EU Commission wraps up examination of potential Chinese biodiesel fraud

The European Commission announced July 18 that it has concluded its examination of fraud allegations notified by the German authorities in 2023 in relation to biodiesel imports from China.

The commission identified some systemic weaknesses in the way certification audits have been conducted and is taking action to address these issues.

Nevertheless, the information gathered did not allow confirmation of the existence of fraud, the commission noted, adding that the German authorities may perform additional verifications or investigations if they wish.

After obtaining a notification from the German authorities in March 2023 of the alleged fraud in imports of biodiesel from China, the commission undertook an assessment of the situation, as required under Article 30(10) of the Renewable Energy Directive (EU/2018/2001).

In close cooperation with the German authorities, it collected input from numerous stakeholders and reviewed audit reports from the voluntary certification scheme that certified the economic operators concerned. 

According to Article 30 (10) of the RED, the commission has the obligation to take a decision whether an EU country that has initiated an examination request can count the biodiesel subject to that request towards its national renewable energy targets. 

To tackle the risk of fraud in the biofuels market, the commission is undertaking a range of actions in the short and medium term, in particular in areas where the implementing regulation on sustainability certification (EU/2022/996) can be further strengthened. 

The commission has set up a working group with EU countries under a committee on the sustainability of biofuels, bioliquids and biomass fuels to reflect on a revision of the legal text.

“The working group has made good progress on additional measures that could better prevent fraud in the future,” the commission stated.

The commission plans to finalize the text after input from stakeholders in cooperation with EU countries early next year.

Furthermore, the commission said it is discussing with EU countries a timeline for the full mandatory deployment of the Union Database for Biofuels.

This EU global traceability system is functional and is being used by an increasing number of operators but its mandatory systemic use by all relevant businesses is a precondition for its success, the commission stated.

The commission will also continue its technical work on fraud prevention and effective sustainability certification to support the voluntary schemes with the implementation of the existing rules.

“These rules can tackle many of the identified cases if correctly and harmoniously applied by the certification bodies,” the commission said.

This work stream is also supported by the review of the current standards of voluntary schemes in cooperation with the European Co-operation for Accreditation and the accreditation bodies of the EU countries as part of the implementation of the new accreditation rules (under Article 11(1) of the implementing regulation on certification) by the end of this year.

“On the basis of the review of the current standards and the experience from examining the alleged fraud cases, the commission may request voluntary schemes to adopt and implement action plans or review the implementation of already-existing plans on fraud prevention,” the EU Commission stated.