T&E: Palm oil in disguise? How recent import trends of palm residues raise concerns over a key feedstock for biofuels | 2025

Summary

T&E recently published the report "Palm oil in disguise? How recent import trends of palm residues raise concerns over a key feedstock for biofuels". This report is about the use of POME-oil, a residual oil from palm oil production as biofuel in the EU and UK. Their analysis suggests that more palm oil residues for biofuels have been reported in Europe than the range of possible availabability of POME-oil which points to potential risks of fraud.

T&E’s analysis demonstrates that the shift in the EU Renewable Energy Directive to phase-out unsustainable palm oil biofuels have been replaced by the use of palm residues such as the oil fraction from the Palm Oil Mill Effluent (POME) for biofuels. By promoting the use of waste and residues, used cooking oils (UCO) animal fats, and residues like POME oil have made up 40% of compliant biofuels in 2023.

According to the study, the consumption of POME-based biofuels in the EU have grown five fold between 2020 and 2023 (see figure). In 2023, almost two-third of biofuels derived from POME oil were used for Hydrotreated Vegetable Oil (HVO)drop in fuels making palm oil residues a significant feedstock for many renewable fuel producing companies. In 2023, Spain, Italy, Germany and the UK were the largest POME consuming countries in Europe.

The analysis by T&E shows that the reported POME material used in EU and UK biofuels surpasses their estimated global POME potential. In 2023, the POME materials used in the EU and UK reached around 2 million tonnes while the global POME potential was calculated to be around 1 million tonnes. T&E makes projection based on preliminary import data and suggest an contibuous growth of POME biofuels usage reaching 1.9 to 2.9 million tonne of oil equivalent in 2024.

The report thus warns about the suspicious POME-based biofuels which are labelled as renewable diesel. Fraud concerns have been raised by EU Member States and recognized by the largest voluntary scheme namely the International Sustainability and Carbon Certification (ISCC). T&E provides recommendations to address these risks, suggesting that stricter enforcement are needed including removing POME from the list of advanced biofuels from the RenewableEnergy Directive.

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Find more about the analysis and read the full report here or by downloading it on the right hand side.

Opinion from the Platform

According to an analysis by Carlo Hamelinck from studio Gear Up, the amount of POME used in EU and UK for FAME and HVO is in the (high) range of what is produced. As such, the current POME-based biofuels are not necessarily pointing to risks of fraud. Furhermore, T&E's prediction assumes that the use of POME will witness significant increase, however this is an expectation based on contibuous growth and thus does not necessarily reflect reality.

Nevertheless, the Platform agrees with T&E's concerns especially given the price trend with POME oil already approaching 90% of the price of palm oil, according to T&E. Potentially, this create an incentive for encouraging more residues for biofuel production and goes against another desire: to minimise residues. This also creates a risk of crude palm oil being used as POME-oil and we think the industry would be wise to act to prevent this from happening.

In additon, we support most of the main recommendations provided by T&E especially that POME should not be double-counted. However, this feedstock is listed on the IXA feedstock list (of the Renewable Energy Directive, RED) under which member states can report this feedstock double. According to the directive the listed feedstocks cannot be removed. However, member states may consider to no longer provide POME with double incentive in the market.

In addition, we see that in increasingly decentralised renewable fuel supply chains relying on geographically dispersed feedstocks, centralised interventions on the level of the European Commission will not be sufficient. In the context of the circular and bio-based transition, we must think of new ways of organising supply chains. This can be done by strengthening the information on renewable fuel supply chains through decentralised ledger technology and support better auditing to detect when fraudulent activities take place. With the start of the Union Database, we believe that the information position for monitoring these volumes in Europe will be strengthened.

The findings send out a strong signal from which the renewable fuel market must act upon. Building stronger information position to gain more trust in renewable fuel supply chains and the use of waste-based feedstocks is crucial to strengthen the role of renewable fuels in the transition.