EU Biodiesel Industry Concerned on Import Labelling

by John Houghton-Brown (Argus Media) European producers and traders of biodiesel say Chinese product entering the EU is being wrongly labelled as an 'advanced' biofuel, and sold into Germany where it is counted twice towards emissions savings targets in transport. This, they say, is having multiple effects on supply-demand balances and prices.

Advanced liquid or gaseous biofuels — those produced from feedstock listed in Annex IX Part A of the EU Renewable Energy Directive (RED II) — are mandated in Germany and are permitted to count twice towards the country's greenhouse gas (GHG) reduction target for transport fuels, once a baseline target of 0.3pc by energy content has been met. The domestic advanced biofuels target will rise to 2.6pc by 2030.

Suppliers of biodiesel to Germany told Argus they are seeing offers for advanced biodiesel made from feedstocks such as sludge from food production waste, acid oils from soap stocks and palm oil mill effluent (Pome). They say the amount being shipped in bulk from China is far in excess of what can reasonably be available for export.

A European producer said that between 130,000-150,000t of such product is being sent to Europe each month.

"This has a brutal effect on the whole market," the producer said. "Advanced product counted against the [German] quota allows blenders to use smaller amounts of biodiesel to reach their targets. This destroys our market here and makes it impossible to produce and trade."

Chinese customs data, which groups all fatty acid methyl ester (Fame) biodiesels together, show a significant rise in exports destined for Europe. Biodiesel exports more than doubled on the year to 455,000t in January-February and the vast majority this made its way to the Netherlands from where it will be redistributed within Europe.

The European producer said that with most product recently offered out of China having a cold filter plugging point (CFPP) of +10°C — the sort of warmer weather grade now in favour ahead of the summer months — "there is little choice but to participate in the flow if [companies] want to stay afloat."

The European Waste-based & Advanced Biofuels Association (Ewaba) said it is treating reports relating to these concerns "as a matter of high priority" given they are "creating worrying conditions for our members."

"We are taking different steps involving certification schemes and customs authorities and if any dubious practice is identified we are confident it will stop shortly," it told Argus.

Germany's federal office for agriculture and food (BLE) told Argus that while it is responsible in Germany for the implementation of the sustainability criteria of RED II in sustainability regulations, the responsibility for monitoring and controlling cultivation, supply and production chain rested with independent certification systems and bodies, which are previously recognised and then monitored.

Pome is excluded from the double-counting incentive but its use is not capped. Argus estimates global availability of Pome at just over 760,000t in 2023, with more than 680,000t of this from Asia-Pacific.

Germany recently revisited a potential ban on crop-biofuels. The environment ministry plans to submit a draft law to ban the use of biofuels from crop and feed "as soon as possible", minister Steffi Lemke said in January. The cap on crop-based biofuels used to fulfil Germany's GHG quota is 4.4pc in energy terms.

German biofuels association VDB has said ethanol producers mostly use grain that is unsuitable for the food sector, and biodiesel producers have already cut back output in favour of food production. READ MORE