China Biodiesel Exporters Pledge Fraud Crackdown after Criticism

by Alfred Cang and Agnieszka de Sousa (Bloomberg/Yahoo! Finance) Chinese biodiesel producers pledged to improve compliance and export standards, days after European rivals called for action to stem “potentially fraudulent” shipments.

A group representing the country’s biggest producers and affiliated with the technology ministry promised closer monitoring of the quality and sourcing of biofuels. However, Chinese supplies shouldn’t be treated differently by the European Union, it said in an open letter.

“We are deeply concerned about the potential fraud in Chinese biodiesel exports,” the industry group said in the letter. “We have zero tolerance for such violations.”

That came after the European Waste-Based & Advanced Biofuels Association said surging Chinese biofuel shipments were threatening local suppliers by depressing prices. European producers say Chinese exporters may be mixing fuels with cheaper feedstocks and mislabeling them to qualify for EU incentives. The European Commission and the Dutch and German governments must take action, the association known as EWABA said.

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The spike in exports to Europe comes at the same time as a surge in Chinese imports of palm waste and palm-based biofuel from Indonesia and Malaysia. Palm oil is generally shunned by the European Union due to deforestation fears, and the jump in Chinese shipments has spurred speculation that some of the palm waste is being blended into the methyl ester that’s being sent to Europe.

The surge in Chinese exports is hitting European biodiesel producers. At least 11 plants have halted output, while another 10 have curbed production, EWABA said in the June 1 letter to officials including Frans Timmermans, executive vice-president for European Green Deal and the European trade commissioner Valdis Dombrovskis. The association represents companies including Cargill Inc., Gunvor Group Ltd. and Novozymes A/S.

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The Chinese group said it’s willing to cooperate on certification and compliance, working with EWABA to address the issues and defend the industry. Supplies of Chinese biodiesel are helping the EU reach its carbon-reduction goals, according to the letter.

The Chinese association is considering establishing a white list of qualified suppliers to improve traceability and transparency, Liu Yaoming, head of the association and a veteran biofuel trader, said in an interview. READ MORE

Germany triggers EU investigation into Chinese biofuels (Reuters)

EU Probes Alleged Fraudulent Biofuel From China (News18)

Industry suspects fraud as flood of Chinese biodiesel destabilises market (Euractiv)

China has zero tolerance for fraud in biodiesel exports; industry has strong complementarity with EU market, says Chinese association (Global Times)

Chinese industry group criticizes potential EU biodiesel product ban (Global Times)

EU-backed green auditor cracks down on China island biofuel trade (EurActiv)

German ministry under pressure to end tainted Chinese biofuel imports: Industry calls for certification system as local producers at brink of bankruptcy (Nikkei Asia)

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Excerpt from EurActiv:An auditing company empowered by the European Union to verify sustainable fuel has suspended the certification of three Chinese biofuel exporters after an audit found the precise source of their waste products from Malaysia and Indonesia could not be verified.

Germany this month triggered a European Union investigation into a large volume of biofuels imports into Europe from China to assess whether the fuel meets EU sustainability criteria.

The Germany-based International Sustainability and Carbon Certification (ISCC), a company that verifies the sustainability of fuel, suspended the certification of two companies headquartered in the port of Yangpu on China’s Hainan Island and another at Zhanjiang nearby on the mainland.

The month-long suspensions mean the companies cannot export to the EU and were detailed in audit reports posted to the ISCC’s online database of tens of thousands of biofuel producers and traders worldwide. The suspensions have not previously been reported.

The companies the ISCC suspended were Hainan Hanpu Import and Export Trade, Hainan Bomi Import and Export Trading and Wuchuan Maosheng Bio-energy. The suspensions took effect in early May and June and last for a month. Wuchuan Maosheng Bio-energy’s suspension finished at the end of May. READ MORE