According to T&E, to prevent "residual" biofuels from being simply palm oil in disguise, more stringent policy restrictions and specific incentives for POME biofuels must be eliminated.
Oil companies offer a "renewable diesel" product called "HVO" (Hydrotreated Vegetable Oil, a synthetic fuel obtained from used vegetable oil), which on paper represents significant emissions savings, in some cases as much as 95%. However, a key component is the POME, a watery sludge produced during palm oil production. POME could have accounted for a quarter of all HVO biofuels consumed in the EU by 2023.
Officially, more than 2 million tons of POME oil were consumed in European biofuels in 2023. This figure is far higher than the estimated 1 million tons available worldwide, while T&E calculations show that actual collection of POME oil is likely much lower in practice.
The use of conventional palm oil in biofuels peaked at around 3 million tonnes in 2019 before falling by 80% by the end of 2023. This is largely due to the EU's decision to phase out palm oil-derived biofuels from its 2030 renewable energy targets. Meanwhile, waste-based alternatives, such as used cooking oil, animal fats, and residues like POME, are taking their place and now account for 40% of EU biofuels. There are concerns that palm oil is simply entering Europe under a different name, warns T&E.
Bosco Serrano Valverde, head of sustainable fuels for aviation and marine, said, "It appears that much of the POME, although classified as waste, could simply be palm oil in disguise. This raises serious questions about whether this renewable diesel or HVO is as environmentally friendly as Big Oil claims. We need to eliminate the political incentives that allow biofuel feedstocks of dubious origin to make their way into Europe as supposedly sustainable fuels."
Spain, Italy, the United Kingdom, and Germany were the largest European consumers of POME in 2023. A third of Spanish biofuels came from POME, while Italy relied on it for almost 20%. POME consumption in Germany quadrupled between 2021 and 2022 but remained stable in 2023, despite rising imports and falling biofuel prices.
The rapid increase in the use of POME-based biofuels in the EU has led to prices for this derived raw material reaching almost 90% of virgin palm oil prices by mid-2024. This market trend suggests that a reclassification of POME from residue to by-product may be necessary if its commercial value continues to rise, as T&E has warned. In 2023, European oil majors spent €2 billion purchasing POME.
