This article is part of our special report Displacing fossil fuels in Europe’s transport sector.
A drastic increase in biodiesel imports from China has caused a stir in European markets, with industry representatives warning the EU’s waste biodiesel industry could collapse unless urgent regulatory measures are taken.
Biodiesel, an alternative to fossil-based diesel used primarily in road transport, can be made directly from vegetable oils such as rapeseed oil or waste sources like used cooking oil or tallow from slaughtered animals.
As the EU wants to incentivise waste-based biofuels to reduce the agricultural space needed to grow energy crops, so-called advanced biofuels can be counted twice towards renewable energy targets, giving producers an economic incentive to use waste as feedstock.
However, a drastic increase in Chinese imports of biodiesel classified as waste-based has rattled EU waste biofuel producers, who say that the spike has depressed EU biodiesel production.
Compared with the same months in 2022, January and February 2023 saw an increase of 80%, to 300,000 tonnes, according to an analysis by S&P Global Commodity Insights.
The quantity of fuels imported from China has raised concerns that the imported biodiesel is not refined from legitimate waste sources but cheaper, restricted feedstocks.
The German Environment Ministry told EURACTIV that it received “indications of possible cases of fraud” from market participants and that the cases would be investigated.
“According to reports, fuels have come onto the market that has been falsely declared as sustainable, advanced biofuels from waste and residual materials […], but have actually been produced on the basis of other raw materials,” the ministry said.
However, The ministry did not want to comment on the question of which fuels or quantities were affected by those claims.
“The investigations are still ongoing at the federal and EU level,” the ministry said, adding that national law enforcement authorities had been informed.
FEDIOL, an association representing the interests of European producers of vegetable oils, said that the sheer quantities of waste biodiesel arriving from China should be a red flag.
“The magnitude of biodiesel imports’ growth is such that it raises questions as to the authenticity of their classification as originating from waste streams,” the association said in a statement. “These trends cannot be explained by other market developments and are a signal that there is abnormal market behaviour.”
Urgent measures needed, warn industry
In a letter sent to the European Commission in early June, German and Dutch policymakers, EWABA, an EU-based waste biofuels trade association, warned that the situation could result in plant closures and job losses across member states.
“If no speedy and effective measures from both the EU and national authorities are urgently taken to safeguard the European waste-based and advanced biodiesel industry, we will soon be on a path which will irremediably spiral into the complete collapse of the EU industry,” reads the letter, signed by EWABA Secretary-General Angel Alvarez Alberdi.
The trade association represents 37 companies across 19 European countries, many of which have seen operations stunted by Chinese imports.
“The situation is so dire that currently, no less than 11 plants from our members’ network have stopped production, while 10 additional plants are operating considerably below their normal production and considering halting in the short term,” the letter states.
‘Effective policing’
To improve the situation for EU producers, EWABA wants to see double counting towards renewable energy targets discontinued for biodiesel originating in third countries in which witness audits cannot be conducted by member state authorities, including so-called ‘integrity audits’ on voluntary certification schemes.
The trade association argues that only “effective policing and worldwide sound auditing and verification practices” of imported biodiesel will allow the EU to avoid “dubious or fraudulent activity”, which harms the ability of local producers to compete.
A 2022 report by US-based green campaigners ICCT investigated the integrity of biodiesel exports from six Asian countries.
The study, which included China, found a discrepancy between collection rates of used cooking oil and export rates, indicating the likelihood of fraud.
However, the study authors note that it is difficult to determine how widespread the practice is, particularly in China.
Following the allegations, a group of Chinese biodiesel producers said they would work to improve compliance and export standards, while stating that Chinese imports should not be treated any differently by the EU.
“We are deeply concerned about the potential fraud in Chinese biodiesel exports,” the industry group said in in a letter, reported on by Bloomberg. “We have zero tolerance for such violations.”
[Edited by Alice Taylor]
