Hydrotreated vegetable oil (HVO) is generally considered to be an effective and green, albeit slightly more expensive, alternative to diesel fuel. However, a new report by Transport & Environment (T&E) highlights a high probability of large-scale fraud along the supply chain. HVO, which is also in use in the rail freight sector, could not be as green as claimed after all.
The alternative fuel HVO is claimed to save as much as 90 per cent in emissions compared to traditional fossil fuels, like diesel. It is often produced using Palm Oil Mill Effluent (POME), a residue of palm oil production. The oily part of POME can be extracted and used as a biofuel.
Nearly two thirds of POME-based biofuels in the EU were used for the production of HVO. That could account for around a quarter of HVO consumption in Europe, made by companies such as Eni, Repsol, Shell, Total, BP, and Neste, according to a report by T&E. The use of POME in HVO seems like a fairly simply measure to reduce global carbon emissions.
Something does not add up
However, import data casts serious doubts over the residual nature of POME. T&E says that POME materials used in EU and UK biofuels reached two million tonnes in 2023. That is an unexpected figure, considering that the estimated global availability of POME is no more than one million tonnes. “Such mismatch suggests that fraudulent practices are likely happening along the biofuels supply chain.” In other words, a significant share of the imported POME may not be residual in nature at all. Rather, it could simply be palm oil in disguise.
European biofuel policies introduced in 2009 led to an increase in the consumption of palm oil. However, it also led to large-scale deforestation and human rights violations to allow for mass production. A revised policy from 2018 triggered a sharp decline of palm oil consumption in Europe. Rather, waste oils are now preferred, such as cooking oils and the POME palm oil residue.
Unsurprisingly then, imports of POME in Europe have grown explosively in recent years. For example, German POME consumption quadrupled between 2021 and 2022, and in Ireland and Belgium it grew 26 times and 14 times respectively (in 2023).
HVO has become an increasingly popular substitute for diesel in the rail freight sector. For example, DB Cargo has been trying to replace diesel in all countries in Europe where it operates. The operator told RailFreight.com that it is relatively easy to take into use, considering that all its locomotives can use it without the need for retrofitting.