Eni kicks palm oil switch into the long grass

23 Feb 2018 | John McGarrity

Italian energy company Eni has no plans in the short-term to switch from away palm oil at its Porto Marghera biodiesel refinery, despite much previous fanfare that the facility would instead rely upon advanced biofuels and used cooking oil.

Eni said it wasn’t able to make the move away from palm oil – the dominant feedstock used at the Venice refinery – because advanced feedstocks are not yet widely available, providing further grist for mill for industry lobbyists that draft EU legislation is divorced from the realities of the biofuels market.

“Advanced [biofuels] feedstock in the short term will not be able to match the equivalent demand currently satisfied by crop-based feedstock, where palm oil represents the largest source,” a press officer for Eni told Energy Census.

The nameplate capacity for the Porto Marghera biorefinery is expected to rise to 560,000 tonnes/year this year, compared with 360,000 tonnes/year in 2014.

The Eni press officer added that unless there is a major increase in the availability of advanced biofuels feedstock, the complete exclusion of palm oil from RED II (as proposed by the European Parliament) in the short term will increase the burden on other crop-based materials.

This in turn would have a negative impact on crop prices, higher utilization of land and water, and could have a ripple effect on the food market because soya oil would be used instead, the Eni spokesman added.

“Industry cannot afford to switch off production [based on palm oil] by waiting for undefined availability,” the press officer for the Italian energy company said, adding that the Porto Marghera biorefinery’s output relies on used cooking oil for 10 to 20% of its feedstocks and has plans to use animal fats too.

In 2014 Eni said on its website: "From 2020 it is expected that the production capacity of the Venice biorefinery will rise to 560,000 tons, with an increasing proportion of the raw materials coming from food production waste - used oils, animal fat and by-products from palm oil production."

It made these comments against the backdrop of concerns about the commodity’s contribution to climate change and discussions at EU level to limit the use of crop-based feedstocks.

Trialogue talks start next week on hammering out final legislation for the recast of the Renewable Energy Directive, which is likely to cap the use of crop-based biofuels somewhere between the EU Council's proposed 7% threshold and the 3.8% recommended by the European Commission. 

Market failure? 

MEPs in January voted to exclude palm oil as a feedstock, but Italy is one of several member states, concerned about a trade war with major producers Malaysia and Indonesia, to have spoken out against a discriminatory ban.   

Earlier this month, a Dublin-based company that operates refineries based on crop-based biofuels published a detailed report outlining the failure of advanced biofuels companies to add significant amounts of new capacity, despite generous subsidies from the EU and national governments.

Producers of advanced biofuels retort that EU legislation will at last provide the regulatory certainty required for the sector to make investments in capacity that uses crop residues and other feedstocks that will have a much lower climate impact than palm oil, while also avoiding the food-versus-fuel concerns.