What's Your Plan?
What’s Your Plan? Bio-Diversity Challenge – Bunkerspot - April/May 2024
In this article, Steve Simms details global bunkering industry’s increasing shift towards sustainability, with biofuels playing a key role in reducing vessel carbon emissions. However, as the demand for biofuels rises, fraudulent activities and disputes within the industry are also becoming more prevalent. Legal incentives like the EU’s Fit for 55 legislation and FuelEU Maritime regulation are encouraging biofuels uptake, but also imposing strict sustainability requirements. These regulations require bunker traders and suppliers to ensure biofuels meet certification standards and provide proof of sustainability (POS), with penalties for non-compliance.
In the EU, the Renewable Energy Directive (RED) and its updates (including RED III) mandate sustainability certifications and detailed reporting, with significant focus on greenhouse gas (GHG) emissions, land rights, and socio-economic impacts. These regulations also require bunker delivery notes (BDNs) to include detailed information on biofuel characteristics, and market participants must record transactions to avoid losing certification.
Fraud is a significant issue in biofuel trading, with common deceptive practices including misrepresenting feedstocks, manipulating production data, and diluting biofuels with cheaper fossil fuels. Even when biofuels are certified by recognized schemes like the International Sustainability and Carbon Certification (ISCC), there are still concerns about fraud, weak oversight, and self-certification practices. Traders must be diligent in verifying the authenticity of sustainability certificates to avoid liability and ensure compliance with sustainability criteria.
Overall, the transition to biofuels in the maritime industry is fraught with legal, regulatory, and integrity challenges, and bunker traders and suppliers must navigate these complexities to avoid disputes, liabilities, and reputational damage.
As the biofuel market continues to grow, bunker traders and suppliers must be vigilant about potential fraud, particularly when faced with suspicious pricing or unclear fuel sourcing. Legal and regulatory compliance, including accurate POS reporting, will be crucial for navigating the complexities of biofuel sales, particularly under regulations like FuelEU. Seeking legal counsel will be important for bunker suppliers to avoid liabilities while capitalizing on the opportunities biofuels offer.
Read the full article and details of considerations here: What’s Your Plan? Bio-Diversity Challenge – Bunkerspot | April/May 2024
