Preventing Biofuels Sustainability Fraud and Unfair Competition

(European Biodiesel Board/Politico) Amid concerns over sustainability fraud, the European biodiesel industry is pushing for regulatory reform. -- As Europe accelerates efforts to decarbonize transportation, biofuels have emerged as an important solution. These CO2-neutral fuels ― derived from sustainable feedstocks including crops and waste and residues ― are the leading contributor to renewable energy in the transport sector, providing an immediate and cost-effective substitute for conventional fuels.

“If Europe is serious about decarbonizing transport, we should be encouraging more biofuel use, not less.”

Evidence suggests some importers, particularly from China and Southeast Asia, are circumventing sustainability standards, threatening to undermine both climate progress and fair competition.

The European Biodiesel Board, representing EU producers, is raising concerns over these practices. As the European Commission prepares to review rules on biofuels verification, EBB President Dickon Posnett spoke with POLITICO Studio about the critical need for stronger controls and a more level playing field.

From expanded audits to harmonized reporting, targeted changes can ensure the system remains effective for legitimate businesses doing their bit to bring down Europe’s transport emissions.

POLITICO Studio: Just how bad is the biofuel fraud problem and the impact on European producers?

Dickon Posnett: By far, the majority of biofuels on the EU market are legitimate and contribute to emission reduction. However, any level of fraud is a very big concern for the biodiesel industry in Europe. There are two main effects. First, by bringing in fraudulent biodiesel that’s not as sustainable as claimed, they are cheating the EU’s climate ambitions and not achieving the greenhouse gas reductions we should be. That’s unacceptable.

But perhaps even more damaging is the longer-term effect of eroding trust and political confidence in our industry. Once that trust is eroded, the regulatory support for decarbonization drops away. That hits everyone, including producers abiding by the rules. Without those regulations, this market wouldn’t exist.

Fraud also depresses prices to an unrealistic level that has become unsustainable for some European producers.

PS: What are the most critical reforms needed to combat fraud and ensure fair competition?

DP: The basic principle is that rules applying to domestic producers should be enforced just as strictly outside the EU. For example, on-site audits should be systematic in production facilities abroad, as is common in Europe.

Additionally, every producer should report the quantities, capacities and feedstock use of the biofuels they make. There are a lot of rules about what biofuels can count toward EU targets based on feedstock. Biofuels that offer the highest greenhouse gas savings are therefore more susceptible to fraud. Shining a light on how much biofuel you can realistically produce from these premium feedstocks will prevent trickery. Some EU countries already require this. We suggest it should apply to all biofuels on the EU market, regardless of where they’re produced.

PS: Is it feasible to require non-EU producers to face the same strict verification rules as European companies?

DP: Of course it is. All biofuels imported into the EU must have a Proof of Sustainability. It’s perfectly reasonable to require all fuels used in the EU to comply with EU sustainability rules. There is a verification system in place, but we need to clarify requirements on audits and access to information. This will enable authorities to oversee economic operators, voluntary schemes and certification bodies, both inside and outside EU jurisdiction.

In fact, it can be done now. As the Commission reviews verification rules, we’ve already drafted detailed amendments that can be implemented immediately.

PS: What key information should be added to the EU biofuels database to enable better fraud detection?

DP: The Union Database for Biofuels is a major asset in fighting fraud. EBB has been instrumental in its inception — in fact, it’s something we have been striving for since 2012. It will fundamentally improve prevention once the system is fully functional, hopefully by early 2026.

Beyond the core data, we’ve suggested including additional information such as customs documents to clarify the origin of both the product and its sustainability documentation, enabling us to match them up. We’re also proposing links to national systems that record production capacities and feedstock use. Having all this data integrated would make anomalies easier to spot and investigate.

Overall, a centralized database dramatically improves traceability and transparency. But it needs to be comprehensive and easily cross-referenced to fulfill its potential as a fraud-busting tool.

PS: How can the revised rules boost European competitiveness and investment in domestic biofuels?

DP: Confidence is key. The fraud issue has dented trust in biofuels and the price effects have made investors wary, at a time when major investment is needed to achieve our climate goals. Stronger verification will provide the credibility and predictability needed to drive long-term growth.

The EU verification system relies on voluntary third-party verification based on criteria established by the legislator, and we do not want to change this. We build up on the current system and improve it. European producers are already subject to strict standards. Biofuels produced outside the EU and their supply chain are not subject to the same level of scrutiny. With a more level playing field, the commitment of EU producers to sustainability becomes an asset. Industries thrive when the rules are clear, consistent and rigorously enforced. Having a comprehensive solution in place is critical.

A hard-to-navigate patchwork of caps and bans is not a viable solution. We’ve seen some calls to cap or cut biofuel use. A few member countries are looking at restrictions. That’s the opposite of what we need. If Europe is serious about decarbonizing transport, we should be encouraging more biofuel use, not less. Tackling fraud head-on removes a major barrier to doing that. It will take the brakes off investments and innovations that can push this industry forward.

PS: Beyond verification, what other policy or market measures could help build a more resilient and sustainable European biofuels sector?

DP: We need a comprehensive strategy. Of course, verification is the foundation because we have to shore up confidence. But we also need a stable, ambitious policy framework to drive demand. The more certainty there is about the market trajectory, the more investments will flow into expanding domestic production, developing new feedstocks and improving technologies.

On the consumer side, education is important. We need people to understand the benefits and safety of biofuels. There’s still work to do in fighting misconceptions. Policymakers also have a role in incentivizing higher blends and ensuring vehicles that are fully compatible are also labeled as such. A renewable fuels infrastructure that’s convenient and accessible will boost uptake. READ MORE