Palm Oil: The Story Behind the Hidden Ubiquitous Ingredient

By Isabelle (Izzy) Kerr

(Image credit: Juan Carlos Huayllapuma/CIFOR)

Gigaton Potential

The International Council on Clean Transportation estimates that eliminating palm-driven land use change in Malaysia and Indonesia, where ~84% of the world’s palm oil is grown, could reduce emissions by 0.5 gigatons per year based on a three-year average. Cumulatively, adopting palm oil equivalents to eliminate palm land conversion could eliminate up to 14 GT by 2050.

For reference: in 2019, the world emitted 51 gigatons of CO2-equivalent greenhouse gases. Project Drawdown estimates we need to cumulatively eliminate 1,000 GT from 2020-2050 to keep global warming below 2 degrees Celsius.

You Might Be Interested If...

• You want to reduce the carbon footprint of our food system

• You are interested in sustainable consumer products

• You care about deforestation and its many severe consequences

What You Should Know

You do not go a day without using palm oil. Found in 50% of supermarket items, palm oil is ubiquitous and makes up one-third of global vegetable oil.

Palm oil is extremely prevalent in our daily lives for two main reasons:

1)  Palm is the most productive and efficient oil crop, yielding ~5x as much oil as the next most efficient temperate crops (rapeseed, coconut, and soy) on the same size plot of land. And because palm oil is such an efficient crop, as the supply of it rapidly increased, it became very cheap relative to other oils.

2)  Palm oil has a unique balanced ratio of saturated to unsaturated fats, allowing palm oil to function in a wide array of consumer products (food, beauty care, homecare, etc.) and biofuels.

This combination of supply reliability, cost effectiveness and unique fat composition led and continues to lead more and more food, personal care, beauty, and homecare product manufacturers and biofuel producers to add palm oil to their formulations. Palm oil is estimated to be a ~$60B global industry and is anticipated to grow at a ~5% compound annual growth rate.

So, what’s the issue with palm oil being ubiquitous?

Palm oil crops grow in the regions ten degrees north and south of our equator. These regions contain some of the world’s most biodiverse rainforest-filled land. With palm oil demand skyrocketing and outpacing supply, this biodiverse tropical land is being burned down, releasing thousands of years old carbon sinks, at a terrifying pace to make room for monocrop palm oil plantations.

The deforestation for palm oil is estimated to produce 1-2% of annual global net CO2 emissions. Additionally, because of deforestation, there is extreme soil biodiversity loss, animal endangerment, and a decrease in quality of life for living organisms (humans, animals, etc.) in and around these fire regions whose air and water streams are negatively impacted.

Key Players

While there is a Roundtable on Sustainable Palm Oil (RSPO) certification for “sustainably” produced palm oil, the RSPO has been “accused of everything from certifying plantations involved in child labor to enabling corporate greenwash”. Impactful and lasting solutions will come from innovation. Here are the two main types of solutions and the respective key players working on those solutions:

Yeast fermentation-based palm oil alternatives

• C16 Biosciences is producing next-generation oils and fats, starting with palm oil, using naturally occurring microorganisms and fermentation to decarbonize the CPG supply chain; recently launched consumer-facing platform, Palmless™.

• Xylome was originally focused on generating more sustainable fuel from microbes but then discovered major parallels between palm oil and their yeast-produced oil and pivoted to focusing on a palm oil alternative; solution is called Yoil™.

• Clean Food Group is producing sustainable food ingredients, starting with palm oil, that are better for human health and the environment.

• Zero Acre Farms produces an all-purpose cooking oil called Cultured Oil intended to replace all conventional oils in the cooking process.

Microalgae

• Nanyang Technological University (NTU) in Singapore is developing an alternative palm oil produced from microalgae that contains fewer fatty acids, decreasing cholesterol levels and reducing risk of heart disease and stroke.

Opportunities for Innovation

💡 Consumer Awareness

• Unfortunately, most consumers do not know about the palm oil problem, or even realize they use and/ or ingest it daily. This is in big part because manufacturers are legally allowed to obscure palm oil by stating its derivative name on ingredient labels. In fact, there are hundreds of ingredients with palm oil and many of them do not contain “palm.” With such a lack of awareness, it is hard to apply substantial consistent pressure on CPG companies to use palm oil alternatives.

💰 Cost

• While the price of palm oil has surged due to the Russia-Ukraine war, palm oil is artificially cheap because there are many externalized costs involved in producing palm oil (e.g., laborers not paid, land use change not taxed). On the other hand, making palm oil in a lab requires expensive equipment, labor, and inputs. Therefore, it is unlikely that synthetic palm oil will reach price parity in the foreseeable future.

⚙️ Versatility

• When manufacturers use palm oil in their various food, personal care, and homecare products, they typically refine palm oil into many different forms of derivatives based on the product’s function. Therefore, to truly make a dent in the palm oil problem, the synthetic products will need to meet a variety of needs that the derivatives meet.

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Author Bio:

Isabelle (Izzy) Kerr is an MBA / MS candidate at Stanford with experience both investing in and operating at food & agriculture technology startups. She is passionate about positively transforming our food system to be better for both human and planetary health as well as to be more equitable. For fun, she loves all things active – hiking, running, swimming, surfing – and adventuring (a recent favorite was the Tour de Mount Blanc).

Read More Here

1. Environmental Investigation Agency, Some of the worst palm oil deforesters in 2022 are supplying major international companies

2. Reuters, Malaysia slams EU deforestation-free law for blocking palm oil market access

3. China Dialogue, RSPO faces challenges of post-pandemic palm oil

4. International Palm Oil Free Certification Trademark, Alternate Names for Palm Oil