CARBON FOOTPRINT & CLIMATE CHANGE

As a rapidly growing industry with a large land footprint, palm oil producers have an important role to play in reducing greenhouse gas (GHG) emissions and limiting the environmental and socioeconomic risks posed by climate change. REA seeks to make a material contribution towards this common goal.

The group publishes emissions data under three methodologies: the RSPO mandated PalmGHG tool, ISCC and the UK Government Streamlined Energy and Carbon Reporting (SECR) framework. Whilst the methodology for calculating emissions under SECR is identical to that used for RSPO, the scope of activities covered is different. RSPO requires only the GHG emissions from the group’s palm oil mills and their supply bases to be included. Emissions linked to the group’s estates that do not yet supply FFB to one of the group’s mills are not included. Instead, emissions associated with the land use change component of new oil palm developments (which represent the majority of emissions from new developments) are accumulated over the immaturity period of each development and then amortised over the 25 year oil palm lifecycle once the development starts producing crop.

The scope of emissions reported under SECR, however, includes all group activities worldwide and thus includes emissions from new developments as these arise, but excludes the amortisation of emissions accumulated during the development of areas now in production. Except where otherwise stated, the PalmGHG methodology, adjusted for this different basis, has been used for the SECR calculations.

Streamlined energy and carbon reporting (SECR) framework

The scope of current emissions and energy usage reported under SECR includes those associated with all group activities worldwide irrespective of where these arise. These are designated as Scope 1 (emissions from group owned or controlled sources) and Scope 2 (indirect emissions from the generation of purchased electricity, steam, heating and cooling consumed by the group). Scope 3 (indirect emissions within the group value chain) are not currently included in the report.

Net GHG emissions associated with the group’s oil palm operations in Indonesia decreased by 15% in 2021 compared with 2020. The net GHG emissions are calculated by deducting from the gross GHG emissions the carbon dioxide that is estimated to have been fixed (sequestered) by the oil palms and conserved set-aside forest through the process of photosynthesis. A further deduction is made to account for the GHG emissions that have been avoided as a result of the use of renewable electricity from the group’s methane capture facilities in domestic buildings and by local communities that were previously supplied with electricity from diesel powered generators. The group’s net GHG emissions have been expressed per tonne of CPO produced and per planted hectare (immature and mature). Both measures are useful in tracking emissions as the maturity of the oil palm within the supply base does not influence the trend in GHG emissions per planted hectare, whereas it does impact the GHG emissions per tonne of CPO.

	2021	2020
Emissions (tCO₂eq)
Oil palm cultivation in Indonesia¹
Gross	578,857	559,542
Net	85,785	101,428
Collection, milling and distribution operations in Indonesia²
Gross	99,848	106,087
Net	60,728	76,285
Emissions from electricity purhased for own use³	86.1	86.7
Global emissions
Gross	678,790	665,716
Net	146,599	177,799
UK emissions inclueded withing global emissions	27.0	30.1
Energy usage (kWh) ('000)
Energy use from combustion of fuel	69,752	70,551
Energy use from methane capture generated electricity	18,881	17,836
Energy use from purchased electricity	82	83
Global energy use	88,715	88,470
UK energy use included within global energy use	26	29
Intensity measures⁴
Net emissions per tonne of CPO produced (tCO₂eq/tonne CPO)	0.69	0.82
Net emissions per planted hectare (tCO₂eq/ha)	4.12	5.00

¹
Covers Scope 1 direct GHG emissions from historic land conversion, agricultural practices and peat soil; includes sequestration by crop and conservation forest areas. Some Scope 3 indirect GHG emissions including those associated with the extraction, production and transport of purchased materials such as fertilisers and pesticides, as well as fuel usage by third party contractors involved in operations
²
Covers Scope 1 and Scope 3 emissions from the transport and processing of crop and waste products; also includes sequestration from sale of excess electricity generated from waste products and sale of excess palm kernel shell for energy generation. Conversion factor used to calculate energy use from combustion of fuel is 10.58 kWh/litre diesel (source: UK Government GHG Conversion Factors for company reporting 2020)
³
Covers Scope 2 emissions associated with electricity usage in group offices in both Indonesia and the UK, representing indirect GHG emissions from the consumption of purchased electricity as defined by the GHG Protocol.
⁴
Calculated using palm oil industry emissions disclosure data for palm oil operations in Indonesia

