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France rejects proposed tax break on palm oil

Palm oil harvest in Kuwala, in the north of the Indonesian island of Sumatra
Palm oil harvest in Kuwala, in the north of the Indonesian island of Sumatra Jefta Images / Barcroft Images / Barcroft Media via Getty Images

France has voted against a proposed tax break on palm oil which would have greatly benefitted energy giant Total, after lawmakers and environmentalist pushed back against the legislation.

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On Thursday, the National Assembly had voted in favour of adding palm oil to a list of biofuel sources that would benefit from a tax break until 2026.

But environmentalists and MPs in President Emmanuel Macron’s ruling LREM party, said the move was done to the advantage of multinational companies which jeopardise the climate and the environment.

Added to that was the fact that many believed the legislation had been rushed through without proper debate nor had they been sufficiently informed about the tax break, an amendment to the 2020 budget.

In response, Prime Minister Edouard Philippe called for a second vote, which inevitably reversed the decision from Thursday.

Biofuel list

Last year, parliament had excluded palm oil from tax breaks for biofuel sources.

The move dealt a hug blow to a new refinery belonging to French oil giant Total, which began operations in July.

To undo the move, lawmakers from the region where the new refinery is located, sponsored an amendment to put palm oil on the list.

“MPs in the majority, in collaboration with the government, have given into Total’s shameful lobbying,” said the advocacy group the Amis de la Terre, Friends of the Earth, just after the amendment was passed on Thursday.

The tax break would have provided a fiscal relief of 70 to 80 million euros.

Former environment minister Delphine Batho said the tax break was "complicit with ecocide -- we cannot support that".

Environmental concerns

Palm oil has long believed to be the cause for mass tropical deforestation, with vast areas of the Southeast Asian rainforest have been logged or set on fire in recent years to make way for plantations.

Critics add that palm oil also contributes to the destruction of habitat for endangered species such as orangutans.

Efforts to restrict palm oil use in Europe have led to increased tensions with Malaysia and Indonesia which currently dominate global production of the oil.

Lawsuit

Total had filed a lawsuit last year against the parliament’s decision to single out palm oil.

Total’s CEO, Patrick Pouyanne noted that the tax break was necessary so it could compete with other European competitors who already benefit from such a tax advantage.

But in October of this year, the constitutional court rejected that argument adding “legislators knowing about the global palm oil farming conditions, used objective and rational criteria” towards achieving the goal of reducing emission of greenhouse gases.

Total has pledged to process no more than 300,000 tonnes of certifiably sustainable palm oi per year at its Mede refinery in Europe.

But that too failed to appease environmentalists.

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