Biodiesel and EU Imports from China

ISCC keeps the public informed about the current topic of suspected cases of mislabeling of advanced biodiesel through our website, newsletters and system updates. On this page, all of the information is bundled for a simplified overview. As the situation develops and our investigations progress, we will publish more information in our email communications and on this webpage. For immediate updates, we invite you to register for our newsletter, which will keep you informed with the latest developments, research, and events on this topic and others.

Communication Timeline

Press Release 27 July 2023

Since February, ISCC has been made aware of potentially fraudulent behaviour regarding unusual trade volumes in the field of biodiesel made from waste and residues coming from China. Furthermore, ISCC was told that the increase of up to half a million tons of biodiesel from China caused a dramatic fall in biodiesel prices in European markets.

ISCC has reacted immediately by initiating unannounced integrity audits at both randomly selected biodiesel and HVO plants in China, as well as at economic operators, which have been reported to ISCC by authorities and other stakeholders. In this process, seven certificates have been withdrawn or temporarily suspended so far. However, the sanctions of these seven economic operators did not conclusively indicate criminal behaviour.

ISCC is in contact with the authorities of the European Commission and the German Federal Office for Agriculture and Food (Bundesanstalt für Landwirtschaft und Ernährung (BLE)), which operates the governmental web application for sustainable biomass Nabisy. The BLE filed charges against some economic operators at the public prosecutor’s office in Bonn, Germany. ISCC is providing all required information to these authorities.

“‘With over 8,000 companies worldwide placing their trust in ISCC, we continue to take the integrity of the certification system very seriously. Certification systems need to continuously adapt to deliver what they are designed for: Trust.’ stated ISCC Managing Director Andreas Feige. ‘To that end, certification systems need to weed out those using the system with bad intentions.’”

ISCC takes this responsibility very seriously as a voluntary scheme recognised by the European Commission under the Renewable Energy Directive (EU) 2018/2001 (REDII). ISCC’s responsibility is to set the system rules under which the cooperating Certification Bodies control and subsequently certify the companies, known as Economic Operators. They assess the Economic Operators along the supply chain as to whether they meet the sustainability and greenhouse gas emissions savings criteria of the RED II.

To promote the circular economy and reduce the competition between crop production for food and energy use, the RED II encourages a shift of biofuels made from crops to the use of wastes and residues. It offers the possibility to claim greenhouse gas emission savings by twice their actual amount – known as “double counting” – thus creating incentives to prioritise the production of biofuels from specific wastes and residues materials. While reducing the competition between food and energy uses, double counting also creates incentives for fraudulent behaviour by operators who, for example, could falsely declare fresh produced biofuel feedstocks as wastes or residues.

ISCC has continuously strengthened its auditing procedures over the last few years to control and mitigate such relabeling. It will continue to tighten the requirements for residue and waste-based biofuels as it observes new attempts to violate the spirit of the RED. This makes the certification process more rigorous, reduces the likelihood of non-conformities occurring, makes them easier to be detected, and reduces the incentives for fraudulent behaviour. While a certification system can detect and sanction cases of non-compliance, it is not a law enforcement authority that can legally identify and sanction fraudulent activities. Nevertheless, ISCC contributes as much as possible to make its certification procedures even more watertight.

News from 26 June 2023

Improved Communication and Information Exchange Between Voluntary Schemes in Case of Certification-related Issues

In response to the discussions about the European biodiesel market being flooded with vast quantities of Chinese biodiesel with partially doubtful declarations of origin and feedstock, the voluntary schemes ISCC, 2BSvs, KZR Inig, RSB and REDcert have agreed to improve their already established communication channels for exchanging certification-related information. 

As all schemes already provide a publicly available and up-to-date list of certificates indicating the status and scope of an economic operator’s certification – including the certification history under the particular scheme – there will now be a systematic and immediate exchange of suspended and withdrawn certificates between those schemes. The sharing of this information will contribute to the common goal of preventing economic operators from ‘scheme hopping’ as a result of suspended or withdrawn certificates. The exchange of such information allows all voluntary schemes to cross-check new applicants’ background, particularly their certification history and any related incidents, before they are accepted/contracted under a scheme.

