Many biofuels traders have experienced difficulties in recent weeks because of a perceived lack of clarity from RTFO on the correct verification protocols for biofuels from waste (so called “double counting” fuels and UCOME in particular). We believe these concerns to be largely unjustified, however there is evidence of a shift in emphasis by RTFO from purely documentary verification to a more system-oriented approach.
Biofuels and the RED
The Renewable Energy Directive (2009/28/EC), or RED, places member states of the European Union under an obligation to reach a target of 20% share of energy from renewable sources by 2020, and a 10% share of renewable energy specifically in the transport sector.
To achieve this target, blenders and distributors of road transport fuels are turning to biofuels such as ethanol from corn, wheat and rye, as well as biodiesel from various vegetable and animal oils. These are blended with conventional fuels to meet the target reductions in CO2 emissions.
Different biofuels offer different degrees of CO2 emission savings. The CO2 savings from different fuels are influenced by where they are grown, the kinds of fertiliser used, how it is harvested and how much energy is used in farming and conversion. Biofuel producers have to account for CO2 that is released during the cultivation, collection, conversion and transport of the biomass and biofuel.
Comparing the amount of CO2 released during production with the energy that the fuel delivers gives a GHG saving figure for that fuel. For a biofuel to qualify as a renewable fuel under the RED, it has to result in savings of at least 35% compared to the equivalent fossil fuel. From 1st January 2017 this figure will increase to 50%. In addition to the GHG saving, renewable fuels have to meet a number of other strict rules relating to land use, social factors and labour laws.
The benefits of producing biofuels from waste
There are a number of exemptions and special cases in the RED that make biofuels from waste particularly attractive:
- Fuels produced from waste do not have to meet the same criteria relating to reporting land use change and social factors, reducing the burden of proof on biofuels producers.
- CO2 emissions from cultivation of the biomass are considered to be zero for wastes: Only CO2 released from the point of collection of the waste through production and transport to the point of consumption is taken into account.
- CO2 savings from biofuels produced from wastes can be counted twice – a procedure known as “double counting”.
For these reasons, biofuels produced from waste are particularly valuable to blenders and distributors of transport fuels and tend to attract a premium in the market.
Wastes and residues used for producing biofuels
There are various kinds of wastes and residues that can be used to produce biofuels.
The RED itself defines a number of types of waste biomass, but this list is not exhaustive. Specific national schemes, such as the RTFO in the UK, publish more extensive lists of materials that are considered to be wastes and residues. Some materials are considered wastes everywhere, whereas others can only be considered as wastes in specific countries.
In general, any material that has an alternative use and therefore has economic value is NOT accepted to be waste: For example PFAD (palm fatty acid distillate from palm oil processing) and DDGS (corn or wheat dried distillers grain from ethanol production) are two examples of materials that are by products from the production of biofuels but which have other economical uses and therefore are not considered to be wastes.
Materials that are considered to be wastes for the production of biofuels under the RTFO (UK) include:
- Used cooking oil (UCO)
- Brown grease
- Tallow category 1
- Organic municipal solid waste (MSW) and food waste
Waste pressings from vegetable oils (olive skins, pips etc.)
- Crude glycerine (not glycerol)
- Manure and biogas
- Palm oil mill effluent (POME)
- Spent bleached earth
Unfortunately there is no comprehensive list of materials that are accepted as wastes across the whole European Union.
Proving that a feedstock is waste
Because of the financial incentives that attach to biofuels from waste, there is an increased risk of fraud around the usage of certain materials as feedstock to produce biofuels. Being able to provide objective evidence that a particular feedstock is waste is very important for the biofuel producer.
Within Europe there are often specific regulations relating to the movement and treatment of waste for reasons of environmental and public health. In the UK, for example, all carriers of waste have to be licensed and all movements of waste have to be recorded using a specific type of document (Waste Transfer Note or WTN). Being able produce WTNs or similar official documents that identify the feedstock as waste is good prima facie evidence that the biofuel will qualify for the benefits that attach to waste. In other parts of the world this is not so easy.
Where no official or regulated scheme exists to prove that the feedstock is waste, auditors or certification bodies may be asked to provide an objective opinion or assurance statement that the product is waste. Current RTFO guidance, reiterated at a recent suppliers and verifiers meeting (18th July 2012), is that it is important to trace evidence through the chain of custody to the source. For example, in the case of used cooking oil, it should be possible to find evidence of the original collection of the oil from restaurants or other catering establishments.
To do so the auditor should look at:
- Evidence that the feedstock has come from an authentic waste collection process, for example from collectors that are paid by a restaurant chain to dispose of their waste cooking oil or from a network of collectors that are licensed or dedicated to waste collection.
