PFAD-based biofuels: “worse for the climate than fossil diesel”

The world is in an ecological crisis of climate change and biodiversity loss. Deforestation and peat destruction are major contributors to both of these crises, resulting in carbon dioxide emissions from lost vegetation and disturbed soils, and depriving plants and animals of suitable habitats.

Policy makers have been promoting biofuels as a measure to reduce emissions from fossil fuel combustion. The reality is more complicated. Increasing demand for agricultural commodities provides an incentive to expand production. Expanding production can be expected to lead to land use changes including deforestation, especially for forest-risk commodities such as palm oil and soy oil, both which are also used in the production for crop-based biofuels.

Aside from the carbon cost of these biofuels, ongoing agricultural expansion leads to biodiversity destruction and fuels land conflicts with local communities, often indigenous peoples.

While Europe is slowly turning away from the use of palm oil for biofuel production, Palm Fatty Acid Distillate (PFAD), an output stream from palm oil refining, is is now also used to produce biofuels. The 2023 report “PFAD and biofuels” by renowned biofuels expert Dr. Chris Malins, warns for an increase of tropical deforestation caused by a displacement effect driven by the uptake of PFAD in biofuels, and urges that PFAD use in biofuels should be phased out as soon as possible.

PFAD in biofuels will predictably cause increased palm oil demand

The report found that PFAD consumption by the biofuel industry will potentially drive increased palm oil production due to the need for substitution in other applications (e.g. soaps and other oleochemicals and livestock feed) which are dependent on the limited PFAD supply.

If PFAD is displaced out of its existing markets for use in biofuel feedstock, it will lead to increased demand for potential substitute materials. In many applications, the lowest cost potential substitute material for PFAD will be palm oil, and therefore, diverting PFAD into biofuel use will predictably cause increased palm oil demand. Palm oil expansion is linked with extensive tropical deforestation and peat loss.

Looking at lifecycle emissions, the author of the report, Dr. Chris Malins, found that if this substitution effect by replacing PFAD in existing applications is considered, analysis suggests that PFAD-based biofuels are even worse for the climate than fossil diesel or jet fuel.

Classifying PFAD as a co-product could reduce deforestation pressure

The report found that PFAD, though less valuable than palm oil, has a higher value than soybeans, wheat, sugar, and crude oil, and it would not be accurate to characterise PFAD as a low-value residue. Besides having a substantial value, PFAD has a well-defined market and is a resource that is entirely utilised by the current applications dependent on it. Therefore, the report argues for a classification as a co-product rather than a residue.

The report highlights that while the EU’s Renewable Energy Directive is less clear on PFAD’s characterisation, multiple Member States have already chosen to exclude PFAD-based fuels from favourable support subsidies or for it to be phased out alongside palm oil-based fuels.

To reduce deforestation pressure, other countries should also follow this approach and restrict or eliminate support for PFAD fuels in their own biofuel policies. They could achieve this by clarifying that PFAD should be treated as a palm oil co-product and, therefore, as a food-and-feed-based fuel.