Walter Ritzel is surveying a putrid, Olympic swimming pool-sized pond of rotting palm fruit debris at the Tequendama palm oil plant in Colombia´s far north, with a look of almost paternal pride.
“We are going to turn this,” he says, arcing his hand enthusiastically over the gently simmering brown foam, “into euros”.
The gas that is giving this pond its fizz is methane, and Colombia’s palm oil producers have found a way to turn it into almost €10m a year in extra revenues through carbon trading.
Banding together to create the first sectoral project under the United Nations’ Clean Development Mechanism (CDM), they reckon each tonne of methane they mitigate will be worth around €13.75 in certified emissions reductions credits (Cers).
Thirty-two palm producers, about 80 per cent of the Colombian industry, have agreed to cut 757,000 tonnes a year of methane emissions, and harness residual emissions to create up to 200 megawatts of renewable energy.
While the CDM has grouped together similar projects in the past, this is the first time an industry sector has created a project with a shared baseline reduction in emissions, says Thomas Black, executive director of the Bogota-based Andean Centre for Economics in the Environment.
“This is one of the largest methane reduction projects in the world,” says Mr Black. “Here we have a major economic sector that is going to cut emissions, switch to renewable energy and have enough capacity left over to sell back to the national grid.”
The fact that such change is emanating from the palm industry, which the United Nations cites as the main driver of deforestation in Indonesia and Malaysia, is counter-intuitive.
With palm oil present in up to half the foodstuffs found on UK supermarket shelves, environment group Greenpeace estimates a doubling of palm demand from 2000 levels by 2030, and a tripling by 2050.
Colombia’s palm industry, small compared with Indonesia and Malaysia, has also been blighted by the seizure of hundreds of thousands of acres from small Afro-Colombian farmers by paramilitary forces in the remote state of Choco in the late 1990s.
Palm producers moved into the area soon after, and it was not until January 2008 that an investigation was launched into 23 companies accused of having links with paramilitaries. Nine companies have since been ordered to return land to farmers, and investigations into alleged homicides and land seizures continue.
Fedepalma, Colombia’s producer representative body, requires its members to refrain from clearing rainforest and use only former agricultural land, a crucial point in the debate over palm. While groups such as Friends of the Earth maintain there is no such thing as sustainable palm, others such as WWF are attempting to create a market for certified palm grown on former agricultural land.
“The production and use of biodiesel from palm oil on deforested peatlands in the tropics can lead to significant increases in greenhouse gas emissions - up to 2,000 per cent or more when compared with fossil fuels,” says a recent report by the United Nations Environment Programme. “However, a positive contribution to greenhouse gas emissions can arise if the palm oil or soya beans are instead grown on abandoned or degraded land.”
In the sweaty confines of the Tequendama processing plant, Daabon, the country’s biggest producer of organic palm oil, is putting that theory to the test. It is investing $2.5m in converting its waste water treatment ponds and building a plant to transform the captured emissions into clean electricity. It expects to be the first of Colombia’s producers to receive CDM credits, by June next year.
“We see a great opportunity to close the circle,” Manuel Davila, Daabon´s commercial vice-president, told the FT. “We are turning contaminated gases into money … we save energy, we get the [credits], so everybody´s happy.” He estimates the investment will pay for itself within two and a half years.
Mr Davila has also made unwitting carbon offset traders out of some 500 small landholders who sell their palm fruit to his company.
Alfonso Cahuana, who switched from growing rice to palm on his 10ha farm outside Aracataca, birthplace of Nobel prize-winning author Gabriel Garcia Marquez, is tickled by the idea of foreign investors paying for waste water. “Palm is very efficient for me, especially now that I am older. It will pay for my retirement,” he says.
Mr Black, meanwhile, sees potential for palm growers elsewhere, or other heavy-emitting sectors, such as the coal industry, to adopt the model once they see that it is possible to gain full market value for the Cers.
“One of the big discussions leading up to the Copenhagen climate change conference is how to increase the participation of the developing world in climate change mitigation,” he said. “And one of the big proposals is instead of project-by-project emissions reductions, to move an entire sector into mitigation at once so you can really begin to make an impact. This is what Colombia´s palm producers have done.”
While a WWF sustainable palm oil initiative has got off to a shaky start, with only one per cent of available stocks sold to date, James Fry, managing director of agricultural economics consulting firm LMC, says palm companies may have little choice but to capture methane emissions if they are to meet tighter regulations for the use of biodiesel in the US and the European Union.
“The reality is that palm oil internationally does not always have a good image,” says Dr Fry. “What is attractive about projects to capture methane is that you actually don’t just need to burn it and waste it - more and more of the electric power in countries will have to come from these kinds of renewable sources.”
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