At the heart of the issue is palm oil mill effluent (POME), a watery waste product of palm oil production. While POME is classified as a residue under EU law and is therefore eligible for sustainability incentives, T&E’s latest analysis suggests that much of the POME reported in Europe’s biofuel mix may in fact be conventional palm oil disguised as waste.
Global availability vs reported use
T&E reports that over 2 million tonnes of POME oil were consumed in European biofuels in 2023. This figure significantly exceeds the estimated global availability of 1 million tonnes, and T&E suggests the actual collectable volume is likely even lower. The discrepancy, says the NGO, strongly suggests widespread mislabeling of feedstocks.
Reported POME use in EU and UK biofuels far exceeds maximum available supply. Source: T&E, based on EU SHARES, UK RTFO and UN Comtrade.
“It appears a lot of POME could be just palm oil in disguise,” said Cian Delaney, policy officer at T&E. “This raises serious concerns as to whether this renewable diesel or HVO is as green as oil majors say it is. We need to remove the policy incentives that enable dodgy biofuels feedstocks making their way into Europe as supposedly sustainable fuels.”
HVO: marketed as green, but is it?
HVO—hydrotreated vegetable oil—is being positioned by fuel suppliers as a renewable diesel with emissions savings of up to 95% compared to fossil diesel. Fleet operators across Europe have increasingly turned to HVO to reduce their carbon footprint without requiring costly vehicle modifications.
However, if the feedstocks used to produce HVO are fraudulent, emissions savings may be vastly overstated. For transport companies—particularly those under pressure to meet ESG targets or who benefit from green procurement incentives—this raises critical compliance and reputational risks.
Shift from palm oil to waste-based alternatives
Conventional palm oil use in EU biofuels peaked at around 3 million tonnes in 2019, but fell by 80% by the end of 2023, largely due to the EU’s decision to phase out palm-based biofuels by 2030.
In response, fuel producers have shifted toward so-called waste and residue-based alternatives, including used cooking oil, animal fats, and POME. These now make up 40% of EU biofuels, according to T&E. But the NGO warns that without stronger oversight, palm oil may be re-entering the EU market under the guise of these wastes.
Major consumers: Spain, Italy, UK, Germany
T&E’s study highlights that the use of POME is particularly concentrated in four countries:
- Spain: A third of all biofuels consumed in 2023 were derived from POME.
- Italy: Nearly 20% of biofuels relied on POME.
- Germany: Consumption quadrupled between 2021 and 2022, before stabilising in 2023 despite lower prices and increased imports.
- UK: Also ranked among the top consumers of POME-based fuels.
Spain, Italy, the UK and Germany accounted for the bulk of POME biofuel use in 2023. Source: T&E, based on Eurostat SHARES and UK RTFO data.
These countries may now be especially exposed to potential regulatory or trade consequences if current POME feedstock volumes are found to be non-compliant with EU sustainability standards.
Rising prices raise questions
The rapid growth in POME use has had knock-on effects in commodity markets. T&E notes that by mid-2024, POME prices had reached 90% of palm oil prices, calling into question whether POME should continue to be classified as a waste residue rather than a by-product.
This distinction matters. Under current EU renewable energy regulations, waste feedstocks receive preferential treatment—including double-counting towards renewable targets and greater subsidy eligibility. If POME’s classification changes, both oil majors and hauliers who rely on it may see costs rise or lose access to financial incentives.
T&E estimates that €2 billion was spent by European oil companies on POME in 2023 alone.
Indonesia’s export data contradicts supply claims
The study also cites recent figures from the Indonesian government, which show that POME exports in 2023 and 2024 far exceeded the country’s own estimates of production capacity. This anomaly further supports the claim that some of the exported POME may not be genuine waste, but instead mislabelled palm oil or a blend of palm-based materials.
Indonesia is the world’s largest producer of palm oil, and its export figures carry significant weight. That its own government is raising red flags adds credibility to T&E’s accusations and increases the urgency for EU policymakers to act.
Call for policy reform
In light of the findings, T&E is calling for the removal of dedicated policy incentives for POME-based fuels, and for stronger verification mechanisms to ensure the integrity of biofuel feedstocks. The group warns that without reform, Europe’s renewable transport fuel targets risk being met with fraudulent inputs, undermining both climate goals and public trust.
For the logistics and road transport industry, the report presents a dilemma. On one hand, companies are under mounting pressure to reduce emissions and transition away from fossil fuels. HVO, marketed as a drop-in, low-carbon solution, has become a popular choice for fleets across Europe.
But with questions now being raised about the legitimacy of these fuels, transport operators may need to reassess their fuel procurement strategies. Key concerns include:
- Greenwashing risks: Companies promoting their use of renewable diesel could face scrutiny if the fuel’s sustainability claims are proven false.
- Contractual compliance: Some tenders and frameworks require documented emissions reductions; questionable feedstocks could jeopardise eligibility.
- Reputational damage: Firms seen to be using “dirty” biofuels may suffer backlash from clients and the public.
