Chinese resort island at centre of alleged fraud

The Chinese resort island of Hainan may be at the centre of a green fuel fraud, where biodiesel mixed with cheap feedstocks is mislabelled and exported to the EU to qualify for green fuel incentives, Bloomberg reported on 5 May.

The island had no capacity to convert used cooking oil (UCO) – the most obviously compliant feedstock – into biodiesel, the report said. Yet Hainan-registered companies exported 498,000 tonnes of biodiesel last year, making up 28% of China’s total outbound shipments, according to customs data compiled by Bloomberg

The island’s share of biodiesel exports increased to 31% in the first quarter of this year, with volumes at 205,000 tonnes. Almost all cargoes were shipped to the Netherlands, a large consumer market and EU trans-shipment hub.

Meanwhile, Chinese imports of palm waste and palm-based biofuel from Indonesia and Malaysia had surged, with Hainan-registered firms handling more than 60% of the country’s biodiesel imports in the first three months of this year, the report said.

China’s biodiesel production totalled 2.4bn litres last year – up by a third compared to 2021 – due to a surge in export demand, according to the US Department of Agriculture.

Germany’s Union for the Promotion of Oil and Plant Proteins (UFOP) wrote on 1 June that sharp falls in EU rapeseed prices were due to good global supply forecasts but also to imports of used waste oils and fats from China and biodiesel produced from them – used cooking oil methyl ester (UCOME) – totalling some 500,000 tonnes since the end of last year. At one point, prices fell below €400 (US$428)/tonne for the first time since November 2020, the report said.

“Doubts have been raised in industry circles about the correctness of the certifications and required proofs of raw material origin,” UFOP said.

Waste biodiesel imports pressure EU sector

The EU rapeseed sector is under pressure due to a huge increase in imported waste-based biodiesel, according to FEDIOL, the trade association representing the EU vegetable oil and protein meal industry.

Imports of biofuels classified as waste-based – such as hydro-treated vegetable oil (HVO) or fatty acid methyl esters (FAME) – were taking place at such scale that it had led to serious disturbances in the EU markets for rapeseed methyl ester, and consequently the rapeseed and rapeseed oil markets, FEDIOL said on 25 May.

Over the last five months, rapeseed oil prices had fallen by over 30% to €800 (US$857)/ tonne, driving down physical rapeseed prices for spot delivery from €625 (US$669)/tonne to €410 (US$439)/tonne, FEDIOL said. “The magnitude of biodiesel imports’ growth ... raises questions on the authenticity of their ... origination from waste streams.”

Neste completes Singapore expansion, doubling SAF capacity

Finnish renewable fuels producer Neste announced the opening of its expanded €1.6bn (US$1.72bn) sustainable aviation fuel (SAF) refinery in Singapore on 17 May, doubling its production capacity there to 2.6M tonnes/year, of which up to 1M tonnes could comprise SAF.

The project also established a SAF supply chain to Changi Airport, with Neste acquiring a stake in fuel storage and infrastructure joint venture Changi Airport

Fuel Hydrant Installation Company Pte Ltd (CAFHI) so that it could offer its blended SAF directly to airlines there.

Neste’s total SAF production capability would be 1.5M tonnes/year by the end of this year following the completion of modifications at its Rotterdam refinery, and 2.2M tonnes by the first half of 2026 following the expansion of its Rotterdam refinery, the company said.

The 1.3M tonnes/year plant would increase Neste’s SAF capacity by up to 1M tonnes/year, in addition to a 500,000 tonnes/year project at its Rotterdam plant, Neste executive vice president Carl Nyberg told Reuters on 5 April.

The Singapore expansion and production from a new joint venture plant in California with Marathon Oil Corp would increase Neste’s biofuels capacity from 3.3M tonnes/year to 5.5M tonnes/year by the end of this year, Nyberg said.

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