A key ingredient for the renewable diesel sold in Europe is likely fraudulent, according to a new T&E study. Nearly twice as much palm oil mill effluent (POME), a residue of palm oil production, is being blended into European biofuels than is available globally. There needs to be stronger policy restrictions and dedicated incentives for POME biofuels should be removed to avoid waste biofuels simply being palm oil in disguise, according to the environmental NGO.

Oil companies are offering a renewable diesel product dubbed HVO, which on paper deliver significant emissions savings—in some cases up to 95%. A key component of this is POME, a watery sludge that is produced during palm oil production. POME may have accounted for a quarter of all HVO biofuels consumed in the EU in 2023.

Officially, more than 2 million tonnes of POME oil were consumed in European biofuels in 2023. This is way above the 1 million tonnes that is estimated to be available globally, while T&E’s calculations show that actual collection of POME oil is likely much lower in practice.

Conventional palm oil use in biofuels peaked at around 3 million tonnes in 2019 before falling 80% by the end of 2023. This is in large part due to the EU’s decision to phase-out palm oil biofuels from renewable targets by 2030. Meanwhile, waste-based alternatives like used cooking oil, animal fats and residues such as POME are taking its place, now making up 40% of EU biofuels. There is concern that palm oil is simply entering Europe under a different name, warns T&E.

Spain, Italy, the UK and Germany were Europe’s biggest consumers of POME in 2023. A third of Spanish biofuels came from POME, while Italy relied on it for nearly 20%. Germany’s POME consumption quadrupled between 2021 and 2022 but stayed steady in 2023, despite rising imports and falling biofuel prices.

The rapid increase in POME biofuels use in the EU has led to POME prices reaching nearly 90% of palm oil prices by mid-2024, suggesting that a reclassification of POME from residue to by-product may be needed if its value continues to rise, says T&E. €2bn was spent by European oil majors on POME in 2023.

In January this year, the Indonesian government published data showing that exports of POME in 2023 and 2024 far exceeded the Indonesian government's estimate of total capacity.