May 16, 2018 / 4:06 PM / 7 months ago

UPDATE 1-France allows Total's La Mede refinery to partly run on palm oil

* France caps use of crude palm oil in La Mede refinery

* Says at least 25 percent should come from recycled oil

* Total commits to lower volumes than France requested

* French farmers condemn French move to allow palm oil (Recasts with Total statement, farmer reaction, background)

PARIS, May 16 (Reuters) - France allowed a limited use of palm oil at Total’s new La Mede biofuel refinery on Wednesday, a move that prompted an outcry from French farmers who said most of the palm oil would be imported.

The environment ministry said in a statement that Total’s newly granted permit for the refinery specified that at least 25 percent of feedstock used to make the biofuel should come from recycled oil. The rest would come from crude vegetable oils, including palm oil.

Environment Minister Nicolas Hulot, a fierce opponent of palm oil use because it is linked to deforestation, also asked that Total use oils meeting sustainability criteria fixed by the European Commission to protect biodiversity and the environment, the ministry said.

French oilseed producers, whose products are used to make biodiesel in France, strongly condemned the decision to allow the use of mostly imported palm oil, which they stressed was also a big component of recycled oils.

“This decision is incomprehensible. Besides its ecological nonsense, it is a slap in the face of our industry,” Arnaud Rousseau, head of French Oilseed Producers (FOP) group, said in a statement.

Total said in 2015 it would halt crude refining at the loss-making La Mede site near Marseille and invest 200 million euros ($236 million) there to create a biorefinery set to produce 500,000 tonnes of biodiesel per year.

French farmers and environment activists have expressed strong concerns since then that Total would mainly turn to palm oil, accused of causing deforestation and unfair competition against local vegetable oil, to supply the refinery.

Total committed in a statement to use less than 300,000 tonnes of crude palm oil per year at La Mede out of a total processing capacity of 650,000 tonnes, and to use oils from other plants such as rapeseed, sunflower seed and maize (corn).

Recycled animal fat, cooking oil and industrial oil would account for 30 to 40 percent of La Mede’s supplies, with the share due to rise over the years depending on availability, Total said.

Hulot had said soon after he was appointed last year he would limit the use of palm oil in biofuels in France in order to reduce deforestation in the countries of origin, raising outcry from top world producers Indonesia and Malaysia.

But Greenpeace last month accused the French government of playing on both sides and being about to “open the floodgates” on massive palm oil imports to supply the La Mede refinery.

“The trend is that we will stop importing palm oil, but that does not mean that Total has to stop using it right away,” Hulot told BFM TV television on Wednesday.

Looming competition from Total’s biofuel made with cheaper palm oil comes as French biodiesel producers are already suffering from a surge in imports after the EU lifted tariffs on Argentine and Indonesian biodiesel last year.

$1 = 0.8493 euros Reporting by Sybille de La Hamaide, Additional reporting by Geert de Clercq Editing by Gus Trompiz and Catherine Evans

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