The voluntary schemes have also agreed to establish a regular platform for collaboration, where system updates and continuous improvement processes can be discussed and harmonised in a mutual and proactive way.

System Update from 09 June 2023

FAQ About the ISCC System Updates Content of 18 and 28 April 2023

Some questions were raised about specific requirements on the content of the ISCC System Update on 18 April and the ISCC System Update on 28 April 2023. You can now find the related questions and answers on the ISCC website.
 
We would further like to specify the following points of the System Update, valid as of 01 August 2023 for initial and recertification audits conducted from this date onwards (earlier application is possible):
 
1. Audits for individually certified Points of Origin, Collecting Points, and Central Offices handling waste/residues from processing of animal or vegetable oils / soapstock, food waste, POME oil, brown grease/grease trap fat, sewage sludge and/or UCO need to be conducted under high risk level.
ISCC EU System Document 204 “Risk Management” provides the guideline that for audits with high risk level, the documents from three consecutive months should be checked. We herewith clarify that in cases where the amount of documents from three consecutive months exceeds a reasonable audit scope (e.g., due to high numbers of deliveries from small PoOs such as UCO from restaurants), the sample size of the documents can be reduced. If the audit includes sampling of third-party locations, e.g., Points of Origin or storage facilities, the minimum sample size must be multiplied with the risk factor 2.0.
 
ISCC will discuss more detailed indications for high-risk audits to reduce the risk of fraud and provide further information shortly.  
 
2. For waste/residues materials that are generated at an oil mill, refinery or other processing unit, the information of the Point of Origin (name and address) must be forwarded on Sustainability Declarations. We herewith clarify that this requirement is limited to Collecting Points and Central Offices (for groups of Points of Origin) forwarding waste/residue materials that were generated from processing units. Collecting Points and Central Offices need to indicate the name and address of the Point(s) of Origin on the Sustainability Declaration to their recipients. ISCC will shortly provide adapted templates of Sustainability Declarations that include a field for the relevant information.
 
3. Modification of the requirement that the certificate of Collecting Points will have to be suspended for 40 days by the CB if no material was collected within the first three months of the validity period of the certificate: After considering stakeholder feedback received, this requirement has been modified. As described in the ISCC System Update of 18 April 2023, System Users may not be certified as a Collecting Point if no materials are collected from Points of Origin with self-declarations. If a recertification audit identifies that in the previous certification period, no material was collected, the scope Collecting Point must be removed from the certificate.
 
If it was not possible to collect material reasonable and verifiable reasons must be presented to the auditor. If deliveries from Points of Origin are expected for the next certification period, and this can be demonstrated by the Collecting Point the scope can be included on the certificate again. Further guidance will be provided in due time.
 
Also, ISCC will update the due-diligence processes and requirements for new registrations with ISCC to verify that the certified scope is applicable.
 
4. The individual certification as Point of Origin for Palm Oil Mills and Refineries will be mandatory. This applies to all kinds of refineries (not only to refineries handling palm-based materials)
 
We would like to point out that individual on-site audits for all Palm Oil Mills supplying liquid waste and residue materials is already obligatory since 01 November 2022. In this regard, the individual certification will permit an easier certification process, as the concerned Points of Origin can choose Certification Bodies depending on their availabilities instead of being covered by the same Certification Body that conducts the audit of the certified Collecting Point.
 
5. Material deliveries to barges and vessels require storage facilities at the port that need to be covered by a mass balance and fulfill the requirements of a Dependent Collecting Point/Dependent Storage Facility. We herewith clarify that this requirement is applicable for cases in which the material needs to be transferred from one container to another at the port. The requirement does not apply to already packaged goods in e.g., ISO standardized shipping containers.
 
6. Non-compliant Points of Origin (PoO) for waste and residue materials will be excluded as suppliers of sustainable material for five years and cannot be covered under the respective certificate of any Collecting Point. They must be removed from the supply base immediately.
 
This does not apply to farms and plantations supplying agricultural residues.
 
Non-compliant means that the supplied material of the Point of Origin does not consist exclusively of the waste or residue material indicated in the Self-Declaration, the requirements on the signed Self-Declaration are not fulfilled, or the Point of Origin denies the access to the auditor.
 
