EU Scrutinizes Fraud in Certification of Biofuels

(The Maritime Executive) The scrutiny on the use of biofuels in Europe has intensified, with reports emerging last week that the EU is planning to suspend recognition of the ISCC certification of waste-based biofuels. The International Sustainability and Carbon Certification (ISCC) has an EU certification scheme that verifies that biofuels entering the EU market are compliant with the bloc’s sustainability requirements, as set out in the Renewable Energy Directive (RED) II.

The EU Committee on Sustainability of Biofuels, Bioliquids and Biomass Fuels had convened to discuss rising fraud cases of biofuels in the European market. While the deliberations of the committee are confidential, one of the outcomes reportedly is a proposal to the European Commission to suspend recognition of ISCC certifications for waste-based biofuels for 2.5 years. If the 27 member states approve the suspension, EU countries will have the discretion to accept or reject ISCC certificates.

A surge of imports from South-East Asia has raised serious concerns on the compliance of these biofuels with EU market regulations. Market players blame this on lax verification procedures by ISCC, which is the largest feedstock accreditor. Data from fuel regulators in Europe estimate that 1.8 million tons of fraudulent ISCC-certified Palm Oil Mill Effluent (POME) entered the EU in 2023. POME is a byproduct of palm oil processing and is used as a feedstock in production of biodiesel. The biofuel is gaining widespread use in the shipping industry.

“Based on European Commission data published in December, a third of the used cooking oil (UCO) is undoubtedly fake, most likely sourced directly from virgin palm oil,” James Cogan, EU Government Affairs, Industry& Policy Director at biotech firm ClonBio Group, told S&P Global. Virgin palm oil as a feedstock is ineligible for renewable energy incentives under the EU’s RED II initiative. This is based on its alleged contribution to deforestation abroad.

In addition, the EU proposal comes at a time when the shipping industry in Europe has started a journey on use of ISCC certified biofuels, as a measure towards a green transition.

The ISCC system said that it is aware of the EU Biofuels Committee’s discussions, noting that it was surprised by the suspension proposal. READ MORE

Excerpt from International Sustainability and Carbon Certification: ISCC is aware of the recent discussions by the EU Committee on Sustainability of Biofuels, Bioliquids, and Biomass Fuels concerning future recognition of ISCC EU certification of waste-based biofuels.

According to our current information, the European Commission is considering suspending the recognition of ISCC EU for waste-based biofuels for 2.5 years. This action is said to be subject to further legal scrutiny and will need approval by Member States.

We are more than surprised by this step. ISCC has been a frontrunner in implementing the most strict and effective measures to ensure integrity and fraud prevention in the market for years. It has an undisputed reputation for setting the strictest standards. It comes after we have actively supported the European Commission’s and Member States’ investigation of the alleged frauds and promoted and implemented additional anti-fraud measures in dialogue with the European Commission during the past two years.

Therefore, we are unable to see the rationale of the planned measure, which seems ad hoc and baseless. We do not see alternatives to ISCC EU with better or even comparable market fraud prevention mechanisms. Moreover, other voluntary schemes would not be able to fill the gap. The measure would be a severe blow to the entire market for waste-based biofuels and would seriously jeopardise the ability of the obligated parties to comply with blending mandates.

Also, we see no legal basis for the planned measure. Fundamental procedural and legal rules, such as the right to a prior hearing, have not been observed. The fact that only the ISCC EU recognition for waste-based biofuels is to be singled out discriminates against us.

We are in ongoing and constructive dialogue with the European Commission and will, together with our market partners, do everything in our power to avoid further market disruption. We remain committed to keeping our members, partners, and stakeholders informed as soon as further details become available.

Important Update: For the latest information on this matter, please see the European Commission’s official position on the recent discussions held by the EU Committee on Sustainability of Biofuels, Bioliquids, and Biomass Fuels. READ MORE

Excerpt from International Sustainability and Carbon Certification: In the interest of transparency and timely communication, ISCC is sharing the European Commission’s official position on the recent discussions held by the EU Committee on Sustainability of Biofuels, Bioliquids, and Biomass Fuels:

We will continue to keep our members, partners, and stakeholders fully informed and supported throughout this process. READ MORE