July 27, 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 In this process, seven certificates have been withdrawn or temporarily suspended so far.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.