ISCC will inform Certification Bodies and System Users about PoOs that were added to the list via notification email.
 
Please note that the FAQs will be updated continuously.

Publication of FAQs on 30 May 2023

Some questions were raised about specific requirements on the content of the ISCC System Update on 18 April and the ISCC System Update on 28 April 2023. ISCC is currently working on the provision of further details regarding some requirements, and the page will be in constant update, publishing answers soon.

Newsletter from 16 May 2023

Update on Suspected Cases of Mislabelling of Biodiesel

In our newsletter from 20 April 2023 and the System Update from 28 April 2023, we informed stakeholders about the actions taken by ISCC to reduce the risk of potential fraud in waste- and residue-based supply chains and identify non-compliant System Users. ISCC has initiated the following actions:

• Unannounced integrity audits
• Follow up with stakeholders
• Discussion with laboratories and customs authorities
• Engaging with other voluntary schemes to ensure a level playing field
• Implementation of tightened system requirements
• Development of yield guidelines for waste / residue points of origin

Unannounced Integrity Assessments

70 unannounced integrity audits have been initiated by now. The unannounced ISCC Integrity Assessments follow strict rules including prompt submission of traceability documents within a given 3-days-deadline. As a result of this action, six certificates have been withdrawn as the companies had not responded within the timeline.  Three certificate holders are subject to on-site audits in China which are conducted in close cooperation with the Certification Body and authorities of an EU Member State.

ISCC is currently in the process of reviewing the received documents to establish a better overview of waste and residue material in and outflows, as well as final biofuel production volumes of biodiesel and HVO plants in China. This overview will serve as a basis to identify unplausible amounts of material and to initiate further actions.

Follow up with Stakeholders

ISCC is in a continuous dialogue with System Users, Certification Bodies, authorities, associations, the European Commission, and other voluntary schemes to closely monitor the current situation and to provide answers to incoming questions. This exchange supports our ongoing efforts to improve the certification standards, increase compliance mechanisms, and promote sustainable practices.

Discussion with Laboratories and Customs Authorities

ISCC is in discussions with laboratories about methodologies to distinguish between different kinds of raw materials and products to prevent mislabelling. So far, the focus of these discussion has been on virgin oil from used cooking oil and derivatives such as biodiesel and HVO. These laboratory tests may facilitate the identification of wrongly declared materials. We are in a continuing dialogue with Member States authorities and customs authorities to evaluate the effectiveness of laboratory tests in the context of the suspected re-labelling of materials.

One Level Playing Field

ISCC is in contact with other voluntary schemes that are recognised by the European Commission under RED II. ISCC has made suggestions  to further facilitate transparency, cooperation and a level playing field amongst the schemes. We consider a level playing field for the prevention of scheme-hopping, and for non-compliance with the system requirements under the different voluntary schemes as an important basis for System Users, and the overall integrity of certified supply chains.

Strengthened Requirements for Waste and Residue Supply Chains

ISCC implemented a portfolio of strengthened system requirements for waste and residue supply chains, as can be seen in the ISCC System Update from 28 April 2023  for further details. Some requirements entered into force with immediate effect, others will become effective from August 2023 onwards.

Implement Yield Guidelines for Waste / Residue Points of Origin

The development of yield guidelines will follow the path already taken for points of origin for liquid wastes and residues from palm oil mills.  The ISCC Guidance Document for the Audit of Waste and Residues from Palm Oil Mills defines thresholds for oil from palm oil mill effluent, empty palm fruit bunches, and pressed palm fibres. Similar to this, in a constructive stakeholder dialogue, ISCC will develop and publish thresholds for other waste/residue materials to provide clear indications for audits of System Users handling the relevant materials.

Non-Conformities / Consequences in Case of Fraud

Critical non-conformities have a severe impact and include e.g.

• Intentional violation of ISCC requirements, for example, fraud
• Modification of production processes to deliberately generate waste or residues
• Deliberate contamination of materials to generate waste or residues
• Intentional false declaration of waste or residues

If critical non-conformities are found, the certification body must withdraw the certificate immediately. Further, ISCC can exclude System Users from recertification with ISCC for up to 60 months. These sanctions will also be applied if fraud cases are confirmed during the ongoing investigations.

