Current POME-based biofuels in EU fall within current production potential

sGU numerical analysis following T&E report on POME

Summary

Transport & Environment (T&E) recently reported that around 2 million tonne of POME-based biofuels have been consumed in Europe and that this is more than what should be expected from palm oil residues.
studio Gear Up’s analysis concluded that the POME used in European consumed biodiesel is likely around 2 million tonne in 2023, while the production of POME ranges between 1.2 and 2 million tonnes, so the consumption is around the maximum of what is produced but we cannot confirm that the consumption is (already) larger than the production.
sGU agrees that more vigilance is needed when waste-residues are used for the production of renewable fuels as their stimulation in the EU promotes risks of fraud.
sGU believes that a better system must be developed to increase the information position of renewable fuels especially on the downstream side to detect fraud more quickly.

T&E analysis pointing to larger amount of EU POME-based biofuels than potential residue production

European NGO Transport & Environment (hereafter T&E) published a report on the use of residues from the palm oil industry that are used to produce biofuels for the European market.^[1] Their analysis points that the amount of biofuel produced from the oil fraction in Palm Oil Mill Effluent (POME), a by-product of the processing of palm oil is outside the range of what can be possibly made available based on the global production of palm in 2023. According to this report, the amount of POME used in EU and UK for the production of Hydrotreated vegetable Oil (HVO) as drop-in fuels has reached about 2 million tonnes in 2023. T&E uses preliminary data to calculate future volumes suggesting a large increase in 2024.

sGU numerical analysis concludes that current POME-based biofuels in EU falls within current production potential

We calculate that the current production of POME-oil falls between 1.2 million tonnes and 2 million tonnes. POME is a residue resulting from the extraction of crude palm oil (CPO) and comprises largely of wastewater^[2] (typically 95%^[3]). POME is referred to as a waste product can be harmful when discarded into the environment without prior treatment process.^[4] Typically, POME contains 0.6% to 0.7 % of POME-oil.^[5]

The amount of POME from CPO production is more difficult to estimate as it varies largely depending in the quality of raw material, time of operation treatment and season.^[2] And it varies from 2.5 to 3.5 time the volume of CPO.^[6] Therefore, we estimate the POME production to range between 200 and 280 million tonnes, hence the POME oil production between 1.2 and 2 million tonne.^[7]

Thereafter, we evaluated the probable use of POME in major European Member States^[8] and in the UK^[9] which confirms the T&E estimates that about 2 million tonne of POME-oil was likely used in EU biofuels in 2023. EU consumption is close to global production in 2023, but we cannot confirm whether it is already surpassing production.

sGU reflections and recommendations

studio Gear Up agrees that the increasing use of POME residue for EU biofuels may be a source of concern. However, the recommendations brought forward by T&E are not sufficient to address the risk of fraud related to the use of palm residues.

Prioritising the production of biogas from POME in producing countries for local decarbonisation is a nice recommendation but the European Commission cannot stimulate this. Using less POME-based biofuels in Europe will not increase the use of POME for biogas production in countries of origin.
European regulation stimulating the production of waste-based biofuels inherently makes the use of residues more economically attractive. sGU agrees that POME should not be double counted yet this does not inhibit the collection of POME which would remain sufficiently attractive. Removing POME from the IXA feedstock list is another recommendation by T&E. according to the directive however, listed feedstock cannot be removed. Instead, Member States may consider removing double incentives in the market for POME.
A stronger system must be put in place to increase the information position of renewable fuels and their feedstock early in the supply chain. With the start of the Union Database, the information position for monitoring these volumes in Europe will be strengthened.
A better understanding of historical fraction of POME-oil is recommended to detect more quickly. The historically reported POME-oil productions allow to spot whether unusual increases have taking place in recent years. This should be complemented by fraud investigation unit at the European Commission and more regular auditing at palm oil mills.

In conclusion, the stimulation of residue-based biofuels goes against another goal, the one of minimising residues. The optimisation of the flow of product and residues will always be subject to economic consideration to obtain the best total value.