To tackle biofuel fraud, Ireland takes matters into its own hands

The Irish government has confirmed it will set up a working group to ensure the sustainability of biofuels used in the country, as concerns grow that tainted fuels are entering the EU market.

The decision by the Irish Department of Transport comes amid allegations that palm oil, a feedstock restricted in the EU due to its supposed contribution to deforestation abroad, is being passed off as used-cooking oil (UCO), a waste biofuel material.

Ireland is heavily reliant on biofuels to decarbonise its transport system, which is centred on road transport. 

Data from British and Irish authorities show some 151 million litres of UCO from Malaysia was exported to the UK and Ireland alone in 2020 – far beyond the 70 million litres Malaysia reportedly collects annually.

Discrepancy in British and Irish used cooking oil imports raises biofuel fraud concerns

A new analysis suggests more Malaysian used cooking oil was exported to Britain and Ireland than was collected in the country, raising fears that banned substances are being fraudulently passed off as the in-demand biofuel feedstock.

Edel Hackett, a spokesperson for Irish environment minister Eamon Ryan, told Euractiv that the working group on biofuel sustainability will “review any possible vulnerability in Ireland’s system to fraud or other indirect impacts” which arise from the “planned future increase in biofuels supply for transport use under climate action plan decarbonisation targets”.

The working group will be established by the end of the year.

Under EU rules, biofuels made from waste materials, such as cooking oil used to fry food, can be double counted towards renewable energy targets. This has allegedly incentivised unscrupulous producers to label cheaper palm oil as UCO in a bid to charge more.

The EU is currently experiencing a flood of low-cost second-generation biofuels from China, raising red flags as to the fuels’ true origin.

In an opinion article for Tagespiegel Background, Elmar Baumann, the managing director of the German Biofuel Industry Association, questioned the veracity of advanced biofuels exported from China.

“What is interesting in this context is that Chinese imports of palm oil biodiesel from Indonesia and Malaysia have increased almost tenfold over the past two years, according to information from the market,” Baumann wrote, raising suspicions that palm oil is being used to bulk up quantities.

Green MEP Ciarán Cuffe, who has long campaigned against biofuel fraud, welcomed the Irish government’s decision to set up the working group. 

The Irish lawmaker was one of the signatories of a letter to the Commission in 2022 asking for transparency on the issue of UCO imports, in light of fraud allegations.

“I’m pleased to finally see movement on this issue, in line with the concerns I have raised previously,” he told Euractiv.

“I look forward to seeing the results of these investigations and hope they will bring stronger controls and more transparency,” he added.

National responsibility

Although advanced biofuels are incentivised under the EU Renewable Energy Directive, dealing with biofuel sustainability fraud is at the discretion of EU countries.

The European Commission has no direct mechanism to deal with environmental fraud, though it has touted the upcoming EU Union Database as a means to improve oversight.

The Union Database for Biofuels is intended to track all biofuel transactions throughout the dense global supply chain, ensuring that only those meeting Europe’s sustainability standards make it into the market.

However, industry sources have been highly critical of the database roll out, slamming the Commission for the delay in making it operational and the difficulty in signing up.

EU under pressure to tackle fraudulent biofuels imports

The delay in implementing a tool to protect the EU market against fraudulent biofuels imports has been heavily criticised by European biofuel producers, who point the finger at the European Commission.

Asked about the Commission’s competence to investigate sustainability fraud, an EU official told Euractiv that “member states are responsible for the supervision of certification bodies who certify economic operators”.

“As part of these supervisory tasks they are also responsible for monitoring possible abuses at national level and enforcing penalties, if available, under national law,” the official added.

This national focus has led to a fragmented approach across the single market, with the level of scrutiny differing from one EU country to another. 

James Cogan, a policy advisor with Ethanol Europe, called for an EU office of biofuels fraud to be created to tackle the issue across the bloc.

The current situation has resulted in member states investing in a system that is “rife with fraud, with prices and volumes dictated not by business conditions in Europe’s circular economy but by how much low cost palm oil can be injected into the supply chain under false certification,” he told Euractiv.

According to Cogan, much of the blame lies with the Commission’s energy directorate (DG Energy), which he argues has “done nothing to detect or deter fraud”.

“There’s so much fraud that cleaning it up will cause shocks to the system and require a total rethink of how Ireland and other member states will reach their 2030 climate targets for renewables in transport,” he added.

Despite challenges with addressing sustainability issues at EU level, the EU executive is empowered to tackle tax fraud.

On 16 August, the Commission announced that it would launch an investigation into biofuel imports from China and the United Kingdom following concerns that Indonesia is sending its exports through these countries to avoid EU custom import duties.

[Edited by Frédéric Simon]

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