PETALING JAYA: The European Parliament has approved a plan to seek restrictions on the use of palm oil in biofuels due to concerns about its environmental impact.

The European Union (EU) Parliament has voted in favour of an amendment to a draft law on renewable energy that calls for reducing to zero ‘the contribution from biofuels and bioliquids produced from palm oil’ as of 2021, Bloomberg reported.

It added that the assembly’s vote defines its position for talks between national governments about the draft law on renewables. The final shape of the law will be ironed out in negotiations between representatives of the EU Parliament, member states and the European Commission.

“The Malaysian government views this as unacceptable and a protectionist trade barrier, and a breach of the EU’s WTO commitments. We will not hesitate to take corrective action,” Plantation Industries and Commodities Minister Datuk Seri Mah Siew Keong said in a statement.

According to the Malaysian Palm Oil Board, the EU accounted for 12% of Malaysia’s palm oil exports last year, making it the biggest buyer after India. Of the shipments to the EU, the Netherlands accounts for about half.

On Jan 16, smallholders in Malaysia had gathered in downtown Kuala Lumpur and marched to the EU’s mission to deliver a petition.

While it is major multinational companies that run plantations, the protestors in Malaysia, the world’s second-biggest producer of the commodity, said a ban would devastate rural communities where many small-scale farmers survive by cultivating the crop.

A ban would threaten the livelihood of 650,000 smallholders and over 3.2 million Malaysians who rely on the palm oil industry, said the Malaysian Palm Oil Council.

Palm oil is a major ingredient in products from food to cosmetics. It has long been controversial, as environmentalists say it drives deforestation, with huge swathes of rainforest logged in recent decades to make way for plantations.

The EU is Malaysia’s second-biggest export market for palm oil.

Felda, which has some 112,000 smallholders, harbours the largest population of oil palm smallholders in Malaysia.

According to Felda’s Annual Report 2016, the average smallholder’s income for oil palm is around RM3,173 per month from RM1,499 per month from rubber.