ISCC Integrity Assessments

The ISCC System implemented years ago a dedicated Integrity Programme to monitor the certification activities of certification bodies and the compliance of System Users, auditors, and certification bodies with ISCC requirements. It is complementary to the work of accreditation bodies and government supervision. The assessments are conducted by ISCC Integrity Auditors who work on behalf of ISCC and are independent and free from conflicts of interest. Integrity Assessments can also be performed at the office of certification bodies. Please see ISCC EU Document 102 “Governance” for further information.

System Update from 28 April 2023

Strengthened Requirements for Waste and Residue Supply Chains

Based on recent experiences and findings during Integrity Assessments, especially the denial of access to Point of Origins and negligent declaration of wastes and residues, ISCC herewith defines further requirements for the certification of waste and residue supply chains under ISCC EU (such as waste/residues from processing of animal or vegetable oils / soapstock, food waste, POME oil, brown grease/grease trap fat, sewage sludge and UCO supply chains). Recent developments further demonstrate that some ISCC regulations were not taken sufficiently into account for every audit, thus, this System Update also emphasizes and focuses on aspects that were already implemented prior to this System Update but are especially crucial in the context of waste and residues supply chains. 

Preamble: Wrong declaration of material is considered a critical non-conformity and leads to the immediate withdrawal of a certificate. 

The following requirements will become effective as of 01 August 2023 for initial and recertification audits conducted from this date onwards (earlier application is possible):

1. For audits (certification and surveillance audits) of all System Users that handle waste/residues from processing of animal or vegetable oils / soapstock, food waste, POME oil, brown grease/grease trap fat, sewage sludge and/or UCO the risk level must always be high.

2. For waste/residues materials that are generated at an oil mill, refinery or other processing unit: The information of the Point of Origin (name and address) must be forwarded through the supply chain on Sustainability Declarations and Proofs of Sustainability.

3. A Collecting Point can only be certified under ISCC if an up-to-date list of Point of Origins is available, at least one Point of Origin is listed with a valid Self-Declaration and deliveries from at least one Point of Origin are expected within the first 3 months of the validity of the certificate.

4. The certificate of Collecting Points will have to be suspended for 40 days by the CB if no material was collected within that time period. For initial audits the certificate must be suspended immediately if during the mandatory surveillance audit six months after the initial certification, it is found that no material was collected within the 6 months-period. This does not apply for agricultural waste and residue supply chains. During the 40 days, the Collecting Point must implement corrective measures, i.e. schedule the collection of the respective material immediately and provide evidence to the certification body. The Certification Body shall end the suspension period to enable the transaction. If corrective measures cannot be implemented within the 40 days period, the Certification Body must withdraw the certificate. This requirement is also applicable if the System User is certified for multiple scopes.

5. All certificates will require a material annex per scope. On the material annex(es) of certificates the Certification Body must indicate which scope handles which materials (applicable if more than one scope is covered by the certificate). The Certification Body has to add this information for every certified scope.

6. The individual certification as Point of Origin for Palm Oil Mills and Refineries that want to supply waste and residues material under ISCC will be made mandatory.

7. All material deliveries to barges and vessels require storage facilities at the port that need to be covered by a mass balance and fulfill the requirements of a Dependent Collecting Point/Dependent Storage Facility to be covered by an ISCC certification.

8. If it is found in an audit that the supplied material of the Point of Origin does not consist exclusively of the waste or residue material indicated in the Self-Declaration, the requirements on the signed Self-Declaration are not fulfilled or if access to auditors is not granted by the Point of Origin, Certification Bodies and System Users will be informed by an ISCC notification via email and the Point of Origin will be listed on the ISCC website as non-compliant.Non-compliant Points of Origin cannot be covered under the respective certificate of the Collecting Point and have to be removed from the supply base immediately.

9. The Certification Bodies must review the list of non-compliant Points of Origin during each audit and check whether the System User is supplied by a non-compliant Point of Origin. If the System User is supplied by a non-compliant Point of Origin the Certification Body must include this Point of Origin to the sample irrespective of the amounts of material supplied to the System User. 

