Furious over the European Union's (EU) plans to phase out palm oil from transportation biofuel mix, Indonesia warned of pulling out of the Paris Climate Agreement.
The EU "should not underestimate Indonesia," said Luhut Pandjaitan, Indonesia's Coordinating Minister for Maritime Affairs and Natural Resources.
The minister pledged that the government would firmly defend its national interests, Reuters reported.
Earlier, Malaysia threatened to purchase fighter jets from China if the EU restricts the use of palm oil.
Some scientific studies have suggested that palm cultivation is causing massive deforestation and emissions. Some environment groups had been demanding the EU bloc to restrict its use of palm oil.
"Palm cultivation in Indonesia accounted for an estimated two to nine percent of all tropical land use emissions from 2000 to 2010," said a study by Union of Concerned Scientists.
Land clearing for palm cultivation has also destroyed the crucial habitat of endangered animals with orangutans and Sumatran tigers being worst affected.
But for Malaysia and Indonesia, the largest producers of palm oil accounting for almost 85 percent of the global production, palm is a significant part of their economy.
Indonesian authorities accused the EU of shunning palm to bolster sunflower and rapeseed oil produced by European countries.
They stressed, according to the International Union for Conservation of Nature (IUCN) study, replacing palm with soy and rapeseed would be even more destructive.
Other oil crops require up to nine times as much land to produce than palm oil, and its replacement would significantly increase the total land area used for vegetable oil production, the study revealed.
"If the U.S. and Brazil can leave the climate deal, we should consider that. Why not?" Pandjaitan said, according to Reuters.
Under the Paris accord, Indonesia pledged to curtail its greenhouse gas emissions unconditionally by 29 percent and conditionally by 41 percent by 2030.
The Malaysian government had previously assured the EU of ensuring sustainable palm cultivation.
"Malaysia is committed to producing sustainable palm oil … every drop of palm oil produced in Malaysia will be certified sustainable by 2020," said Saifuddin Abdullah, Malaysian foreign minister, in January.
Meanwhile, Indonesia has decided to approach the World Trade Organization (WTO) to protect farmers and communities dependent on palm farming. It also announced to encourage palm oil manufacturers to file lawsuits against the EU bloc.
