The head of industry body the European Waste-Based Advanced Biofuels Association has called on the EU to tighten regulation on mislabeled imports to the region in a bid to stop local production being outpriced.
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Register NowEWABA Secretary-General Angel Alberdi told S&P Global Commodity Insights in an interview that the bloc needs to address the causes that have enabled potentially mislabeled streams to go to Europe, adding "we need stronger certification, and greater traceability."
Recent punitive measures by the EU against the suppliers of some biofuel deliveries from Asia into Europe address only part of the fall in renewable prices, he added, saying the market authorities have a systemic issue to address.
Alberdi said that, although these issues are being worked on, the industry needs better functioning certification schemes, more solid auditing practices and a prompt roll-out of the Union Database for Biofuels (UDB).
According to assessments from Platts, part of S&P Global, the RED FAME 0 European biodiesel premium on a FOB ARA basis to ICE LSGO plunged 62% from December 2022 to April 2023, hitting a record low of $245/mt April 14, which market sources attributed to imports from China and Southeast Asia of non-sustainable origin being certified as sustainable, and thereby undercutting rigorously-certified EU product.
Platts assessed it at $351.50/mt Sept. 6.
Alberdi sent an open letter to International Sustainability and Carbon Certification Managing Director Andreas Feige in July, asking that additional measures beyond the removal of licenses and 70 unannounced integrity audits in Asia be implemented.
His requests were numerous and included that ISCC certificates only be issued when economic operators were able to demonstrate the mandatory certification of Palm Oil Methyl Ester Points of Origin, and an up-to-date list of all Points of Origin and valid Self Declaration be made available to the auditor and ISCC.
He also asked ISCC if it could confirm whether all valid ISCC certificates had demonstrated compliance with the existing requirements and whether the body could specify whether, during integrity assessments at collecting points, the eligible points of origin are visited again.
All eyes on the database
The EU's Union Database for Biofuels is due to take effect in January and this will be a significant boost to traceability, market sources have said.
The UDB is a digital tool that is intended to support transparency in the biofuels supply chain in the EU. It will track all feedstocks from their point of origin, irrespective of global location, and its designers hope it will therefore enhance transparency, promote investment certainty and showcase the services provided by companies within the waste-based and advanced biofuels sector.
This transparency and traceability have proved difficult so far.
"For now, you are sheltered from China because imports have been stopped but there are these known loopholes and what is to prevent other countries doing the same?" Alberdi said.
"The problem is not solved only with trade defense issues because there are two different problems, one is an issue of trade circumvention and the other is cases of fraud alongside certification practices," he said.
Expanding feedstock base
Legislators in the European Council and European Parliament reached a provisional political agreement in March to raise the share of renewable energy in the EU's overall energy consumption to 42.5% by 2030, as part of the Revised Energy Directive III. A final agreement was then reached in June among member states, with the European Parliament plenary set to vote in September.
In terms of transport, this includes a binding sub-target of 5.5% for advanced biofuels -- generally derived from non-food based sources -- and renewable fuels of non-biological origin -- mostly from renewable hydrogen and hydrogen-based synthetic fuels -- in the transport sector's share of renewable energy.
An upcoming revision of Annex IX of the Renewable Energy Directive (RED) is expected before the end of the year, which widens the list of acceptable waste-based feedstocks that can be double-counted -- that is, count twice toward renewable energy mandate requirements -- to include feedstocks such as brown grease, damaged crops and intermediary and cover crops.
These additions of promising feedstocks such as cover crops, coupled with a broader definition of sustainable aviation fuels (SAF) in the ReFuelEU aviation regulation diminish concerns around competing access for feedstocks from road transport and maritime, alongside mounting quotas for biofuel uptake in aviation, Alberdi said.
"We are likely to see greater access to relatively easier to process feedstocks to be used across different transport sectors," Alberdi said.
"I think this could be a potential game changer that will bring additional volumes to RED III, FuelEU maritime and ReFuelEU aviation," he said.