Additionally, from now on the following requirements must be complied with in all initial and recertification audits. Newly established regulations listed below will, thus, also become effective from now on:​​​​

10. The Collecting Point is responsible for the traceability and correct declaration of the collected material. This includes that the Collecting Points must check the plausibility of the received amounts of material for each delivery from a Point of Origin and assess whether the collected amount is verifiable.

11. Material declarations on the Sustainability Declarations must be consistent with the ISCC material list. For cases where the legally required material description in the export documents does not match the ISCC material list, the Sustainability Declarations must not reflect the export declarations but the wording from the ISCC material list.

12. Fulfilling the traceability requirements of the material back to the Point of Origin is mandatory, meaning that access must be given to Point of Origins for any auditor of Certification Bodies or ISCC Integrity Auditors. When signing a Self-Declaration, the Point of Origin allows on-site access for auditors of Certification Bodies and ISCC Integrity Auditors. If an auditor requests access to a Point of Origin, it is the responsibility of the Collecting Point to ensure that the access is granted.

13. If access to a Point of Origin is not granted, the Certification Body and/or ISCC will impose sanctions accordingly. If access to a liquid waste and residues supplying Point of Origin at a Palm Oil Mill or Refinery is not granted, the certificate of the Collecting Point must immediately be withdrawn by the Certification Body.

14. The Certification Body must inform ISCC immediately about non-compliant Points of Origin.

15. After each audit of a Collecting Point, the Certification Bodies must submit the updated list of Points of Origin for each audited material to ISCC.

16. The list of Points of Origins must always be kept up-to-date and shall be made available to the Certification Body and/or ISCC upon request. For the following ISCC materials, specific conditions will further need to be considered:

• POME oil: The material requirements from the ISCC material list must be fulfilled. The ISCC Guidance Document for the audit of waste and residues from Palm Oil Mills must be followed.
• Sewage sludge: Point of Origins for sewage sludge can only be wastewater treatment facilities. The ISCC eligible material sewage sludge is a remainder of the wastewater treatment process.
• Brown grease / grease trap fat: Points of Origin with valid Self-Declarations must fulfil the material requirements from the ISCC material list. Material removed from the sewage system cannot be classified as brown grease / grease trap fat. It shall be checked during the audit if the listed Point of Origin generates brown grease / grease trap fat.
• UCO: Points of Origin with valid Self-Declarations must fulfill the material requirements from the ISCC material list. Municipal UCO collecting stations such as public containers must be audited on-site on a sample basis, irrespective of the amount of material collected from each collecting station.

Thresholds for different waste categories will be developed together with System Users and Member States and successively published. ISCC will implement trainings adapted for Point of Origins. 

Newsletter from 20 April 2023

Recent Suspected Cases of Mislabelling of Advanced Biodiesel

In recent weeks, ISCC has received communications from stakeholders expressing concerns about a surge of advanced biodiesel¹ imported from China and produced from waste and residue materials that are at least partly supplied from Indonesia and Malaysia. This sharp increase began in late 2022 and peaked in January and February 2023, with serious implications for the European biofuels market and indications pointing to a potentially dubious or fraudulent origin of these trade flows.

ISCC Response to the Situation

ISCC has already intensified its work on mitigation measures. As a result, ISCC’s Integrity Programme has focused on Asia since last year and additional Integrity Assessments have been conducted at Points of Origin. ISCC Managing Director Andreas Feige traveled to the region to discuss the situation and possible measures with affected System Users and Integrity Auditors, and the capacity of Integrity Auditors in Asia was expanded. Furthermore, ISCC requirements were strengthened, as communicated in the ISCC System Updates. This included for example a designated Self-Declaration for POME oil, a mandatory 100% audit for respective Points of Origin and guidelines for plausible yields.

Since last month, after being alerted to certain players suspected of committing fraudulent activity, we immediately carried out unannounced Integrity Audits at the companies concerned. In a second step, we are conducting a further 70 unannounced Integrity Audits at Processing Units in China and Singapore.  This gives us the opportunity to review data remotely and select System Users for on-site Integrity Audits based on the results.

We will also further strengthen our cooperation with regulatory and law enforcement authorities and have already received positive feedback in this regard.

