The update on Tuesday May 6 confirmed that the associated blocked certificates showing proof of sustainability (POS), which were originally suspended at the start of the investigation, have been re-released into the market despite the government’s doubts about the existence of the firm under investigation.
Authorities had originally frozen the firm’s account in the country’s Nachhaltige Biomasse System (Nabisy), or biofuel compliance ticket scheme, in a case that has thrown additional light on the complex challenges that face active participants and regulators in trying to meet ambitious decarbonization goals.
According to the update, which was issued by the Federal Office for Agriculture and Food (BLE), the government has “a strong suspicion that the HVO producer does not exist.”
The statement said that the German government had found that the Nabisy ticket scheme user in question, an HVO producer, had an address in the United Arab Emirates, while the associated audit report gave an address in Hong Kong. Further, associated POS documents – which are issued by a voluntary scheme such as the ISCC to verify the sustainability of a given biofuel – were linked to a separate supplier in the Netherlands, the BLE said.
“All proofs of sustainability of the Nabisy user were initially posted to the Nabisy account of a supplier,” the update said. It added that the user’s certificate showed an address in the Netherlands, while in the corresponding audit report “the same address in Hong Kong is given as for the Nabisy user.”
“There is a strong suspicion that the HVO producer with the ID: EU-BM-13-SSt-10022652 does not exist. There are also considerable doubts about the existence of the supplier in the Netherlands,” the May 6 update read.
But despite these findings, the POS documents associated with the HVO volumes in question were unblocked, although the German government added that further steps, “in particular with regard to criminal prosecution,” were being examined.
The update was met with criticism from market participants, with one describing the decision to release the originally blocked certificates as “a complete joke” and “the end of our business at it is.”
Since the German authorities blocked the entities’ participation in the scheme, industry sources have alleged that entities under investigation may have redirected the rejected HVO into countries including the UK and Spain, under different POS certification.
“There are low premiums and less control, at least in Spain,” one source told Fastmarkets. Another added that demand for HVO in Spain was high because of increased scrutiny of participants’ compliance in the nation’s scheme this year “versus previous years where there were high [levels] of non-compliance.”
According to trade sources, the HVO volumes in question, in the range of 150,000-200,000 tonnes, may have been blended with diesel and relabeled as pure HVO or renewable diesel, before being resold into Germany under the Nabisy scheme.
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