A new report by Transport & Environment has found that a large proportion of the biofuels promoted by oil companies such as Shell and BP as a low-emission diesel alternatives are being fraudulently labelled as a waste residue from palm oil milling.
Theoretically, the fact we can use hydrotreated vegetable oil (HVO) as a fuel is a remarkably convenient thing. It can be added straight to a diesel engine without modification, it produces lower emissions, is sulphur-free and is literally made from waste.
But as they say, if something seems too good to be true…etc.
Which brings us to palm oil, as discussion around HVO often does.
The original idea was that HVO would be made from waste material such as used cooking oil, but as demand for biofuels grew, producers turned to virgin crops such as palm oil. By the late 2010s, the demand for palm oil as a biofuel became extremely problematic, leading to levels of deforestation that were worse for the planet than if everyone had just continued using fossil fuels.
In 2018 the EU decided to phase out the use of palm oil as a biofuel, leading to its use falling 80% by 2023.
There is a residue from palm oil milling however that can cause environmental damage if left untreated. Conveniently, this can be prevented by converting it to biofuel. This is classified as Palm Oil Mill Effluents (POME) and its use has soared over recent years, increasing fivefold between 2020 and 2023.
New research from Transport & Environment has, however, uncovered a problem: the amount being used is impossible. In fact, they found that the amount of POME being blended into biofuels in Europe is nearly double the amount that the world is capable of producing. The only explanation for this, they believe, is fraud.
Their new report, ‘Palm oil in disguise?’ highlights the issue and predicts that as POME imports continue to increase, the problem will become worse.
The European Commission have already flagged up POME as being a market in which fraud is likely, due to the fact that different materials can be altered to appear to be POME.
On top of this, as the report observes: ‘the certification process is primarily based on auditing paperwork including self-declarations of compliance, to verify whether the biofuels product is sourced and processed sustainably. Importantly, this means that chemically or physically testing the biofuels product is not a mandatory criterion for certification to be granted.’
To address this growing problem, T&E have proposed five courses of action:
- Palm oil mill effluent (POME) residues should be prioritised for local decarbonisation efforts in producing countries, especially with emerging uses such as biogas production.
- POME should be removed from the Annex IX list of double-counted advanced biofuels in the EU Renewable Energy Directive, considering that several EU member states have recommended limiting the amount of POME-based biofuels that can be counted towards the Directive targets.
- A complete review of the certification system is needed, shifting from industry-led voluntary schemes to more stringent EU and national regulations. National governments should establish supervision procedures, such as cooperation frameworks with third countries.
- A dedicated EU-level fraud investigation unit that can be triggered by industry whistleblower alerts, suspicious transactions, or suspected market distortions should be established.
- These recommendations should be complemented with support for cleaner alternatives, with direct electrification preferred for road transport and hydrogen based fuels for sectors harder to electrify, such as aviation and shipping.
The full report can be read here: Palm oil in disguise? How recent import trends of palm residues raise concerns over a key feedstock for biofuels