The Indonesian government announced Monday March 25 that it would encourage the country's palm oil companies to sue the European Union if the EU continues to implement a plan to phase out the use of this product as a renewable transportation fuel.

Indonesia, the world's largest palm oil producer, strongly condemned the EU’s decision to stop using palm oil as a transportation fuel by 2030. The European Union is Indonesia’s second largest palm market after India, accounting for about 12 percent of exports country.

Indonesia in recent weeks has also promised to start a fight against the EU by the World Trade Organization (WTO) and said the government is “considering bilateral relations with the member states that most support” the European rules. Malaysia, the second largest palm producer in the world, is also threatens a statement to the World Trade Organization against the European Union.

The EU concluded that palm oil is a high-risk crop after it was found that 45% of palm growth in 2008–2015 occurred in areas with high carbon reserves, which is much higher than competing soybean and rape crops. At the same time, according to the Indonesian government, unlike many markets, Europe uses most of the palm oil, which it buys, not for cooking, but as a raw material for biofuels.

The governments of the EU and the European Parliament have two months to decide whether to accept or veto the new EU rule.