Overview

On 16 December 2019, Indonesia formally requested a consultation with the European Union (“EU”) at the World Trade Organization (“WTO”) regarding the adoption of certain measures that were severely impacting the access of Indonesian palm oil-based biofuels to the EU market. As this consultation failed to reach a mutually satisfactory resolution, a litigation process then ensued, ultimately becoming one of the most significant ongoing disputes under international trade law.^[1]

Broadly speaking, the dispute revolves around the EU’s renewable energy, sustainability and greenhouse gas (“GHG”) emissions reduction targets, as set out under the EU’s Renewable Energy Directive II 2018/2001 (“RED II”) and its supplementary regulation, Delegated Regulation 2019/807 (“DR 2019/807”). These frameworks classify biofuels as a major driver of deforestation due to the high rates of Indirect Land-Use Change (“ILUC”) that are associated with the expansion of palm oil plantations.^[2]