Combating biodiesel fraud

Protecting our industry from threats from outside the EU has become almost as important for the biofuels industry as advocating for better policies within the EU.
If we look back 10 or 15 years, we see a time where the European Biodiesel Board (EBB) only just started to make use of EU trade defence instruments, to ensure that trade is not only free but also fair.
We used to consider trade cases as an ad-hoc answer to a specific issue.
But times have changed.
A quick glance at the list of open EU trade cases will show you that the bloc has opened over 40 cases against China alone, including our very own anti-dumping case. The larger trend shows what all European biodiesel producers – FAME, HVO and SAF alike – already know: Trade cases have become a permanent concern, and are here to stay.
The brand-new Commission is still finding its footing, exploring the balance between ambition and pragmatism, but has already committed to strengthening Trade Defence Instruments (TDIs) such as anti-dumping and anti-subsidy measures to protect EU industries from unfair competition.
That is not only about fair trade, but also about industrial policy and independence.
New drivers of uptake
Also in the policy arena, we have seen change. While the Renewable Energy Directive (RED) is still our bread and butter, and remains the main driver for the use of biodiesel in the EU, other policies have become equally important. Some would even argue, they are becoming more important.
We see new ‘drivers’ of biodiesel use appear on the horizon, bringing new opportunities but also new challenges.
Notably ReFuelEU Aviation and FuelEU Maritime will likely increase uptake of biodiesel in their respective transport modes, but as they apply to international flights and shipping routes, there is a concern that in some cases the EU rules could benefit mostly non-EU producers.
After all, even if the ship’s port of call is geographically in Europe, the fuel it bunkers stays outside of the Customs Union – so-called T1 bunkering. While we can appreciate this is crucial to the functioning of the shipping industry, we also note that this way biofuels from outside of the EU, never enters the EU. In other words, the fuel counts towards the EU mandates, but circumvents the bloc’s trade laws and duties. The EBB is calling on legislators to address the issue.
In a time where ‘competitiveness’ is a buzzword in the corridors of Brussels, the EBB makes a strong case.
The EU is once again realising it needs to make sure that the main beneficiary of the bloc’s economic growth should be its domestic industry. In times of global uncertainty, our arguments on energy independence also right true. After all, what is more reliable than what you produce yourself? And with the EU’s energy imports dependency rate hovering around 60% and oil import dependency at a staggering 97%, there is room for improvement. Recent world events underline that autonomy is one of the elements of sovereignty.
Blatant disregard for the rules
While it would be caricatural to consider that fraud does not exist within the EU, it would be naive not to point out that doing business with Southeast Asia – and in particular China – brings along unparalleled issues.
To protect the EU industry against blatant fraud, we have to go beyond the notions of fair trade and competitiveness.
Most will remember the tonnes and tonnes of biodiesel coming in through the Port of Hainan miraculously disappearing when an EBB anti-circumvention case shined light on it.
However, trade defence instruments are not always the right tools to combat fraud. We are convinced that in addition to dumping and circumvention, large-scale biofuels fraud is being committed in Southeast Asia. Questions about the true nature of the ‘Annex IX’ declared feedstock in the Proof of Sustainability. It’s hard to prove it is (or isn’t) what it says on the tin.
We have alerted the Commission numerous times, and have engaged in dialogue with ISCC, who is by far the largest verification in this region – all with no tangible result. Many others have come to the same conclusion.
EU Members States have called on the Commission to develop “strong corrective actions to prevent the entry of fraudulent biofuels on the European market”. A leading environmental NGO in the field of transport jumped on the bandwagon requesting action, and Indonesia and Malaysia are taking measures to prevent tax fraud with exported palm oil waste feedstocks.
Putting an end to fraud
In a new reality where EU policies are more and more favouring the use of waste and advanced feedstocks, we have to admit we are not fully self-sufficient. A hard-to-navigate patchwork of caps and bans is not a viable solution.
We need a systemic reform of the set verification rules that will guarantee the compliance with RED criteria and restore the level playing field between producers in- and outside the EU.
We consider fraud an existential threat for our industry, for the functioning of RED verification, and for the EU climate ambitions.
As raising our concerns is not enough, the EBB has recently published an elaborate and ambitious proposal revising the rules on sustainable biofuels verification. The timing is not by coincidence.
The European Commission will soon start their work on revision of the set of rules that governs sustainability verification in our sector, and the Union Database for Biofuels is being finalised, hopefully soon contributing to fraud prevention. The 30-page EBB document addresses both these regulatory developments and includes detailed amendments that can be implemented immediately.
At the core of the proposal is the notion that rules that apply to EU producers, should be enforced just as strictly outside of the EU, for biofuels placed on the EU market. Currently, that is not the case. While the fuel is used in their countries, the national governments struggle to enforce the rules as they have no jurisdiction abroad.
In our view, the successful revision of the EU system for the certification of sustainable biofuels can establish a standard for the numerous EU policies relying on compliance with sustainability criteria. Preserving the integrity of EU rules and the EU industry requires nothing less.

Author: Xavier Noyon, Secretary General of the European Biodiesel Board (EBB)
For more information: Visit ebb-eu.org