RSPO PalmGHG standard

REA has been monitoring and reporting its carbon footprint using the PalmGHG tool for over ten years and currently uses the latest version (version 4) of the PalmGHG tool which became mandatory for RSPO members on 1 January 2020. The PalmGHG tool was developed by a multi stakeholder group within RSPO which included leading scientists in the field of GHG accounting for oil palm operations. Annual reporting of emissions using the PalmGHG tool has been mandatory for all RSPO members since 2016, with submissions independently verified by RSPO accredited certification bodies.

The PalmGHG tool uses a lifecycle assessment approach, whereby all of the major sources of GHG emissions (carbon dioxide (CO₂), methane (CH₄) and nitrous oxide (N₂O)) linked to the cultivation, processing and transport of oil palm products are quantified (gross emissions) and balanced against the carbon sequestration and GHG emissions avoidance to calculate the net GHG emissions. All direct emissions, and the majority of indirect emissions, associated with the group’s oil palm operations in Indonesia are captured within the PalmGHG tool. Changes in the calculation methodologies of the various versions of the PalmGHG tool as it has developed, together with accounting adjustments to reflect the proportion of FFB that is processed in the group’s own mills each year, mean that there are variations in the calculation of emissions from year to year.

The group’s net GHG emissions are expressed per tonne of CPO produced and per planted hectare (mature). Both intensity measures are considered relevant because the maturity of the oil palm within the supply base does not inﬂuence the trend in GHG emissions per planted hectare, whereas it does impact the GHG emissions per tonne of CPO. Net GHG emissions in 2021 compared with 2020 show a 16.1% reduction when expressed as per tonne of CPO produced and a 17.7% reduction when expressed as per planted hectare.

Contribution to carbon footprint 2020

GHG emissions associated with the group’s oil palm operations were 3.5% higher in 2021 compared with 2020, primarily reflecting increased applications of inorganic fertiliser as a result of some carry over from 2020 and also in response to palm nutrient requirements (as explained under "Responsible agricultural practices" below). By contrast, emissions associated with crop collection, milling and palm product distribution decreased by 5.9% in 2021 due to reduced usage of diesel fuel and increased power generation by steam turbines in the group’s mills.

Net GHG emissions associated with the group’s oil palm operations decreased by 17.6% in 2021 due to increased sequestration of carbon in additional set-aside areas (forest reserves, riparian buffer zones and peat soil conservation areas). Net GHG emissions are calculated by deducting from the gross GHG emissions the carbon that is estimated to have been fixed (sequestered) by the oil palms and conserved set-aside forest through the process of photosynthesis. A further deduction is made to account for the GHG emissions that have been avoided as a result of the use of renewable electricity from the group’s methane capture facilities in domestic buildings and by local communities that were previously supplied with electricity from diesel powered generators.

For more detailed information on the calculation of GHG emissions on an individual mill basis, click here.

International Sustainability and Carbon Certification (ISCC)

Since 2012 the group has also been reporting GHG emissions under the ISCC system which uses a different calculation methodology and for which annual emissions calculations are independently verified by an ISCC accredited certification body. ISCC is a globally applicable sustainability certification system which covers sustainable feedstocks including, amongst others, agricultural and forestry biomass.

The ISCC requirements regarding GHG emissions apply to all relevant supply chain elements from raw material production to the distribution of the final product, including cultivation, all processing steps, and transport and distribution of intermediate and final products. The calculation methodology follows the requirements of the Renewable Energy Directive 2009/28/EC amended through Directive (EU) 2015/1513 (RED) and Fuel Quality Directive 2009/30/EC amended through Directive (EU) 2015/1513 (FQD)1. The RED2 allows economic operators to calculate actual GHG emission values, to use default values or to use a combination of disaggregated default values and calculated actual values. In this calculation, the group chooses to use the actual value calculation method for all stages of the process. The group must be able to prove and justify that the resultant GHG emissions calculations represent all emissions from the group’s production process. Calculated GHG emissions are submitted annually to an ISCC accredited Certification Body for auditing, verifying and approval as part of the group’s annual ISCC recertification process.