Based on the Integrity Audit experiences of the last 6 months, ISCC has identified potential for further improvement such as the continued definition of clear yield thresholds for Points of Origin for specific waste and residue materials. This was already implemented for POME oil and the respective yield verification will become a mandatory audit requirement. Implausible quantities of material provided by the Point of Origin, that cannot be verified by the auditor will be considered as a critical non-conformity and will result in withdrawal of the certificate. False declaration of materials on Sustainability Declarations will be regarded as a critical non-conformity being subject to certificate withdrawal and further measures regarding Points of Origin will be implemented. ISCC will shortly issue a comprehensive System Update implementing the above-mentioned improvement areas for waste and residue supply chains. The update will subsequently be posted on the ISCC website.

ISCC Quality Management

ISCC continuously monitors its processes and structures. The ISCC quality management aims at the integrity, reliability, credibility, and consistency of all ISCC activities, especially regarding the practical implementation and the safe and credible demonstration of compliance with the certification requirements of the ISCC system. ISCC is a multi-stakeholder organization that encourages all interested parties to participate in the process, whether through membership in the ISCC Association, participation in the stakeholder meetings, trainings and working groups, or by providing feedback to ISCC through public consultations. In addition, ISCC is in dialogue with government agencies to improve the system and ensure regulatory compliance. The ISCC system is therefore constantly revised and adapted to stakeholder feedback and best practices.

ISCC Integrity Programme

ISCC operates the ISCC Integrity Programme and for this purpose employs a number of independent Integrity Auditors. The objectives of the ISCC Integrity Programme are to monitor the audit activities of Certification Bodies (CBs) and the compliance of companies and CBs / auditors with ISCC requirements. Through the Integrity Programme, ISCC also gathers valuable feedback for further developing the system and for companies and Certification Bodies to improve processes and compliance. The ISCC Integrity Audits are selected by ISCC partly random and partly on risk-based criteria considering risk assessments, complaints or reports of non-conformity or fraud. These risk-based criteria include e.g. indication of non-compliance, scope of certification or type(s) of material. Integrity Assessments are conducted by independent ISCC Integrity Auditors that are free of conflicts of interest. They can take place at any ISCC System User or CB in any country where CBs carry out activities and audits in the framework of ISCC. This means that they can be performed for any ISCC certification scope (Point of Origin, Collecting Point, Trader, Logistic Center etc.). If implausibilities are identified during an Integrity Assessment, the assessed System Users are used as a starting point to further follow the supply chain up- or downstream. More information on the ISCC Integrity Programme can be found in the ISCC EU 102 System Document “Governance”.

Grievance Mechanism

Conflict resolution and the investigation of fraud cases or any other form of misuse is essential for ISCC to maintain its reliability and integrity. ISCC takes complaints seriously to also protect those who have truthfully invested time and resources in ensuring compliance with the ISCC standard and the performance of the certification scheme. All conflicts are handled in a consistent, non-discriminatory and timely manner. If you become aware of any fraudulent behaviour or any other form of misuse of the ISCC system, we encourage you to submit your complaint on the ISCC website.

Excluded System Users, Auditors and Withdrawn Certificates

Transparent provision of information is of great importance for ISCC as a secure and credible certification system. Therefore, various information is available on the ISCC website, including publicly accessible lists of all withdrawn certificates and excluded System Users as well as a list of excluded auditors, which can be found in the CB section of the ISCC website (login required). From September 2022 until March 2023 ISCC has already withdrawn several certificates in Indonesia and Malaysia after conducting an Integrity Audit.

System Update from 18 April 2023

Certificates Must Reflect Actual Material Flows and Business Activities

The annex of a certificate should reflect the state of operations as verified during the audit. This means that the annex may only include input and output materials for which the auditor was able to verify eligible appropriate inputs and outputs and, if applicable, internal processes. If an audit identifies that no amounts of a specific material were handled by the System User during the previous certification period, the relevant material must be removed from the annex.

In addition, certificate scopes must reflect the actual business activity of a System User. This means that a System User may not be certified as a Collecting Point, for example, if no materials are collected from points of origin with self-declarations. If a recertification audit identifies that in the previous certification period, a System User did not operate according to the definitions of the certified scope(s) as presented in ISCC System Document 203 “Traceability and Chain of Custody”, the relevant scope(s) must be removed from the certificate.