Palm oil in Indonesia and Malaysia is under pressure from substitutes and EU deforestation regulation

The palm oil industry, particularly in Indonesia and Malaysia, is under threat due to the development of environmentally friendly substitutes, as highlighted by the creation of C16 Bioscience's emission-free fermentation product, Palmless. The EU Deforestation Regulation (EUDR), aiming to reduce deforestation-linked product consumption, poses a significant challenge for the palm oil sector, especially after 2024. In response, producing countries like Indonesia and Malaysia are encouraged to ensure sustainable supply chains. The EUDR, a key initiative of the EU's Open Strategic Autonomy, aims to regulate palm oil imports while maintaining cooperation with producing countries, indicating a potential shift towards sustainable alternatives. Meanwhile, the demand for palm oil continues to grow, contrasting with a decrease in its use as biofuel feedstock in the EU due to sustainability concerns. This situation underscores the need for sustainable practices in the palm oil industry to maintain competitiveness and address environmental and deforestation concerns.