T&E: ‘Renewable diesel’ sold by oil majors can contain fraudulent palm oil’

A new study from the NGO Transport & Environment (T&E) shows significant irregularities in the reported consumption of palm residues used in renewable diesel (HVO) being sold by oil majors.

A new T&E study shows that a key ingredient in the ‘renewable diesel’ sold in Europe is likely fraudulent. Nearly twice as much palm oil mill effluent (POME), a residue of palm oil production, is being blended into European biofuels than is available globally.

T&E says stronger policy restrictions and dedicated incentives for POME biofuels should be removed to avoid ‘waste’ biofuels simply being palm oil in disguise.

Oil companies offer a ‘renewable diesel’ product dubbed ‘HVO’, which on paper delivers significant emissions savings, sometimes up to 95%. A key component of this is POME, a watery sludge produced during palm oil production. POME may have accounted for a quarter of all HVO biofuels consumed in the EU in 2023.

Palm oil in disguise

Officially, over 2 million tons of POME oil were consumed in European biofuels in 2023. This is way above the 1 million tons estimated to be available globally, while T&E’s calculations show that the actual collection of POME oil is likely much lower in practice.

Conventional palm oil use in biofuels peaked at around 3 million tons in 2019 before falling 80% by the end of 2023. This is primarily due to the EU’s decision to phase out palm oil biofuels from renewable targets by 2030.

Meanwhile, waste-based alternatives like used cooking oil, animal fats, and residues such as POME are replacing it, now making up 40% of EU biofuels. T&E warns that there is concern that palm oil is simply entering Europe under a different name.

Cian Delaney, biofuels campaigner at T&E, said: “It appears a lot of POME could be just palm oil in disguise. This raises serious concerns about whether this renewable diesel or HVO is as green as oil majors say. We need to remove the policy incentives that enable dodgy biofuels feedstocks making their way into Europe as supposedly sustainable fuels.”

Reclassification needed

Spain, Italy, the UK, and Germany were Europe’s biggest consumers of POME in 2023. A third of Spanish biofuels came from POME, while Italy relied on it for nearly 20%. Germany’s POME consumption quadrupled between 2021 and 2022 but stayed steady in 2023, despite rising imports and falling biofuel prices.

The rapid increase in POME biofuel use in the EU has led to POME prices reaching nearly 90% of palm oil prices by mid-2024. This suggests that a reclassification of POME from residue to by-product may be needed if its value continues to rise, says T&E. European oil majors spent some €2 billion on POME in 2023.