Is China Engaged in Biodiesel Fraud?

The EU-based trade association for waste-derived biofuels, EWABA, warned in early June that the drop in market prices could lead to the closure of some European manufacturers.

“The situation is so serious that currently eleven of our member companies have stopped production and another 10 facilities are working significantly below their normal production and are considering suspending production in the short term,” EWABA said in a press release. This means that nearly half of all production sites in Europe are struggling or already closed production facilities.

Baumann said that the problem with advanced biofuels is that “even in the laboratory, it isn’t possible to determine the raw material from which the fuel was made.” Content control would solely rely on “the paperwork” provided to the authorities, he added, which manufacturers use to document their production, the origin of the raw materials, and the greenhouse gas reduction.

However, EU certification requirements do not mandate that private auditing companies investigate whether a facility can even process the mostly heavily contaminated raw materials for advanced biofuels, Baumann noted.

Furthermore, auditors should normally be accompanied by a state official to see if checks are according to the law. In China, he said, “random checks are not allowed as the Chinese government prohibits the entry of foreign state representatives.”

Small wonder then that European biofuel companies are increasingly wondering if advanced biofuel from China is really made from waste and residual materials, or something else.

The Palm Oil Trace
In the search for clues about what makes China’s advanced biofuels so cheap, the spotlight has recently trained on palm oil as a forbidden ingredient.

The cheap oil is controversially discussed in the multiple sectors where it’s used, including the food industry, energy production, cosmetics and fuel for transportation. Palm oil is linked to the destruction of rainforests in countries like Malaysia and Indonesia which are among the world’s biggest producers and exporters of the oil.

In view of this, the EU has revised its biofuel policy to phase out palm oil-based biodiesel by 2030. From 2023, palm oil imports to the bloc have been capped.

Lobbyist Elmar Baumann said that a senior executive told him a few months ago about a visit to China where he saw ships from Indonesia arrive. The executive was told that the ships carried Indonesian biodiesel made from palm oil which would be rebranded in China and sold to Europe. 

Further evidence about China’s allegedly fake biofuels reached the German agricultural authorities charged with biofuel certification in March. They launched an official investigation and filed a lawsuit against some importers with the public prosecutor’s office in Bonn, Germany.

But by the end of June, neither the German government nor the European Commission has found enough evidence to support their cases. Nevertheless, they have revoked certifications for one company following inspections of three biodiesel plants in Europe.

German biofuel producers aren’t happy with the outcome of the probe. Elmar Baumann demands that the entire biofuels certification process be reviewed.

“Given the deficiencies in certification practices and the lack of independent controls in China, the German government must suspend the double counting for such biofuels in the short term,” he said.

Verbio CEO Sauter warns that in the future so-called greenwashing could happen in more industries, including steel, aluminum, and notably hydrogen.

“Each of these products has a fossil sibling. There could be Chinese ships full of supposedly green hydrogen that might actually have been produced from Russian gas,” he said, adding that China’s fake products might eventually kill off local German industries and in the end increase dependence on the Asian powerhouse.

Insa Wrede is a DW journalist. This article is published courtesy of Deutsche Welle (DW).