EU under pressure to tackle fraudulent biofuels imports

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

The criticism comes as the EU faces a flood of low-cost second-generation biofuels from Asia, which have priced some European producers out of the market.

In response, domestic producers have raised fraud concerns, arguing that biofuels entering the market are illicitly dodging customs duties – a complaint that prompted the European Commission to launch an official investigation.

It is further alleged that producers in countries such as Indonesia and Malaysia are passing off cheaper palm oil, which is restricted in the bloc, as used cooking oil, a valuable feedstock eligible for double counting towards renewable energy targets.

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The Union Database for Biofuels

Under the 2018 revision of the Renewable Energy Directive, the Commission created a database to monitor biofuels in a bid to bolster the anti-fraud protection provided by voluntary certification schemes.

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 Europe.

It would also ensure that sustainability certificates are used only once, ending the problem of certificate duplication.

However, the database remains at an early stage. Within the industry, criticism of the database is widespread – biofuel producers paint a picture of a delayed, confusing rollout that fails to address fundamental problems.

James Cogan, policy advisor at Ethanol Europe, a family-owned biofuel producer from Ireland, said despite pressure from the industry to get the database up and running, little progress has been made.

“Five years after it was decided to build it, there’s still nothing in operation and no communication from the Commission on what the status is,” he told EURACTIV.

“In any case, the Commission does not have the competencies to build such a thing. Just like they don’t build the offices they work in, they shouldn’t be building this,” he added.

Cogan put down the lack of progress to a dearth of investment from Brussels and a lack of institutional capacity.

“There doesn’t appear to be anybody in charge of the database project. No chairperson, no plan, no progress reports, no oversight, no answerability,” he said.

Germany’s database to continue

The Association of the German Biofuel Industry (VDB), a national trade association, also raised concerns about the database rollout’s flaws. A first experience with the database during the testing phase proved underwhelming.

“They’ve been working on it for quite some time, and they have set deadlines for the industry to participate in the database, but it has been really a mess because registering is very difficult, and several issues have not yet been conclusively clarified,” Elmar Baumann, managing director of VDB, told EURACTIV.

According to the German Environment Ministry, a national biofuel database known as NABISY has operated for 13 years and will continue to operate within Germany.

“The German database NABISY has been established for many years; the system works well and reliably. NABISY will continue to be needed in the future to implement the national greenhouse gas reduction quota (GHG quota) and to offset biofuels against the legal obligations in Germany,” a spokesperson told EURACTIV.

German officials are in “close contact” with the European Commission regarding the EU database design and believe it has the potential to one day be connected with the national database.

While interconnection would be welcome, technical improvements are needed on the Commission side before this can happen, according to Baumann.

“The German biofuels industry is worried because the [EU database] onboarding does not work properly. Without the German NABISY database, which is working well, we would be lost in terms of the proofs of sustainability,” he said. 

Certification problems

Even when the database is fully operational, it will remain reliant on the EU’s flawed certification system, meaning “there will still be fraud”, according to Cogan.

“A database is only as good as the processes generating the data. The EU certification processes are full of false information, and the database will be too,” he said.

VDB was similarly sceptical about the database’s ability to combat fraud unless issues with voluntary certification are addressed.

“Pointing at the future EU database as a means to tackle the issue with dubious certificates from China is, from our point of view, fundamentally misleading,” said Baumann. 

“The database is an important building block of the sustainability certification in general as it prevents multiple uses of certificates. But it does not help against fraudulent behaviour when issuing certificates or with poor audit execution.”

A 2016 European Court of Auditors report, an EU watchdog, warned that weaknesses in the biofuels certification system could undermine the EU’s renewable energy targets in transport.

A subsequent follow-up in 2019 revealed that while some recommendations were taken on board, the recommendation to better check that certification schemes comply with standards was implemented “in a limited way” only.

Biofuel certification schemes slammed for failing to halt fraud

Measures to ensure the integrity of biofuels imported into the EU single market are not fit for purpose, an EU producer has claimed, asserting that EU-backed certification schemes are failing to prevent fraud.

[Edited by Frédéric Simon /Alice Taylor]

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