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Jun 2019

Editorial: The washing-machine for fake POS is on

Suspected fraudulent uses of the certification and mass balance systems have been on operator’s minds for years. The UCO complex has always been at the center of doubts, mainly because its supply is so fragmented and its value so high. After weeks of intense rumors, Dutch authorities have finally provided details about an alleged criminal scheme under which thousands of tons of cheap non-RED Fame have been sold as UCOME. The scope of the fraud is rather astounding: 300 KT of biodiesel sold with a fake Proof of Sustainability (PoS) over two years (2015/2016) in several countries and by one sole operator. Despite the shocking numbers, it feels like it’s only the beginning of the revelations. Chances are that the investigation will show that the cheating extended into more recent years, while market sources insistently suggest that other operators may be involved. Of course, the scheme(s) has(ve) contributed to create a fake balance between UCOME supply and demand, to feed the illusion that the UCO supply might be infinite, and to keep prices below expectations. This week’s revelations confirmed that the biodiesel market in Europe has gotten progressively infected by dream sellers and that it needs a serious cleanup. Dutch authorities finally draw a red line between indulgence and accusation; this will hopefully lead to a serious reassessment of some behaviors in the market. Time will tell what the market impacts are, but we anticipate that both supply and demand will be lowered by the news. On one hand, the European supply of UCOME will be diminished as fake POS are removed. On the other hand, buyers will get more suspicious and cautious about their UCOME deals, with a potential transitory period during the time of revelations. We stand at a crossroads to clean the waste-based Fame market and failure is not an option.