A New Era for Biofuels Traceability in Europe

(Energy Institute) What will the European Union’s (EU) new bioenergy database mean for bioenergy sustainability and traceability both across and beyond Europe, and what are the challenges that still lie ahead? Gemma Toop and Sacha Alberici, Associate Directors at Guidehouse, take a look.

The European Commission (EC) launched its much-anticipated Union Database for Biofuels (UDB) in January, aiming to transform the traceability of supply chains for biofuels used across Europe and beyond. Any biofuels that are consumed in the EU will need to be registered in the UDB, regardless of their origin. Therefore, companies which want the option to sell their biofuels into the EU will also need to be involved, creating ripple effects of the UDB outside Europe.

Since the inception of the Renewable Energy Directive (RED) in 2010, biofuels used in the European transport sector have had to comply with mandatory sustainability criteria and achieve minimum lifecycle greenhouse gas (GHG) emissions savings, compared to their fossil equivalent. Biofuels are liquid fuels, such as biodiesel or bioethanol, made from biogenic material including crops, or wastes and residues like used cooking oil or straw.

The sustainability and GHG criteria apply to all biofuels consumed in the EU, regardless of the origin of the feedstock or fuel.

Successive amendments to the RED over time have increased the minimum GHG-saving requirements and tried to steer away from the use of crops by capping crop-based biofuels and providing double incentives for biofuels made from more sustainable wastes and residues.

The challenge of certifying global supply chains
The main mechanism that biofuel companies use to demonstrate compliance with the sustainability and GHG criteria is the use of certification schemes (so-called ‘voluntary schemes’). Currently, there are 14 voluntary schemes recognised by the EC, covering a range of feedstocks, geographies and scopes. Between them, these schemes have developed into global enterprises that deploy teams of auditors able to independently check and verify supply chains worldwide.

The system has developed into one that is today certifying over 16mn toe of sustainable biofuels consumed in the EU. However, the global and complex nature of supply chains leads to a challenge in ensuring that the claims made in the EU are robust, even within a certified environment.

The double incentive for biofuels from waste and residue provides a large economic incentive to supply those types of biofuels to the EU. To illustrate this, the price of used cooking oil (UCO) biofuels for supply to the EU consistently trades at a higher price than their virgin vegetable oil equivalents. This incentive has resulted in significant trade flows of waste oils and waste-based biofuels into Europe from around the world.

There have been several high-profile cases of UCO fraud, including both ‘mis-claiming’ and ‘double-claiming’. Mis-claiming fraud is where pure virgin oils (such as cheaper palm oil) are labelled as UCO or mixed with UCO to increase the volumes traded.

Many European stakeholders also see such mis-claiming as a way of circumventing restrictions on the use of palm oil in the EU. Accusations of such fraud are supported by very high rates of collected UCO in regions such as South-east Asia compared to Europe or the US.

Double-claiming fraud is when companies sell the same sustainability information more than once, for example, to different customers across more than one country, which can be hard to detect without a broader oversight of the system.

Once fully implemented, all renewable transport fuel consumed in the EU and counting toward RED II targets will need to be entered into the database. The UDB explicitly aims to improve the traceability of biofuels, avoid double counting and address concerns about fraud.

Originally envisaged to cover the supply chain from the point of fuel production, the EC soon realised that the most significant sustainability and fraud risks are at the origin of the supply chains. Therefore, to ensure a robust system, the UDB has been set up to cover the full bioenergy supply chain scope from feedstock production, or first collection, through to the point the fuel is supplied on the EU market.

The UDB is intended to complement the existing certification and traceability requirements for liquid and gaseous transport fuels under the RED II. Member states will require companies to enter information on the volume and sustainability of feedstocks into the database, starting from the (first) gathering point for agricultural or forestry raw material, or collection point for wastes and residues up to the point of consumption.

For gathering or collecting points this means that companies supplying farms or points of origin will need to be entered into the UDB and all deliveries from these farms or points of origin will be documented. Similarly, all dependent warehouses and collecting points covered by group certification will need to be recorded so that material can be traced at every location where it is stored. Auditors will be required to verify that the information entered into the UDB is accurate and consistent with the audited data.

The certification schemes; International Sustainability & Carbon Certification (ISCC); Biomass, Biofuels Sustainability voluntary scheme (2BSvs); and the Roundtable on Sustainable Biomaterials (RSB) scheme working with Bioledger, are all developing solutions for the market. Other entities are expected to follow. READ MORE