there is a cobra in the room – Euractiv

The European green oil industry is concerned about massive and potentially fraudulent imports of biofuels from Asia. This fraud consists of importing “waste cooking oil biofuels” which are in fact biofuels made from virgin palm oil.

Jean-Philippe Puig is the CEO of Avril

Have you ever heard of cobra effect? It is the threatening name used by specialists to describe an unintended economic phenomenon, whereby a public policy produces effects exactly the opposite of those for which it was designed. At issue: the opportunistic reactions of economic actors to the new mechanism.

Where does this venomous name come from? During the British Empire, India was infested with cobras. The colonial administration, favorable to the use of economic incentives, offered a reward to anyone who brought back dead snakes.

The measure was initially a success and the local population developed an interest in hunting. But after a few months, the number of cobras increased sharply again: motivated by the reward, some cunning inhabitants began to reproduction cobras to exchange them. The reward was suspended, some reptiles were released, it was a disaster. The “cobra effect” was born.

A boom in biofuels

Today, the circular economy is an absolute necessity. Sustainability requires us to consider yesterday’s waste as co-products and to recycle everything that can be recycled. Avril, like many other actors, has been involved in this process for a long time. However, this new economic situation produces side effects that we can no longer ignore.

The last example is used cooking oils. Oil collected from restaurants is deemed carbon neutral, according to European regulations, since it has already been used for frying. Fuels made from this raw material should therefore be encouraged. This is understandable: while this oil was destined for waste, we are giving it new life as a source of energy.

Used oils are sold at a very high price since they make it possible to produce fuels that are, on paper, even more sustainable. This is precisely the threat of the cobra: when selling the used product becomes more attractive than selling the virgin product, what is the point of respecting its normal life cycle?

Falsely labeled palm oil

This is the case for oils from Asia, falsely labeled as being used, and whose imports into Europe have seen a dizzying increase in recent months. Palm oil is disguised as waste oil so that it can be included in European and national renewable energy targets.

This mechanism makes it possible to introduce unsustainable raw materials into Europe, which we no longer want to use: used oils are the disguise of palm oil, and the real face of fraud.

When will European authorities realize the scale of the problem? When will they apply the safeguard procedures to curb this economic and ecological disaster?

It is high time that the Commission, which has told us that it has been investigating this issue for several months, took concrete measures to put an end to this fraud. It must suspend imports and sustainability certificates for fraudulently imported raw materials and biofuels. We must also put an end to the double counting of used oils, which makes it possible to artificially achieve decarbonization objectives, while encouraging fraud. The integrity and credibility of European policy to combat climate change are at stake.

Meanwhile, the cobra is spreading its powerful venom across global oil markets, driving down the prices paid to European farmers for their oilseeds. It’s high time to hypnotize the snake.