Biofuel certification schemes slammed for failing to halt fraud

Introduction

The European Union (EU) producer claims that the measures in place to ensure the integrity of biofuels imported into the EU single market are inadequate. The EU-backed certification schemes have failed to prevent fraud, leading to an investigation by the European Commission into suspected customs duties fraud. This investigation involves allegations that biodiesel produced in Indonesia, a country subject to anti-subsidy duties, was routed via China and the United Kingdom to avoid import tax.

Concerns over Certification Schemes

According to James Cogan, a policy advisor at Ethanol Europe, the EU certification schemes are not effective in preventing fraud. The EU Court of Auditors had already identified this issue in 2016. Cogan emphasizes the need for the investigation team to examine the role of the EU certification schemes in enabling fraud, including the export of finished diesel biofuel and raw materials along the same trade routes.

Certification Requirements

European Commission personnel do not carry out biofuel sustainability checks directly. Instead, private sector-run schemes approved by the European Commission or EU member states are responsible for ensuring that biofuel imports meet the environmental criteria set by EU law. Currently, there are 15 voluntary and national certification schemes recognized by the Commission. However, recent suspected fraud cases have raised concerns about the effectiveness of these schemes.

Need for Rigorous Audits

Biofuels expert Barbora Smailagic from the green NGO Transport & Environment suggests that more rigorous audits are necessary. While EU law emphasizes independent and transparent audits, these audits are arranged by the companies themselves, raising questions about their independence.

Concerns over Palm Oil Fraud

NGO critics have long questioned whether some Asian nations are misrepresenting palm oil, a restricted feedstock due to its links with deforestation, as used cooking oil, which is eligible for double counting towards EU renewable energy targets. Cogan highlights the collection rates of used cooking oil in Indonesia, suggesting that if exports certified as used cooking oil were found to contain palm oil, it would constitute significant sustainability fraud.

Investigation into Customs Fraud

Biodiesel from Indonesia is subject to customs duties ranging from 8% to 18% under EU law. The European Commission has initiated an investigation to determine if these taxes are being circumvented through transhipments from China and the UK. The investigation is expected to conclude in May 2024, and on-the-spot verifications will be conducted in November. If circumvention is confirmed, the applicable duties will be extended to imports from China and the UK.

Response from UK Authorities

The UK government spokesperson stated that UK authorities are closely monitoring the developments and encourage relevant UK producers to participate fully in the investigation process. They emphasized the need to avoid drawing definitive conclusions of fraud before the findings are reached.

Conclusion

The integrity of biofuels imported into the EU single market is a significant concern, as EU-backed certification schemes have failed to prevent fraud. The investigation by the European Commission aims to address these issues and ensure compliance with EU sustainability standards. It is crucial to address the shortcomings of the certification schemes and implement more rigorous audits to maintain the integrity of biofuel imports and achieve the Sustainable Development Goals (SDGs) set by the EU.

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