work in Malaysia, Indonesia, Thailand, Sri Lanka, Vietnam, and China. About 80% of that work is with the palm oil industry.
What are your projections for global carbon trading over the next few years?
DIXON: It appears that there is a significant systemic crisis taking place right now in the carbon trading industry. The Certified Emission Reduction (CER) credits for developing countries will continue to be affected by the European Union Allowances (EUAs) prices. At this time, EUAs are about 7 Euros and CERs are about 1 Euro. These have fallen from great heights. CER prices were about 12 Euros a year ago. The future depends on whether the European Union decides to backload the EUAs. This would mean the free entitlements for carbon emissions could be transferred from the 2013-2015 period to a later period. This is being debated right now but Germany will be the decision maker. It also depends on if there will be an agreement on a post-Kyoto mechanism. This will be partly taking place in Doha. It has taken place in Durban, Copenhagen, and many other venues without a tangible outcome. The CER prices have suffered as a result of the European and American economic crisis. There will still be a clean development mechanism available for Least Developed Countries (LDC) like Bangladesh, Myanmar, Laos, and others. They will still be allowed to generate carbon credits under the CDM over the next few years. This is where we see a big opportunity, and it will be an area of our focus.
What do governments need to do to come up with a post-Kyoto solution?
DIXON: The Clean Development Mechanism could have been fundamentally flawed in the way it was created. Absolute emissions are measured, rather than productivity. It is not measured by emissions for every ton of steel, cement, or paper, but rather emissions on an absolute scale. Russia was able to generate emissions to sell because they simply closed down paper, steel, and cement plants all over the country. They created this surplus of credits. The European economic crisis has created a surplus of credits as well. The slowing of production and energy consumption results in the reduction of emissions. There is a problem of not measuring carbon against each unit of commodity produced. I think if you change the system to measure carbon against every ton of output, it would be more appealing for countries to participate. Instead these countries suffer from large surpluses of credits evolving from a financial crisis. The intentions were in the right place when the CDM was created, but nobody knew the crisis would take place in 2008 and 2012. It would be a good idea to rethink this protocol.
What are your views of NGO criticisms of the palm oil industry as a whole?
DIXON: There is no doubt that there are serious biodiversity and conservation issues in the palm oil industry. I think it depends on where you are. There are other factors that are very important. Palm oil is far more productive per hectare than corn or soy or peanut oil. Each hectare produces about 6 tons of crude palm oil per year, whereas other oil seed crops produce only around 1 ton. In terms of land usage, palm oil is a far more efficient crop, and it absorbs a lot more CO2. Palm oil can be harvested from the same tree for 30 years while other crops in comparison must be planted every year. There is a lack of requirement to replant annually. Fertilizers for the plants can also be made from the compost of agricultural waste from the palm oil industry. It is not as good as chemical fertilizers but it has a better value than other seed oil plants like corn, soya, or sunflower.
There is a problem of not measuring carbon against each unit of commodity produced. I think if you change the system to measure carbon against every ton of output, it would be more appealing for countries to participate.
How responsible have the Malaysian authorities been in developing the palm oil industry thus far?
DIXON: The Malaysian Palm Oil Board has been very proactive in trying to create sustainable composting, biofuel, and management of empty fruit bunch, palm kernel shell, and mesocarp fibers. They have also been active in managing palm oil mill effluent, which has a very high methane output. They have engaged in a lot of research and development, which has resulted in many good outcomes. Commercial mills have been very active in terms of turning waste streams into resources. Liquid effluent and solid wastes can be used for anything. Both public and private sector companies who have been working in this industry to find waste solutions have been very productive. I think this cooperation between the public and private sectors has been good, as they have different perspectives. At the end of the day, carbon credits do help, but governments can step in when carbon credits may not be available anymore. There is a lot of politics involved in the French Nutella tax for instance. There was a lot of politics involved in the United States soya lobby, which petitioned against palm oil. Politics are involved in many decisions being made. We must fight through those issues and try to get clarity in order to identify the real issues here. If everyone is too involved in politicking, you will never get to the real core of the problem. This is what the environmental crisis is all about. We must push away all the smoke and mirrors. We want to see the real problem and gain visibility. It would be nice if NGOs could play a good role in that sense, and not get roped into lobbying with interest groups. They must maintain a neutral stance and push the priority items on the agenda to make it a sustainable crop. If there is an alternative that is better, then they should bring it forward. NGOs should have the budget and resources to bring forward these solutions.