A burning issue: palm oil shows promise as a biofuel, but the environmental cost of production can be high.

• Author: Augustyn, Heather

Tour guide Asok Kesavan has brought his multinational group of tourists to see some of the oil palm plantations in the countryside in his homeland, Malaysia. He asks his driver to stop the bus and the tourists unload briefly for a walk through the rows of palm. There are many, many rows. "This is not a family business. These are big private companies and Malaysia is the largest explorer and producer of palm oil," Kesavan says, pointing out the grape-like clusters of ripening fruit that nestle between trunk and branches like an overflowing treasure chest. The oil is used for everything from margarine to cosmetics, and it is exported worldwide. "We are the only country to sell oil to the Middle East," he jokes.

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Palm oil is one of the world's leading agricultural commodities. The two biggest producers, Malaysia and Indonesia, account for 84 percent of the world's palm oil production and ring up sales of US$11 billion annually. But as Asok Kesavan knows, lucrative crops can bring trouble. He has seen the fires and the smog, just like his countrymen and millions of others in Indonesia, Singapore, and the rest of Southeast Asia. Plantation owners slash and burn existing vegetation to clear the way for more and more palm, rows and rows sown in place of once-lavish and ancient rainforests. The forests, obliterated by fire, are replaced by hectares of monoculture, and the ground beneath is kept clear of even shade-tolerant native species.

Bad as it already is, this situation may be set to worsen. The world can only use so much lipstick but its appetite for energy seems insatiable, and palm oil may be the Next Big Thing in energy. As biofuels take center stage and governments mandate their use--ironically for the environmental benefits--additional forest destruction, and the attendant loss of wildlife and proliferation of smoke-filled skies, are likely to ensue.

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The World Rainforest Movement (WRM) believes that plans for new plantations in Indonesia are already in the works. "Existing regional plans have already allotted a further 20 million hectares for oil palm plantations, mainly in Sumatra, Kalimantan, Sulawesi, and West Papua," WRM noted in a recent bulletin, "and new plans are currently under discussion to establish the world's largest palm oil plantation of 1.8 million hectares in the heart of Borneo."

Ellie Brown, lead author of the U.S. Center for Science in the Public Interest (CSPI) report Cruel Oil: How Palm Oil Harms Health, Rainforest & Wildlife, says the owners of these palm oil plantations will be largely either big business or government. "In Indonesia, half of the plantations are owned by private companies, which are often part of large conglomerates; the remainder are owned either by the state (17 percent) or by smallholders (33 percent), she writes. "Smallholders are farmers who own a few acres each in a section of a large company's plantation. Although they tend their own oil palm trees, they depend on the company for planting, pesticides, fertilizers, sale of the palm fruits (at a price set by the company), and initial processing in the company's on-site mill." And in countries where state-owned land is the norm, many of these plantations are affiliated with the state. "Especially in Malaysia and Indonesia, which have the lion's share of the global market, national governments have made mammoth tracts of land readily available for companies to establish oil palm plantations," writes Brown.

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The biofuel boom is spurring companies to turn more and more of these vast areas into oil palm plantations. John Buchanan, senior director of business practices with the U.S.-based NGO Conservation International, says that palm oil's energy efficiency as a biofuel makes it very attractive to investors. "One of the common measures used to look at the factor or efficiency of a biofuel crop is...