Spanish Abengoa Bioenergy Suspends Palm Oil Purchases From Sinar Mas

Spanish biofuel and energy producer Abengoa Bioenergy, a subsidiary of Abengoa SA (ABG.MC) has joined major consumer product companies Unilever NV(UN) and Nestle SA (NESN.VX) in cutting off palm oil purchases from Indonesia's Sinar Mas Group until the palm oil producer can prove it fully complies with sustainability policies.

"Palm oil is a raw material that is used to produce biodiesel in the San Roque plant in Spain, and the company has insisted that sources of raw materials used by its suppliers must be socially and environmentally sustainable...And it must comply with social responsibility and the control of greenhouse gas emissions," the company said in a statement on its company website Monday.

The company has adopted a greenhouse gas measurement system that records direct and indirect emissions during production of products and services it purchases from third parties, meaning all Abengoa's suppliers need to measure there GHG emissions or do so within a specific timeframe.

The Spanish firm has a combined installed capacity of more than 1.5 billion liters of biofuel production in the U.S., Europe and Brazil. It currently operates ten bioethanol, sugar and electricity production plants.

"The development of this emissions measuring system is "just another step in Abengoa Bioenergy's commitment in the fight against climate change."

The measure comes after environmental group Greenpeace alleged that Indonesia's biggest palm oil producing firm, PT Sinar Mas Agro Resources and Technology (SMAR.JK), and Singapore-listed Golden Agri-Resources Ltd.(E5H.SG) have failed to follow sustainable plantation practices.

Both PT SMART and Golden Agri are part of the Sinar Mas Group. They reiterated recently that they won't cultivate oil palms on land with high conservation value, and that they remain committed to following sustainable practices in production of palm oil.

-By Shie-Lynn Lim, Dow Jones Newswires; [phone]; [e-mail]