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Even as a new EU regulation approaches mandating its use, biodiesel and SAF production within Europe could be in big trouble, according to experts.

Last week, Shell announced that it would be putting construction of a Rotterdam facility on hold, and is expecting this to add up to non-cash impairments of up to $2bn this quarter.

Shell will “temporarily pause construction work at its 820,000 tonnes a year biofuels facility at the Shell Energy and Chemicals Park Rotterdam to address project delivery and ensure future competitiveness, given current market conditions”.

At the beginning of next year, airlines will be required to use a 2% proportion of SAF as part of their fuel mix, which rises to 6% by 2030 and 70% by 2050.

While this would appear to guarantee sufficient demand for Shell’s refinery, sources confirm that China is overwhelming Europe’s paltry biofuel production capability with its cheap biofuel exports.

Last month, Transport & Environment (T&E) revealed that European countries were importing almost all their used cooking oil (UCO) biofuel, with the UK in particular consuming some 15 times more UCO (1.93Mt) than the 0.13Mt it collected last year.

But incongruence between biofuel feedstock collection (such as UCO) and China’s biofuel export figures – as well as those of nearby Indonesia and Malaysia – makes plain that imported feedstocks of biodiesel and SAF are not what they purport to be.

However, EcoCeres, which has a plant in China and is building one in Malaysia, said it traced feedstocks. Its CCO, Jeremy Baines, told The Loadstar: “We spend so much effort in ensuring the traceability of the feedstock. So, for example, one of the main feedstock we use is used cooking oil, and the source of used cooking oil is restaurants.

“You need to collect the oil from thousands of restaurants to get the volumes that you need. EcoCeres has developed in-house software that we provide to our collectors and, as the collector goes from restaurant to restaurant, they scan in not only the volumes they’ve collected, but also the agreement from the restaurant for that transaction … it’s linked to GPS coordinates so you can see what time, what volume, what restaurant.”

But, he conceded this traceability didn’t cover all the collections –“ but we’re scaling it up”.

He added: “If there is fraud involved, and I think fraud is a separate issue, then it needs to be tackled as fraud.”

Cian Delaney, campaign coordinator at Transport & Environment, told The Loadstar:“ The impact of the recent flood of cheap, suspectedly fraudulent, biodiesel from Asian countries like China and Malaysia is a prime example of how imports can completely destabilise the market,”

Palm oil is more energy-rich than other oils, and its producers are able to apply agriculture’s efficiencies, standardisation and scalability. While it is unsurprising that biodiesel and SAF made from palm oil is drastically cheaper, it is considered more-polluting than fossil diesel, emitting similar CO2 at the funnel, and requiring extensive deforestation –undermining the case for its use. 

“It’s hard to imagine that an industry player would take a $2bn hit on a product if they truly believed in it,” said Mr Delaney. “Oil giants, such as Shell, BP and Chevron, are starting to backtrack on biorefinery development due to a lack of profitability and market predictability.

“This is surely a warning sign for any government relying on biofuels as an energy alternative for transport – they are endlessly problematic.”

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