The International Sustainability and Carbon Certification (ISCC) has responded to market concerns about a surge of advanced biodiesel imports from China to Europe and indications they may include fraudulent cargoes.
The certification system is carrying out 70 unannounced integrity audits at processing units in China and Singapore, it said in a newsletter on 20 April. It started carrying out surprise audits at companies suspected of fraudulent activity following stakeholder complaints received since last month.
Market participants have expressed concern after Chinese biodiesel exports more than doubled from a year earlier during January-February, weighing heavily on European biofuels prices. There have been reports of advanced biodiesel produced from palm oil mill effluent (Pome) oil, food waste and soap stock offered to Europe in volumes exceeding what could reasonably be produced. This has coincided with a increased exports of palm oil wastes from Indonesia and Malaysia to China.
The ISCC had already been conducting regular integrity audits and expanded auditor numbers in Asia-Pacific since last year as market concerns over increasing exports from China started to mount, it said. Based on results of the audits, the ISCC said it will work to clarify definitions and yield thresholds for specific waste and residue feedstocks.
The certification system introduced guides for plausible yields of palm oil mill wastes including Pome oil in November 2022, along with annual on-site audits for collection points supplying these feedstocks. But many advanced feedstocks including food waste and soap stock have in place no such requirements that auditors check output volumes fall within plausible limits.
Under the new yield cap requirements, ISCC certificates will be withdrawn from companies found to be supplying volumes of advanced feedstocks that seem implausible and cannot be verified by auditors, meaning they will no longer be able to sell into the EU market. False declarations of materials will also be subject to certificate withdrawal.
The ISCC has withdrawn 11 certificates since the start of this year, including six from Indonesia and one from a Malaysian certificate holder listing Pome as raw materials. It is unclear if these were linked to continuing fraud investigations, as reasons for withdrawal are not made public.
As well as beefing up audits, the ISCC said it will strengthen co-operation with regulatory and law enforcement authorities. It will issue a more thorough update on plans for improving waste and residue traceability soon, it said.
