HONOLULU, Hawaii, June 29, 2007 (ENS) - Hawaiian Electric Company, HECO, is proposing to use palm oil to fuel electricity generation in the Hawaiian islands.

HECO is the biggest utility sector consumer of petroleum diesel in the country and the company says that when this transition is complete, it will be the largest single consumer of biodiesel in the United States.

The utility's policy is being challenged by environmental and Native Hawaiian groups, who say HECO's sustainability standards are not strong enough to protect Southeast Asian forests that are cleared to make way for palm oil plantations. They are concerned about environmental destruction, indigenous rights and impacts on forest and rural communities

Hawaiian Electric's planned 110 megawatt peaking unit at Campbell Industrial Park on Oahu will use 100 percent biofuel.

Hawaiian Electric and BlueEarth Biofuels LLC propose to build a biodiesel refinery on Maui to produce fuel for Maui Electric Company generators. After public comment, the proposed policy will be finalized for application to all biofuel purchases by Hawaiian Electric and subsidiaries on Maui and Hawaii Island.

HECO's proposed policy to ensure that "only palm oil from sustainable sources and eventually local feedstock" are used to create biodiesel for use by Hawaiian Electric, Maui Electric and Hawaii Electric Light companies was the subject of public discussions on Oahu Wednesday and Thursday.

Public discussions take place today on Hawaii Island and on Maui on Monday.

The policy was developed by environmental scientists from the Natural Resources Defense Council working with HECO, and has been reviewed by a panel of academic experts.

The components of the HECO policy are - baseline criteria for all biodiesel feedstocks, sourcing requirements for palm oil, local feedstock support mechanisms, chain of custody tracking for feedstocks and oils, greenhouse gas emissions accounting and reporting, establishment of a biofuels public trust fund, public review and notification, and public progress reporting and contingencies.

This effort is part of a broader strategy to transform Hawaiian utilities into a model of diverse, sustainable supply and efficient use, and we believe that this policy represents a large step forward on the path toward increasing self-reliance and sustainability."

However, the policy notes, "palm oil cultivation has also been responsible for widespread clearing of primary tropical forests, draining of peat soils, catastrophic fires in Southeast Asia, and a number of other negative social and environmental impacts "

But HECO says it will rely on "voluntary certification" and the palm oil it uses will be "sustainable." Over 200 members of the Roundtable on Sustainable Palm Oil, RSPO, have worked for the past five years to create a sustainable model of palm oil production. We believe that such a sustainable model is essential to reducing future environmental and social harm from palm oil."

But a group of international oil palm analysts, forestry and indigenous rights experts, and Hawaii environmental and Native Hawaiian rights organizations says more than 4,000 people in 28 countries wrote letters to Hawaii Governor Linda Lingle opposing a $59 million bond issue for the proposed plant.

Among the concerns of these petitioners and the Hawaiian groups is that HECO criteria are "far weaker" than the international RSPO criteria.

They are concerned that indigenous rights have been left out of the HECO criteria, although free prior informed consent of indigenous people to palm oil plantations on their land is part of the RSPO criteria.

The critics say it is well documented that there is a lack of sustainable supplies of palm oil, and that the track record of Indonesian companies producing the palm oil is poor.

Indonesia and Malaysia supply 85 percent of the world's palm oil.

Critics warn that the recent push towards "cheap biofuels" has been associated with extreme levels of deforestation and violations of indigenous rights in Indonesia, Malaysia and other countries, adding, "The demand for palm oil as biofuel may push Indonesia to clear over 49.4 million acres of land for plantations."