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If Indonesia and Malaysia want to have a debate at the World Trade Organization about the European Union’s treatment of crude palm oil as a biofuel, the European Union is happy to oblige, the EU’s ambassador to Indonesia said on Wednesday in Jakarta.

Julian Wilson, the head of the EU delegation to Indonesia and Brunei, said the EU welcomed the opportunity to defend its trade incentives for certain forms of biofuel — which does not include those derived from palm oil.

“We really hope to have a debate at the WTO on the matter and we welcome it,” he said.

Wilson said the incentives offered to biofuels derived from a mixture of fossil fuels and rapeseed, for example, were not meant to harm imports of crude palm oil, but were only intended to promote use of those biofuels most effective in reducing carbon emissions.

“We never block any oil produced by any countries. EU directives will be effective regarding every oil,” Wilson said.

“Consumer trends in the EU and globally are changing to demand more environmentally friendly products. Companies need to cope with these changes,” he added.

Agriculture Minister Suswono said last week that Indonesia and Malaysia, the world’s two biggest producers of palm oil, would seek advice from the WTO regarding the EU’s rules on biofuels as part of increased efforts to fight back against what palm oil growers in both countries say is the unfair demonizing of their product as environmentally destructive. They say anti-palm oil campaigns threaten the development of the industry.

At issue at the WTO would be the EU renewable-energy directive, which states that biofuel from palm oil results in a 19 percent reduction in carbon emissions — below the 35 percent threshold required to receive trade benefits. It also establishes sustainable criteria regarding deforestation or the destruction of wetlands necessary to build oil palm plantations.

The European Union has set an indicative target of lifting biofuel use to 5.75 percent of fossil fuel consumption by Dec. 31, 2010 and raising it to 10 percent by 2020.

Palm oil producers say biofuel from palm oil provides much greater reductions in carbon emissions, and claim the classification of rapeseed, which is heavily subsidized, and soya beans as more suitable for reducing emissions through biofuels is a reflection of their relatively higher production levels in developed countries.

The trade incentives would take the form of tax incentives and premium market prices.

The Indonesian Biofuel Producers Association (Aprobi) has asked the European Commission for clarification regarding how it calculates estimated emission reductions for the various types of biofuel mixtures.

Wilson said the EU plans to adhere to its original criteria regarding biofuels.

He added, in response to critics, that sustainability certification from the Roundtable on Sustainable Palm Oil (RSPO) cannot be used by producers to claim that their commodity is eligible for EU biofuel incentives because greenhouse gas emissions in biofuels are not calculated as part of the RSPO process.

Wilson suggested that to try and prove that they meet the EU criteria, palm oil producers should get the RSPO to add such criteria to its sustainability certification, or they could go to an independent certification body.

In the meantime, the EU will keep importing palm oil to be used for biofuels but without any incentives, he said.