- Evidence of where specifically the waste has come from, such as a specific company, town or region. This information is also required to be able to calculate the distances that waste has been transported from collection to processing, to calculate the GHG cost of transport or to justify the use of a default value.
- Documentary evidence of the quantities of material that have been collected, whether expressed in volumes or weights, and of the calibration records for the devices used to measure those quantities. These documents should always be uniquely identifiable (e.g. have a unique serial number) and show:
- what the material is
- where the material came from and where it was delivered to
- date and time of delivery
- who delivered it (name, registration or license number of the vehicle)
- if there is more than one tank where the material is collected, which tank the material was loaded into
- The documentary evidence should cross-references any external records, such as customer order numbers, weighbridge dockets, laboratory analysis reports, seal numbers etc.
- Objective evidence of quality checks undertaken on the collected material, such as laboratory analysis records of water content, FFA content and (if available) carbon chain analysis. Specific tests that can differentiate between “virgin” product and waste are of course of particular interest, although these are few and far between.
Management information reports that allow the auditor to verify and to cross check the quantities of material collected against the quantity of biofuel produced are very important. Yield information over a reasonable period of time should be made available, including the use of any added material (bleached earth, alcohol) and the quantities of any by products and residues (such as waste water).
Any additional information or evidence that the feedstock is waste, such as plans and layouts of collecting plants, names and addresses of transporters, photographs of the plant and processes should be retained because they can add to the quality of any assurance statement issued.
If the collector and producer is processing waste on a continual basis, then it may be appropriate for the auditor or certification body to issue an assurance statement for the management system and not just a specific cargo. To do so, the auditor would also look for other information that demonstrates that the management system is effective and will continue to operate in a specific way. This information would include (as it would for any quality management system):
- A description of the process.
- Organisational structure and responsibilities within the system.
- Training records for operators in the system.
- Evidence that the organisation undertakes internal audits and periodic management reviews between external audits.
Voluntary schemes and certification
Because wastes are in important aspect of the RED, all the national, industrial and voluntary schemes are introducing specific processes and rules relating to the use of waste as a feedstock. This is a good thing for the entire industry because it raises standards and quality of information throughout the supply chain.
Where possible all organisations in the supply chain, including collectors and processors of waste, should consider applying for formal certification through national schemes or voluntary schemes such as ISCC. The benefits of doing so are:
- The initial certification process and periodic audit requirements increase confidence in the quality of information on the biofuels produced.
- Documentary evidence that is produced through the supply chain has a consistent content and layout which makes it easier for buyers and users to trade biofuels that are produced.
- The traceability requirements of a certified process such as ISCC means that sellers do not need to replicate large quantities of documentary evidence on the origin of the feedstock as all of this information can legitimately be summarised on a single sustainability statement, backed up by a periodic and externally verified audit process of the supply chain.
Schemes such as ISCC lay downs the information requirements for Delivery Orders and Mass Balance systems fairly prescriptively. Although these are not all applicable to waste collectors, as much information of this type as possible should be included on waste collection notes.
Resolving the present impasse
Many traders and suppliers complain that RTFO has taken a harder line in recent weeks with regard to verification of UCOME shipments. This may be unfair. The level of scrutiny has increased, certainly, however most of the questions raised by RTFO are perfectly legitimate. Nearly every assurance statement and RTFC claim reviewed has contained errors of some kind.
We believe some simple “best practises” can help to reduce the level of uncertainty and help suppliers and traders alike to navigate the system:
- Buyers should consider investing in a supply chain audit before engaging into a purchase contract for UCO or UCOME. This does not need to be excessively expensive and can usually be completed in less than 3 weeks. Considering that a typical shipment volume of over 5,000 tonnes out of the Far East can take up to 6 weeks in Europe, this investment is trivial.
- Shift the emphasis of contract review from purely documentary reviews to a system view. Having a document labelled “Waste Transfer Note” is meaningless outside most of the EU in any case. What is important is being able to evidence that a collection and aggregation network exists, that volumes and the route to the conversion plant are documented and that some kind of “mass balance” analysis has been performed: A WTN that states that exactly the same volume of UCO has been collected as UCOME shipped is clearly a fabrication as there are conversion losses in the collection, aggregation and esterification process.
- Consider the benefits of helping your suppliers apply for voluntary certification under one of pan-European schemes such as ISCC. Even though ISCC and other schemes remain reluctant to take a proactive stance on the issue of classification of wastes, the requirements for documentation and training, mass balance accounting, supply chain verification (square root of the number of suppliers) and periodic external audits are valuable disciplines which can only serve to increase confidence in the overall supply chain.
Stephen Oliver is an accredited ISO 9001, ISO 14064 and ISCC auditor and regularly undertakes supply chain and cargo assurance assignments for biofuels suppliers and traders. If you are a biofuel trader or supplier, Expraxis Limited can help you improve supply chain quality and reduce risk.