A better traceability of imported feedstocks used to produced advanced biofuels, particularly those derived from the palm oil sector, is essential for both the reputation of the market and the EU but the block's recent drive for better certification falls short, according to Portugal's association of biofuels producers APPB.
The problem concerns not only the environment, but also the competitivity of biorefiners that use little or no derivatives or waste from the palm oil sector — such as those in Portugal — which have been competing with an increase in pre-blended, imported biofuels since early 2021.
Recent votes in the European Parliament such as the amendments to the RED II directive, or proposals to halt the sale of products from deforested or degraded land, are steps towards a better tracing of palm oil and its derivatives and preventing fraud arising from mixing palm oil with used cooking oil (UCO). But they only meet a fraction of the need for tighter monitoring of waste-based feedstocks, according to the association.
New controls on auditing and governance of sustainable biofuel supply chains via a central track-and-trace database, hosted by the European Commission, will include advanced biofuel feedstocks, but are only set to start becoming operational from 1 January 2023.
Wastes such as palm oil mill effluent (Pome) and empty palm fruit bunches were granted exemption from Portugal's ISP special energy tax in January 2021, along with other biofuel feedstocks qualified as advanced by the EU's RED II directive.
This tax exemption, together with Portugal's adoption of double-counting methodology for waste-based or advanced biofuels since 2012, drove a surge in biofuel imports to 39pc of total national consumption in 2021 and 45pc in the first quarter of 2022. This compares with under 10pc in previous years.
Most of these imports arrive in Portugal already blended with road fuels, making it even more difficult, without tighter enforcement using methods such as isotope testing and geolocation, to trace the origins of their bio-component. In some 63pc of blended advanced biofuel imports to Portugal the bio-component is certified as waste from the palm oil industry.
Of the about 72,000m³ of advanced biofuels imported into Portugal in 2021, 45,000m³ was certified as originating from Pome or empty palm fruit bunches, according to the country's national laboratory for energy and geology (LNEG).
The surge in palm industry waste-based biofuel imports, which are largely arriving in diesel pre-blended with hydrotreated vegetable oil (HVO), continued in January-March 2022 and accounted for some 25,000m³ of biofuels imported into Portugal.
"This upsurge in imports is not driven by their competitiveness, but by the indiscriminate concession of fiscal advantages. It's an upshot of the current legislation that we hope was not among the original objectives of the lawmakers," said Jaime Braga, a former biorefinery manager and current general secretary of APPB.
The SBEO conundrum
LNEG's figures for palm industry waste feedstock are separate from volumes of spent bleaching earth oil (SBEO), a waste product from the refining process of palm and other vegetable oils that if extracted in line with best industry practices should occur in yields to refined oils at a proportion of 1:1000.
LNEG reports that imports of biofuels made with SBEO into Portugal, a country representing a fraction of total European advanced biofuel waste feedstock demand, totalled 29,400m³ in 2021 and 18,000m³ in January-March 2022, reflecting the refining of 42.9mn m³, or over 40mn t of vegetable oils, according to Braga. This is well over the total annual consumption of vegetable oil in Europe.
Raising further doubts about the certification of bio-feedstock as SBOE in Portugal, he said that India — one of the primary producers of the feedstock — produces just 25mn t of it per year.
Portugal's environment and climate action ministry declined to comment on the possible certification issues and current legislation on palm-oil waste based imports and SBEO.
"It seems clear that thanks to the incentives in place, Portugal is becoming a privileged destination of undesirable tropical cultures from India and South-east Asia, which in 2021 benefited from €38mn ($37.3mn) of tax exemptions," the APPB general secretary said.
"Lawmakers still have time to correct these undesirable effects of the legislation by perfecting and adjusting it to the spirit of the law, but there is danger in delay," he said.