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The European Commission has confirmed it is investigating a complaint from a member state about possible fraud relating to biofuel imports from China in a statement sent to Fastmarkets Agriculture.
The statement acknowledged the complaint and called on those in the industry to fully cooperate with the investigation.
It follows the influx of Chinese-sourced waste-based biodiesel through the early part of this year that has swamped key European markets and was accused of harming domestic production of both waste-based and conventional biofuels, as physical prices collapsed across the EU.
“The Commission has been informed by a member state about possible fraud cases related to biofuel imports from China into the EU,” the statement read, as reports surfaced of the investigation.
Earlier in the day news agency Reuters had named the member state as Germany, but the EC has declined to comment.
“The EU takes any allegations of fraud very seriously and will not hesitate to take appropriate action to protect the integrity of its biofuels market,” the statement said, inviting “all economic actors involved in the biofuels market to cooperate fully… and report any suspicious activities.”
The confirmation comes after several European industry groups had flagged their concerns over inbound Chinese flows – with many using pointed language to highlight the nature of their concerns.
The European waste-based and advanced biofuels association (Ewaba) called for “bold measures” as it drew attention to the impact that an increase in “dubious” flows has had on the bloc’s own domestic producers.
Citing figures that up to half the association’s membership have been affected, with eleven production facilities forced to close and another ten paring back output as the influx of volumes hit the bloc, Ewaba described the situation as “dire” and called for some exporters to have certificates revoked.
The association sent the letter to a number of highly-placed Commission representatives, along with members of both the German and Dutch governments.
That followed on from a similar claim from vegetable oil industry group Fediol in late May and news from inspection agency ISCC in mid-May that it had revoked six certificates after finding evidence of ‘mislabelling’ – with three of the certificate holders said to be China-based.
The EU has recently set out ambitious plans to become the first carbon-neutral continent by 2050, with a range of dramatic measures under consideration.
Among those is a massive hike in the use of sustainable aviation fuel to 70% by 2050, and pledges to rid the bloc of Russian energy supplies.
However, the EU is also pledging to break the link between food and fuel and has encouraged legislation to develop advanced fuels, efuels and biofuels from waste-based feedstocks – sparking a major incentive for anything deemed to be waste-based.
Recent data from China’s customs agency showed a near 30% increase in waste-based biodiesel moving to the European Union in April, with the volumes shipped to the Netherlands alone reaching 125,466 tonnes through the month – up 43% on the same period of 2022.
Even so, the April volumes overall were down 18% from the volumes shipped in March, the data showed as an armada of product set sail.
The influx has had a profound impact on the pricing of biodiesels in the bloc, with a similar oversupply of rapeseed oil and strong production margins for crop-based producers also contributing to a glut of finished product in the market that sent physical premiums into a nosedive.
Fastmarkets Agriculture has charted the decline in premiums for conventional FAME biodiesel and UCOME since the start of the year, with UCOME premiums to the ICE gasoil contract falling 53% at its lowest point since the end of 2022, and FAME premiums down 63% over the same period.
One trade source said that the flow of waste-based biodiesel was unusual, as the country would more typically export unprocessed used cooking oil (UCO) flows, but likely reflected a changing dynamic within China.
“[Domestic] biodiesel production has pumped up in China,” the trade source said, splitting Chinese UCO flows between the export market and new domestic processing capacity.
A similar ramp-up in sophisticated renewable diesel capacity across the US means the country has been pulling more and more of China’s UCO flows in as a feedstock, cutting flows of the feedstock to the EU – but the US has limited use for the finished grade UCOME.
“The US don’t want it [UCOME], so half China’s UCO is heading to the US and the other half to Chinese production which is then being exported [as finished product],” the source said.
However, the influx of new supply has been deemed suspicious by the European industry, with Ewaba issuing a statement amid the news of the EC’s investigation.
“The market situation keeps getting worse with no signs of recovery. We hope appropriate measures are taken immediately to avoid irreparable damage to the EU industry,” a statement from Ewaba’s press office said in response to an Energy Census request.
The Commission gave no further details on the volumes that might be involved but did say that “indications of possible fraud have been received from market participants in connection with biofuels certified as sustainable.”
“The alleged fraud concerns biodiesel produced from advanced raw materials, such as residual and waste materials in accordance with Annex IX Part A of Directive (EU)2018/2001,” the EC comment said, referring to the key annex that governs the feedstocks eligible for use under the Renewable Energy Directive (RED).
For more information on the current biofuels market, take a look at our dedicated page for biofuel prices.