French court upholds law banning palm oil from biofuels scheme

France’s constitutional court has upheld a law excluding palm oil from the country’s biofuel scheme, a decision which French oil and gas giant Total says puts its recently launched La Mède renewable diesel refinery at risk.

Total had appealed against the regulation, which removed palm oil from a list of permitted biofuels from January 2020 and eliminated related tax advantages.
The constitutional court said on 11 October that the new law was in line with the public interest of environmental protection, “considering the strong growth of palm oil production and the major amount of land used for its production worldwide, and given the deforestation and drying out of peat bogs”.

Total CEO Patrick Pouyanne had warned in September that the decision could mean losses of up to €80M (US$88M) for its La Mède refinery, forcing it to rethink its plans, Reuters reported.

The company has invested €300M (US$332M) in converting its La Mède site from a crude oil refinery into a 500,000 tonnes/year renewable diesel or hydrotreated vegetable oil (HVO) plant, with the first batches of fuel coming on stream in July.

Total had said the plant would be using 60-70% sustainable vegetable oils (rapeseed, sunflower and palm oils) and 30-40% animal fat, used cooking oil and residues from waste. It had pledged to use no more than 300,000 tonnes/year of palm oil (less than 50% of the total volume of raw materials needed) and at least 50,000 tonnes of French rapeseed as feedstocks.

A spokesman said Total had taken note of the court’s decision and reiterated Pouyanne’s previous comments that the company would not be able to meet commitments such as buying rapeseed oil from French farmers for the refinery.

The French law specifies that palm oil cannot be considered a biofuel unless producers can guarantee it has been produced under conditions that prevent indirect increase of greenhouse gas emissions. Tax exemptions for palm biofuels would also end on 1 January 2020 under the government’s 2019 budget, Reuters said. In addition, operators would no longer be allowed to include palm oil-based biofuels in their mass balances.

When the new legislation was passed, Germany’s Union for the Promotion of Oil and Protein Plants (UFOP) explained in July that the French government was implementing changes introduced by the EU’s 2015 Indirect Land Use Change (ILUC) regulation, which sets limits on high ILUC-risk biofuels.

“In this sense, France will fulfil its obligations 10 years earlier,” UFOP said.

In May 2019, the EU published the Delegated Regulation 2019/87 (delegated act), which determines what high-risk ILUC feedstocks are. Only palm oil falls under its definition. The use of high-risk ILUC biofuels will be capped at 2019 levels until 2023, after which it will be gradually phased out to zero by 2030.