The European oleochemicals industry is increasingly concerned that Commission proposals to reduce the environmental impact of biofuels may well lead to higher greenhouse gas emissions and job losses in Europe. The proposals are starting to wend their way through the European Parliament institutional decision-making system.

The proposals are in connection with the European Commission’s proposal for a directive amending Directive 98/70/EC relating to the quality of petrol and diesel fuels and amending Directive 2009/28/EC on the promotion of the use of energy from renewable sources. The central aim of this proposal is to start the transition to biofuels that deliver substantial greenhouse gas savings. The Commission’s proposal needs to be approved by the European Parliament and the Council of the European Union in order to become EU law.

Ahead of a key vote in the European Parliament’s Environment and Health Committee on 10 July, the European oleochemicals industry is calling for animal fats not to count double towards an EU target under which 10% of the energy used for transport must come from renewable energy by 2020 (Article 3.4 of the existing EU directive (2009/28/EC)).

Another essential point to note is that rendered animal fats (e.g. tallow), are, in fact, valuable raw materials and not waste. They are produced by the rendering industry, by processing the non-edible parts of animals into feedstocks that the oleochemicals industry further transform into chemicals that are used to manufacture daily life products such as detergents, soaps, lubricants, paints, cosmetics, pharmaceuticals, candles, tyres, plastics and textiles.

By making animal fats count double towards the EU renewables target, the Commission proposals unduly encourage the diversion of rendered animal fats away from these existing applications into biofuels.

If rendered animal fats are diverted to biofuel production, this would lead to shortages for the European oleochemical industry, which will then need to switch to palm oil, which is the only substitute with similar chemical properties. The increased consumption of palm oil would mean more rainforest land being used to cultivate palm oil, which will ultimately lead to further deforestation, the loss of biodiversity and tropical rainforests and release millions of tonnes of additional CO2 over the years to come. The danger is that the proposals would therefore fail in their efforts to cut greenhouse gas (GHG) emissions and may even lead to more GHG emissions. For example, a study in the UK shows that the use of tallow for biofuels production could lead to a 13% net increase in GHG emissions.

Moreover, there is a danger that the European oleochemical industry and its customers would lose a valuable, domestic, European raw material that they have been using for decades. The substitute palm oil would have to be sourced from south East Asia, thereby exposing the EU chemical industry to raw material import dependence. Jobs in Europe may also be lost in both the oleochemical as well as customer industries as the palm oil based industry and downstream users may place the value chain in Asia, delivering the end products to Europe rather than processing them in Europe.

As it stands, the Commission proposals therefore pose a significant threat to the future of the oleochemical industry. This needs to be carefully considered by EU representatives especially in the light of the European Commission’s recently unveiled strategy and action plan to develop a strong EU bioeconomy. Here, the Commission wants to help Europe live within its limits, ensuring the sustainable exploitation of biological resources and thereby allowing the production of more from less.

APAG, a Sector Group of Cefic (European Chemical Industry Council), is the European Oleochemicals and Allied Products Group and represents the European producers of Fatty Acids, Glycerine, Fatty Alcohols, Metallic Soaps, Fatty Esters, Fatty Nitriles and their Derivatives. The oleochemicals sector generates a turnover of over four billion euro and directly employs 10,000 people in Europe, mainly in SMEs. It is estimated that another 10,000 to 15,000 jobs are indirectly dependent on the production of oleochemicals.