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REA Holdings

Using the RSPO PalmGHG Greenhouse Gas Emissions Calculator

Abstract: REA Holdings trialled the Roundtable on Sustainable Palm Oil ‘PalmGHG’ tool to calculate the carbon footprint of its two palm oil mills and the associated supply base. The main sources of greenhouse gas (GHG) include clearance of vegetation when the oil palm is planted (land use change); oxidation of peat soil when peatland is drained for cultivation; digestion of Palm Oil Mill Effluent (POME); fertiliser manufacture, transport, and application; and fossil fuel use for transport and generating electricity. Challenges included obtaining the data required to accurately calculate emissions from land clearance, smallholders, and transport by contractors.

Keywords: Greenhouse gas emissions, carbon footprint, Roundtable on Sustainable Palm Oil PalmGHG tool, methane capture, land use change

Background situation:
REA Holdings is a UK public listed company which produces palm oil in East Kalimantan, Indonesia. The group first established oil palm plantations in 1994 and now has a land bank of approximately 100,000 hectares, approximately 40% of which has been or is being planted with oil palm. REA also operates two palm oil mills in the region, both of which obtained RSPO certification in 2011.

A wide variety of stakeholders, from investors to buyers and governments, are putting increasing emphasis on the importance of companies taking action to measure and manage their greenhouse gas (GHG) emissions. Pertinent examples include:

  • Principle 5.6 of the RSPO standard currently requires that ‘Plans to reduce pollution and emissions, including greenhouse gases, are developed, implemented and monitored’. Proposed revisions to the RSPO standard may require companies to start reporting on their GHG emissions and the PalmGHG tool developed by the RSPO is expected to become the preferred tool to assist producers to do this.
  • The Carbon Disclosure Project requests companies to disclose information relating to their GHG emissions on an annual basis, including the action they are taking to address the risks and opportunities associated with climate change. In 2012 the request for information was supported by 655 institutional investors backed by $78 trillion in assets. The information obtained by the Carbon Disclosure Project is used by investors and policy makers to guide decision making.
  • A recent announcement by the UK government stated that, from April 2013, it will be mandatory for all companies listed on the main market of the London Stock Exchange to report their GHG emissions in their annual report and accounts.

In recognition of the importance of this issue, REA embarked upon the process of quantifying and implementing measures to reduce the carbon footprint of its palm oil operations in 2010. REA was one of the participants in the pilot study of the RSPO PalmGHG tool, which was developed by two scientists/independent contractors, Laurence Chase and Ian Henson, in collaboration with the RSPO GHG Working Group 2.

How does the RSPO PalmGHG tool work?
The PalmGHG tool enables palm oil producers to calculate their carbon footprint. This is done by estimating the amount of carbon dioxide, methane, and nitrous oxide (GHGs) that is released as a result of palm oil production and balancing this against the carbon dioxide absorbed (fixed) from the atmosphere by the oil palms (and by any natural vegetation conserved within the concession). Companies will also get credits for surplus energy products that are used outside of the company’s operations. Both direct and indirect emissions are taken into account, the key sources of which are:

  • Clearance of vegetation when the oil palm is planted (direct land use change)
  • Oxidation of peat soil which occurs when peatland is drained for oil palm cultivation
  • The digestion of Palm Oil Mill Effluent (POME), which releases methane
  • The manufacture, transport, and application of fertilisers
  • The use of fossil fuels for transport and for generating electricity

The unit for the calculation is the palm oil mill and its supply base. The net GHG emissions are expressed in tonnes of carbon dioxide equivalent (tCO2e) per planted hectare and per tonne of Crude Palm Oil (CPO) and Palm Kernel Oil (PKO) produced.

A Greenhouse Gas accounting tool for palm products.

Diagram credits: C. Bessou@CIRAD. Reference: Chase, L et al. 2012. PalmGHG. A Greenhouse Gas accounting tool for palm products. Accompanying documentation. The Roundtable on Sustainable Palm Oil.

Options and action:
Estimating emissions
A.
Land use change
When estimating the emissions from land use change, it is necessary to have accurate information about the type and quantity of vegetation that was present prior to land clearing. This information will indicate the amount of carbon contained in the biomass cleared that was subsequently lost to the atmosphere. Since satellite imagery was not readily available when REA’s oldest estates were established (1994), we initially had to rely on records made by the estate managers regarding the type of vegetation that was cleared in these areas. Once the vegetation was classified, the total GHG emissions associated with clearing this vegetation was estimated using a default value for the carbon stocks (tonnes of carbon/ha) of each category of vegetation (e.g. heavily logged forest). The default values used were those identified by the RSPO GHG Working Group Scientific Panel as a result of a comprehensive review of relevant scientific publications.

