THE IMPACT OF RENEWABLE ENERGY DIRECTIVE ON PALM OIL TRADE BETWEEN EUROPEAN UNION - INDONESIA (2014 – 2017)

Abstract

In the recent years, the tension between European Union (EU) and Indonesia increased, and it is caused by palm oil related issue between both parties. Indonesia is the biggest producer of palm oil in the world and EU is one of Indonesia’s importer of palm oil. In EU, most of the imported palm oil from Indonesia is used for food purposes and other daily necessities ingredients. However, in the last decade, the use of palm oil has expanded into other industry, renewable energy industry. Especially in EU, renewable energy industry has developed since the establishment of Renewable Energy Directive (RED). RED is a policy which contains the target for greenhouse gas emission and the provisions on how to achieve the target. RED focuses on promoting the consumption for renewable energy for several sectors such as transport, electricity, heating, and cooling. As RED is being implemented, Indonesia in the same time faced difficulty for their palm oil to be qualified for EU market, thus affecting the palm oil trade between Indonesia and EU. Indonesian side expressed their dissatisfaction towards EU and the regulation, as well as giving responses to the issue, showing the impact of the regulation. Thus, in this research, the writer explores about the implementation of RED which brought impact to the palm oil trade between Indonesia and EU, on the course of 2014 – 2017. In analysing the issue, this research used international trade concept, interdependence theory, and International Political Economy (IPE) with its Neo – Mercantilism theory. The findings from the research showed that the implementation of RED in the form of certification requirements, Member States’ own regulation pertaining to RED, and the development it brought for EU’s domestic oilseeds, impact the palm oil trade between Indonesia and EU, in the year 2014 – 2017.