Overall, the group’s total emissions increased by 8% in 2021, taking account of all elements of emissions.

This increase is influenced by changes in the provisions of the ISCC referring to the Renewable Energy Directive 2009/28/EC amended through Directive (EU) 2015/1513 (RED) and Fuel Quality Directive 2009/30/EC amended through Directive (EU) 2015/1513 (FQD)1 (RED II) whereby excess electricity from methane capture is no longer counted as an emission credit and there is a change in the coefficient on the emission factor and feedstock factor.

In 2021, emissions from cultivation increased by 13% due to an increase in the volume of fertiliser and pesticides applied, partly as a consequence of some carry over from 2020. Mill processing emissions increased by 2% in 2021 due to an increase in the POME emissions. Emissions from transportation and distribution increased by 13% due to an increase in diesel fuel consumption on the estates, and from transportation of FFB from the estates to the group’s mills.

ISCC

REA has prepared intensity reduction targets for GHG emissions for 2021-2023. This involves the identification of all sources of emissions and carbon sequestration that specifically affect the balance of GHG emissions. The group uses the gross emissions value (total GHG emissions resulting from the operational activities of plantations and palm oil mills) as the indicator of the GHG emission reduction target.

The emission sources that have been identified are shown in the table below, together with the emissions reduction targets for 2021-2023.

Emissions Source	Gross emissions value (tCO₂eq)			Emissions intensity (tCO₂eq) / CPO			Emissions intensity (tCO₂eq) / Ha Planted			Increase/Decrease (%)
	2021	2022	2023	2021	2022	2023	2021	2022	2023	21/22	22/23
POME emissions	45,162.33	47,715.37	44,120.27	0.18	0.19	0.18	1.12	1.08	1.00	6.00	(8.00)
Mill fuel consumption	12,847.37	12,323.92	10,880.95	0.05	0.05	0.05	0.32	0.28	0.25	(4.00)	(12.00)
Grid electricity utilization	91.31	100.26	105.28	–	–	–	–	–	–	10.00	5.00
Emisionss from chemical for WTP	0.29	0.36	0.35	–	–	–	–	–	–	(27.00)	(4.00)
Lubricant emissions	179.63	179.52	176.12	–	–	–	–	–	–	(0.06)	(2.00)
Emissions from KCP	47,612.33	42,351.26	40,730.12	0.19	0.17	0.17	1.18	0.96	0.92	(11.00)	(4.00)
Land conversions	475,842.20	457,312.05	439,644.03	1.93	1.86	1.84	11.81	10.36	9.96	(4.00)	(4.00)
CO2 from fertilizer	3,987,932	35,225.39	34,341.40	0.16	0.14	0.14	0.99	0.80	0.78	(12.00)	(3.00)
N2O from peat	817.59	817.59	817.59	–	–	–	0.02	0.02	0.02	–	–
N2O from fertilizer	32,889.76	28,737.68	27,658.76	0.13	0.12	0.12	0.82	0.65	0.63	(13.00)	(4.00)
Field fuel consumption	11,343.96	12,065.12	12,859.55	0.05	0.05	0.05	0.28	0.27	0.29	6.00	7.00
Peat Oxidation	5,963.41	5,963.41	5,963.41	0.02	0.02	0.02	0.15	0.14	0.14	–	–
Emissions from inputs Pesticides	749.60	752.71	796.90	–	–	–	0.02	0.02	0.02	6.00	6.00
Emissions 3^rd	24,127.80	27,746.97	31,909.02	0.10	0.11	0.13	0.60	0.63	0.72	15.00	15.00
Total gross emissions	697,506.90	671,291.610	650,003.750	2.82	2.74	2.72	17.31	15.21	14.73	(4.00)	(3.00)