Biodiesel exporters in China have pledged to improve compliance and export standards following calls from European competitors for action to halt “potentially fraudulent” shipments, Yahoo! Finance reported from a Bloomberg report.

A group representing China’s biggest producers – and affiliated with the technology ministry – has pledged closer monitoring of the quality and sourcing of biofuels, according to the 6 June report.

However, Chinese supplies should not be treated differently by the European Union (EU), the group was quoted as saying in an open letter.

“We are deeply concerned about the potential fraud in Chinese biodiesel exports,” the industry group said in the letter. “We have zero tolerance for such violations.”

The group’s statement followed claims by the European Waste-Based & Advanced Biofuels Association (EWABA) that surging Chinese biofuel shipments were threatening local suppliers by depressing prices.

European producers claimed Chinese exporters could be mixing fuels with cheaper feedstocks and mislabelling them to qualify for EU incentives, the report said.

EWABA has called on the European Commission and the Dutch and German governments to take action, according to the report.

China’s exports of methyl ester – a feedstock for biodiesel made from used cooking oil (UCO) – to the EU increased by almost 40% to 1.79M tonnes last year, according to the Chinese group. Production capacity was expected to increase to 3M tonnes this year.

According to a report by the United States Department of Agriculture (USDA) last year, almost all China’s capacity is export-orientated to take advantage of EU tax policies.

The surge in exports to Europe came at a time of increasing Chinese imports of palm waste and palm-based biofuel from Indonesia and Malaysia, Yahoo! Finance wrote.

Palm oil was generally shunned by the EU due to deforestation fears, and the increase in Chinese shipments had led to speculation that some of the palm waste was being blended into methyl ester sent to Europe, the report said.

The surge in Chinese exports was affecting European biodiesel producers, with at least 11 plants halting output, while another 10 had curbed production, EWABA said in the 1 June letter to officials including Frans Timmermans, executive vice-president for the European Green Deal and the European trade commissioner Valdis Dombrovskis.

The association represents producers of biodiesel from UCO, animal fats and other advanced waste feedstocks, waste collectors and technology providers. Its members include leading companies Cargill, Chevron, Gunvor Group and Novozymes.

Policing and auditing of biodiesel flows should be strengthened to avert fraud and damage to the EU market, the association’s secretary general Angel Alvarez Alberdi, said in the letter.

“If no speedy and effective measures from both the EU and national authorities are urgently taken to safeguard the European waste-based and advanced biodiesel industry, we will soon be on a path which will irremediably spiral into the complete collapse of the EU industry,” EWABA said in the letter.

The Chinese group said it was willing to co-operate on certification and compliance, working with EWABA to address the issues and defend the industry. Supplies of Chinese biodiesel are helping the EU reach its carbon-reduction goals, according to the letter.

The Chinese association was considering setting up a white list of qualified suppliers to improve traceability and transparency, Liu Yaoming, head of the association and a veteran biofuel trader, was quoted as saying.

Most exporters followed EU regulations, Liu said. Europe’s production difficulties were due to declining road diesel consumption, which was curbing demand, he added.

“Chinese factories are bigger and more efficient and able to handle waste oils in relatively bad conditions,” Liu said.