The weakness of this approach is that it is often difficult to ascertain from subjective classifications like ‘heavily logged forest’ whether or not the vegetation assessed in the scientific publications was of similar quality to that cleared when developing the REA estates. Since the GHG emissions resulting from land use change are an important issue for the palm oil industry, we are now collaborating with a scientific institution to produce an accurate and objective ‘carbon map’ of the vegetation cover prior to land clearing for all of our existing and planned oil palm concessions.

B. Smallholders & outgrowers
Ideally the emissions associated with the cultivation of all the oil palm fruit which supplies the palm oil mill should be included in the carbon footprint calculation. However, we found that the information required to calculate the emissions associated with cultivation by independent smallholders and small companies which supply our palm oil mills was not available (e.g. accurate records of fertiliser & fuel usage). Therefore, we decided to make the assumption that the GHG emissions associated with cultivation by these outgrowers would be the same per tonne of fresh fruit bunches (FFBs) as our own estates. The fact that we did not have access to accurate information about the total planted area which provides the FFBs to our mills meant that we were unable to calculate our total GHG emissions per planted hectare.

C. Contractors
The use of contractors to assist in transporting FFBs from the field to the mill as well as CPO from the mill to the bulking station meant that accurate records of the fuel consumption associated with this were not available and so the consumption had to be estimated. This was estimated by calculating the number of journeys required to transport the volume of FFBs and CPO produced, the distance travelled, and the average fuel consumption per km for the trucks and barges used. Firstly, it is important to make sure that processes undertaken by contractors are included in the calculation, as they still contribute to the carbon footprint of the palm oil producer. Secondly, the methodology used to produce the estimation needs to be clearly and accurately documented so that the calculation can be repeated each year.

D. Ensuring calculation is a true reflection of the company’s operations
Although the PalmGHG tool is very comprehensive, every company is slightly different so it is important to make sure that all relevant inputs have been included when calculating GHG emissions. For example, when asked to input the fossil fuel used for oil palm cultivation this should  include fuel used by support departments for transport and for electricity generation, even though their activities may not be directly associated with the cultivation of oil palm. These activities still contribute to the GHG emissions associated with the company’s operations.

It is also important to ensure that the calculation is sensitive to changes over time. For instance, if the total volume of POME produced is estimated based on an assumption that the volume of POME produced per tonne of FFBs processed is constant, any reductions in the actual volume of POME produced, potentially resulting from improved management practices in the mill, will not be reflected in terms of a reduction in the GHG emissions associated with this. Therefore, it may be worth considering installing flow meters to measure the actual volume of POME produced.

Outcomes and conclusion:
A tool for management
It is often said that you can’t manage what you don’t measure. Using the PalmGHG tool has helped REA to understand better the key sources of GHG emissions within the company’s operations and to identify opportunities for achieving reductions, setting targets, and monitoring progress towards achieving them. The estimation of REA’s GHG emissions for 2011 will provide a baseline against which reductions achieved as a result of the commissioning of methane recovery plants at our two palm oil mills in 2012 can be monitored. This major investment is expected to make a material contribution to reducing REA’s GHG emissions. This is as a result of both the capture of the methane emitted by the POME and the conversion of this gas to electricity. The electricity produced has largely replaced the use of diesel-powered generators for both operational and domestic purposes, thus reducing our diesel consumption and the carbon dioxide emissions associated with this.

A tool for reporting
Calculating our carbon footprint using the PalmGHG tool means that we are now in a position to report our GHG emissions to investors, buyers, and the RSPO as and when required. The ability to monitor and report on our net GHG emissions will provide a quantitative and credible indicator to measure our sustainability performance, which can be conveyed to our stakeholders in a clear, transparent manner.

As with any tool of this kind, the estimate of GHG emissions produced by the PalmGHG tool will only be as accurate as the data used to perform the calculation. Therefore, if companies anticipate that they may wish to start monitoring their GHG emissions they would be well advised to ensure that they are keeping accurate records of the parameters required to perform this calculation. This includes obtaining satellite imagery, and if possible conducting carbon stock assessments, of the vegetation present prior to land clearing, inputs used by smallholders, fossil fuel consumption by the company and external contractors, electricity consumption, fertiliser consumption, and the volume of POME produced.

Prepared by: Sophie Persey with inputs from Dr. Llorenç Milà i Canals Unilever Scientist, Laurence Chase (independent scientist), and Ian Henson (independent scientist)
Position: Group Sustainability Manager

Organisation: REA Holdings
Date: August 23rd, 2012

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