Palm oil, the RED II and WTO law: EU sustainable biofuel policy tangled up in green?

Abstract

New European Union (EU) rules on biofuels have led to mounting tensions between the EU and some of its trading partners. A particularly contentious measure is the ‘freeze and phase-out’ of certain biofuels in the transport sector with a high indirect land-use change risk, as introduced by the recast of the Renewable Energy Directive. In light of Indonesia’s recent move to initiate proceedings against the EU at the World Trade Organization (WTO), this article systematically explores relevant key concepts of WTO law and analyses the compatibility of the EU measures with the General Agreement on Tariffs and Trade (GATT) and the Agreement on Technical Barriers to Trade (TBT Agreement). While the EU measures are carefully crafted to avoid potential WTO pitfalls—such as applicability of the TBT Agreement—the article identifies several critical aspects that raise doubts about the measure’s compatibility with WTO law. In particular, the seemingly deliberate targeting of palm oil casts doubt on the justification of the measure on environmental grounds.