The UK government has initiated an investigation into HVO diesel, a rapidly growing “green fuel,” amid serious allegations of fraud. This investigation aims to be a whistleblower on accusations that millions of tons of virgin palm oil are misrepresenting themselves as waste products in the production of HVO diesel. This new diesel is being promoted as an outright replacement for regular diesel. This recent development ignites important questions surrounding the sustainability of biofuels and whether they truly make a difference in carbon emission reductions.
Hydrotreated Vegetable Oil—commonly known as HVO diesel—is gaining real momentum as a transportation fuel. Its unique properties allow for major reduction of planet-warming emissions. According to whistleblowers from within the industry, much of the feedstock for this fuel is virgin palm oil. They strongly oppose it when it’s not derived from true waste. This poses tremendous ethical and environmental dilemmas. The increased attention placed on palm oil production has shed light on its catastrophic impact on deforestation and biodiversity.
The European Waste-based and Advanced Biofuels Association (EWABA) is the voice of leading biofuel producers in the EU and UK. They stress the need for immediate and significant reforms to certification processes. At present, ISCC (International Sustainability and Carbon Certification) is the main certification system overseeing the conversion of waste materials into fuel in Europe. Dr. Christian Bickert, a representative from ISCC, noted that their ability to monitor compliance has been hampered by restrictions in China, where much of the palm sludge waste is processed.
“ISCC is simply not allowed to send anybody to China,” – Dr Christian Bickert
Dr. Bickert elaborated that ISCC relies on local, China-based certification companies for on-the-ground oversight. They are extremely restricted in their ability to access operations for oversight inspections.
“They have to rely on certification companies in China to check that everything is OK, but China doesn’t allow any inspectors in from outside.” – Dr Christian Bickert
In 2023, the UK and EU combined burned nearly two million tonnes of palm sludge waste. They processed this waste into HVO and other biofuels. This is not a marginal problem, as global production of this waste barely exceeds one million tonnes annually. This should be raising huge flags over the lawfulness and legitimacy of sourcing practices. Industry insiders have claimed that the supply chain for HVO diesel is opaque and therefore does not inspire faith in its sustainability promises.
“We just are not able to get any level of visibility over the supply chain of HVO that would give us that level of assurance that this is truly a sustainable product,” – Jo Gilroy, Balfour Beatty
The demand for HVO diesel — a biomediary derived from non-petrochemical feedstocks — is exploding in the EU. According to preliminary UN trade data, a huge increase in imports may be due for 2024. The UK has recently experienced a rapid increase in the use of HVO diesel. It exploded from 8 million litres in 2019 to a projected 699 million litres by 2024.
The impulse of the situation has forced the hand of the EEAS and the European Commission to act. They’re now mulling a two and a half year ISCC certification ban for waste biofuels. More broadly, this proposed ban addresses growing concerns about the lack of transparency and authenticity in waste sourcing practices. It further admits that no clear violations of renewable energy targets have been found.
“The measure would be a severe blow to the entire market for waste-based biofuels,” – ISCC
While these investigations are a long way from producing any settlements or enforcement actions, the potential implications for the biofuel industry are huge. His former trader on the deal admitted it was a good hedge that had locked in several shipments of virgin palm oil. They thought these shipments were being diverted by misclassification as palm oil sludge.
“I believe that what I bought was multiple cargos of virgin palm oil that has been wrongly classified as palm oil sludge,” – A former trader of these biofuels
Attempting to refine virgin palm oil instead of using legitimate waste materials would be a blow to the integrity of HVO diesel. In doing so, it greatly diminishes its environmental positive impact. The EWABA has called attention to what it describes as a “major certification verification issue that needs to be addressed as a matter of priority.”
“There is a major certification verification issue that needs to be addressed as a matter of priority,” – The European Waste-based and Advanced Biofuels Association
Concerns about sustainability have led some companies, including construction giant Balfour Beatty, to adopt policies against using HVO diesel altogether. Balfour Beatty’s Jo Gilroy made the case that biofuels must be proven to strict sustainability criteria.
“Chemically, the sludge and the pure palm oil are absolutely the same because they come from the same plant, and also from the same production facilities in Indonesia,” – Dr Christian Bickert
Concern about HVO diesel’s sourcing practices is growing. Industry stakeholders today are under increasing scrutiny to ensure that biofuels are produced from true waste feedstocks, as opposed to virgin sources. The end result of these investigations has the potential to reframe what’s considered green when it comes to fuels and guide us toward achieving climate goals.