The EU Parliament’s proposed deforestation legislation mandates the prevention of the sale of products linked to forest destruction inside the EU bloc. This move is expected to significantly impact imports of several commodities, including palm oil. Moreover, the EU’s renewable energy directive which requires palm oil-based fuels to be phased out by 2030 will further reduce its palm oil imports. Against this backdrop, there is a growing interest in developing lab-grown alternatives to palm oil, says GlobalData, a leading data and analytics company.
Suneera Joseph, Consumer Analyst at GlobalData, comments: “Palm oil is one of the most popular and least expensive plant-based oils that is used in a wide range of packaged food products, from cooking oil and baked goods to confectionery. Since the first quarter of 2022, palm oil prices have spiked due to the resurgence of domestic demand in Indonesia, the single-largest global producer. Lifting of the COVID-19 restrictions led to a surge in domestic on-premise and retail demand for cooking oil. Moreover, biofuel production using palm oil has increased sharply in recent years, spurred by government subsidies.”
Bobby Verghese, Consumer Analyst at GlobalData, comments: “Concurrently, climate change issues, COVID-19, and the Russia–Ukraine conflict disrupted the global supply of edible oils, such as sunflower oil, soybean oil, and rapeseed oil. This catalyzed international demand for alternatives, including palm oil, thereby escalating the international prices of the commodity. Though the Indonesian government restricted exports to curtail domestic palm oil prices, the bans were soon recalled as domestic inventories piled up and global food inflation skyrocketed in 2022.”
Joseph continues: “To reduce palm oil dependence, British start-up Clean Food Group, and C16 Biosciences, a startup backed by Bill Gates, are working on lab-grown alternative to pam oil developed from yeast, called Palmless. The initiative is now entering into the commercial stage with C16 scouting for partnerships with health & beauty and household product companies, with an aim to enter the food industry in 2024. Another alternative, again from yeast, developed by the University of Bath, the UK, claims to have successfully generated a new strain of Metschnikowia pulcherrima, which is capable of high yields. The scientists are now trying to scale up the production to industrial levels.”
Joseph concludes: “The growing concerns over deforestation in Indonesia and Malaysia, as well as increasingly stringent import laws to promote sustainable practices in western countries, especially in the EU, will drive the research on new alternatives for palm oil. If and when a scalable product that can be produced at an industrial level is developed, it will help to address concerns over deforestation as well as delink supply from geopolitical issues.”
