Fake fuel destroying forests?
Fake fuel destroying forests?
A new study by the european federation for transport and environment (T&E) has found that fraudulent palm oil is likely being used in renewable diesel made from hydrotreated vegetable oil (HVO), as the amount of palm oil mill effluent being used exceeds the amount being supplied.
Conventional palm oil use in biofuels peaked at around three million tonnes in 2019 before falling 80% by the end of 2023. This is in large part due to the EU’s decision to phase out palm oil biofuels from renewable targets by 2030.
“After a decade of biofuel policies contributing to global deforestation, the EU began shifting toward waste-based alternatives like used cooking oil, animal fats, but also palm products, and residues,” T&E – an umbrella organisation for non-governmental entities focused on promoting sustainable transport in Europe – highlights in its report “Palm oil in disguise? How recent import trends of palm residues raise concerns over a key feedstock for biofuels”.
This led to oil companies offering a “renewable diesel” product, dubbed HVO, which on paper delivers significant emissions savings: in some cases up to 95%. A key component of this is palm oil mill effluent (POME), a residue of palm oil production.
“POME, a wastewater residue from palm oil milling, can cause environmental harm if untreated, releasing methane as it decomposes, which can be captured for biogas production. Its oily fraction can also be extracted and converted into biofuels,” T&E points out.
“According to Stratas Advisors’ estimates, almost two-thirds of POME biofuels in 2023 were used in ‘renewable diesel’ or HVO. Unlike conventional biodiesel, namely Fatty Acid Methyl Esters (FAME), HVO can be used as a drop-in fuel in diesel engines and is more and more often promoted as a clean solution, in particular for the road sector,” T&E adds.
“However, the increasing reliance on these so-called waste materials has raised concerns, particularly over questionable imports. Data indicate that more palm oil residues are being reported than is actually possible, suggesting a high likelihood of fraud.”
Officially, over two million tonnes of POME were consumed in European biofuels in 2023. This is way above the one million tonnes that is estimated to be available globally, while T&E’s calculations show that actual collection of POME oil is likely much lower in practice.
“We estimate that the actual POME oil production in Malaysia and Indonesia is probably much lower than the maximum potential due to competition with biogas production initiatives in these countries and the likely limited collection across all palm oil mills. This suggests that fraudulent volumes might be even more prevalent in the EU’s reported figures, aligning with official statements from Indonesian authorities indicating that exports have been surpassing POME production capacity.”
In January, the Indonesian government published data showing that POME exports in 2023 and 2024 far exceeded its estimate of total capacity. “The suspicious jump in POME biofuel use across the EU also came with significant economic impacts. Induced by EU incentives for waste-based biofuels, the high demand for POME biofuels led to a progressive increase in average POME market prices throughout 2023 and 2024,” emphasises T&E.
“In addition, POME prices reached close to 90% of palm oil spot prices in the first half of 2024 according to data from Quantum Commodity Intelligence. Such a narrow gap needs to be carefully monitored as high demand and high prices for POME might require a reclassification from residues to by-products if POME becomes as valuable as conventional palm oil.”
Cian Delaney, biofuels campaigner at T&E, adds: “It appears a lot of POME could be just palm oil in disguise. This raises serious concerns as to whether this renewable diesel or HVO is as green as oil majors say it is. We need to remove the policy incentives that enable dodgy biofuel feedstocks making their way into Europe as supposedly sustainable fuels.”
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