Used cooking oil (UCO) biofuels now account for over one third of European biofuel consumption. To meet
this demand, Europe is heavily dependent on imports from third countries, causing fraud concerns to be
higher than ever. In a global supply chain ripe for fraud, we take a look at the certification system
responsible for verifying these biofuel products.
What is UCO fraud?
UCO fraud is when biofuels made from unsustainable feedstocks, such as palm oil, are fraudulently
reported as being made from UCO. It is difficult to determine whether a biofuel has been produced from
UCO or from an unsustainable feedstock due to their similar chemical and physical composition.
Laboratory analysis is limited in practice, and verification typically relies on auditing paperwork and
records along the supply chain, rather than actually testing the biofuel product.
The inherent problems of voluntary schemes
EU-endorsed “voluntary schemes” are responsible for overseeing these audits. The largest scheme
responsible for certifying UCO biofuels is the International Sustainability & Carbon Certification
(ISCC), with at least 1,275 valid UCO certificates registered on its online database. Voluntary schemes
have long been criticised as industry-governed, market-based mechanisms that certify companies as
sustainable to grant them greater accessibility to the market, rather than out of genuine environmental
concern.
Mass balance
A key problem is that voluntary schemes incorporate a “mass-balance” approach, where the physical
segregation of sustainable and non-sustainable products is not required. Instead, accounting documents
are responsible for tracking the details of products passing through the supply chain. These documents
are then audited. The mass-balance approach is highly susceptible to fraud, as these documents can be
falsified and open to the illegal practice of "multiple claiming".
Points of origin (PoO), such as restaurants, are where UCO is collected before being turned
into biofuel.
By overstating the volumes collected from a restaurant, a collector could report that a PoO
has provided more UCO than it actually has.
They can then use this overstatement of UCO to conceal volumes of unsustainable fuel on their
records.
Both feedstocks can then be processed into "UCO" biofuel and put on the market as a certified
sustainable fuel.
The adulterated, yet sustainably certified, UCO biofuel is then sold as a greener fuel at
European petrol stations.
Biofuel production facilities are where UCO is turned into biofuel. They are often also
certified as collectors.
A biofuels producer receiving 50 tonnes of UCO per month can be certified after having its
mass balance records successfully audited.
That producer then has that same UCO certified again through a different audit to receive a
second certificate.
Certified as receiving 100 tonnes of UCO per month across the two different certificates, the
producer can conceal 50 tonnes of unsustainable feedstock entering the production process.
Using the two certificates, the producer can now put 100 tonnes of the adulterated, yet
sustainably certified, UCO biofuel on the market.
The adulterated UCO biofuel is then sold as a greener fuel at European petrol stations.
Guaranteed traceability? Not quite…
Voluntary schemes supposedly allow full traceability of sustainable material throughout the supply
chain. However, this is misleading when it comes to fighting fraud. Being able to fully trace a
biofuel product cannot guarantee that product has not been illegally adulterated somewhere along the
supply chain.
This is compounded by the fact that the vast majority of UCO sources, such as restaurants, do not
need to be individually audited or visited in person for that UCO to be certified. Instead, they
just need to provide a self-declaration to their relevant collecting point stating their UCO is
compliant with the relevant certification scheme's sustainability criteria.
An audit of a UCO source, known as a “point of origin", is only required if it is supplying over 5
tonnes of UCO per month - a near impossible figure for any restaurant to reach. For a restaurant
providing UCO to be verified via an audit, it would need to cook more than 50 tonnes of
fries per month - equivalent to the average monthly production of 18 fast food restaurants.
Based on our analysis of ISCC-certified UCO collectors in China, Malaysia and Indonesia - the three
biggest exporting countries of UCO to Europe - only 9% of ISCC-certified UCO collecting points in
these three countries had a sample of their points of origin audited.
For the remaining 91% of collecting points, no audits were conducted to verify their sources of UCO.
Instead, a simple phone call, email or online search of a fraction of their points of origin to
check they exist was sufficient to verify all of their points of origin as certified UCO sources.
If not certification, then what?
The EU must stop relying on inadequate certification schemes and recognise the limited role they can
play in authenticating biofuel imports, whether it is from crops, waste or residues. While the
recently introduced Union Database for Biofuels has been touted as a means to fight fraud by
improving traceability, it is still reliant on certification - an ineffective means of verification.
It has also been heavily criticised by industry stakeholders and Member States alike, who claim it
is not fit for purpose and have called for its mandatory use to be postponed.
Other potential measures, such as third country cooperation frameworks and formal grievance
procedures or an ombudsman, offer limited benefits. The most effective way to prevent fraudulent
imports from entering the European market is to disincentivise the use of biofuels that originate in
third countries through effective policy reform. This means no longer allowing biofuels, such as
those made from UCO, from third countries to count towards EU and national renewable energy targets.
The EU should suspend its recognition of imported biofuels certified by voluntary schemes. It should
recalibrate its biofuel policies to exclude hard to certify, non-domestic biofuel feedstocks from
its green energy targets. The same fraud concerns outlined in this briefing also apply in the case
of other imported biofuel feedstocks that rely on voluntary certification schemes, such as animal
fats, intermediate crops and crops grown on severely degraded land. This is also logical from a
climate and energy perspective, as third countries need those waste feedstocks to decarbonise their
own economies
