RED II Implications and Latest Challenges in Waste and

Residues based Supply Chains

Dr Norbert Schmitz, ISCC System GmbH
Technical Committee “Waste, Residues and Advances Low Carbon Fuels”, Shanghai, 02 July 2019

© ISCC System GmbH: For personal use only. Reproduction and distribution is prohibited. 1
 01
RED II Implications

02
Latest Developments ISCC

03
W/R Based Supply Chains

© ISCC System GmbH: For personal use only. Reproduction and distribution is prohibited. 2
The RED II, approved on 24 December 2018, sets ambitious targets
for renewable energy for the EU for the next decade
§ RED II defines the legal framework for biofuels and bioliquids in the EU from 2021 to 2030

§ Transposition of the Directive by the EU Member States is due by 30 June 2021

§ Targets: Energy from renewable sources 32 % (at EU level), renewables in the transport sector 14%

§ The framework of the RED II sets further incentives for biofuels and bioliquids produced from waste and
residues (e.g. cap on crop-based biofuels, phasing out of high iLUC risk palm)

§ Targets for advanced biofuels produced out of feedstock of Annex IX, Part A (0.2 % (2022), 1 % (2025),
3.5 % (2030)

§ Limit of 1.7% of biofuels produced out of feedstock of Annex IX, Part B (animal fat, UCO). Limit can be
modified by Member State if approved by Commission

§ New fossil fuel comparator (94 instead of 83.8 gCO2eq/MJ) and new GHG emission saving tresholds:
§ 50% for old installations
§ 60% for new installations after 5 October 2015
§ 65% for installations starting operation after 1 January 2021
§ 70% for renewable fuels from non-biolog. origin after 1 January 2021
© ISCC System GmbH: For personal use only. Reproduction and distribution is prohibited. 3
New fuel categories have been introduced by the RED II

Advanced biofuels § Annex IX of RED II (Part A)

§ Produced from feedstocks with significant production expansion

High iLUC risk biofuels
into areas with high carbon stock

§ Produced with schemes avoiding displacement effects of food/feed

Low iLUC risk biofuels
crops (e.g. double cropping, use of degraded land, yield increase)

Renewable fuels of non-

§ E.g. Power-to-X such as hydrogen made from renewable electricity
biological origin

§ Fuels produced from e.g. plastics, waste processing gases,

Recycled carbon fuels
industrial exhaust gases

© ISCC System GmbH: For personal use only. Reproduction and distribution is prohibited. 4
Annex IX Part A defines feedstocks for advanced fuels. The list can be
updated by the European Commission. Limit for Part B fuels introduced
Annex IX
Part A (“Advanced”) targets: at least 0.2% in 2022, 1% in 2025 and 3.5% in 2030
• Algae if cultivated on land in ponds or photobioreactors • Crude glycerine
• Biomass fraction of mixed municipal waste but not separated • Bagasse
household waste subject to recycling targets • Grape marcs and wine lees
• Bio-waste as defined in Article 3(4) of Directive 2008/98/EC from • Nut shells
private households subject to separate collection
• Husks
• Biomass fraction of industrial waste not fit for use in the food/feed
• Cobs cleaned of kernels of corn
chain, including material from retail/ wholesale and the agro-food and
fish and aquaculture industry, excluding feedstocks listed in part B • Biomass fraction of wastes and residues from forestry and forest-
based industries, i.e. bark, branches, pre-commercial thinnings,
• Straw
leaves, needles, tree tops, saw dust, cutter shavings, black liquor,
• Animal manure and sewage sludge brown liquor, fibre sludge, lignin and tall oil
• Palm oil mill effluent and empty palm fruit bunches • Other non-food cellulosic material
• Tall oil pitch • Other ligno-cellulosic material (…) except saw logs and veneer logs
Part B (Not considered as “advanced”) capped to 1.7% but exemption possible
• Used Cooking Oil (UCO) • Animal fats classified as categories 1 and 2 in accordance with
Regulation (EC) No 1069/2009

Source: RED II (Directive 2018/2001)

© ISCC System GmbH: For personal use only. Reproduction and distribution is prohibited. 5
ISCC certifies already several companies using Annex IX A feedstock
for the production of low carbon fuels

UPM is producing renewable

Raizen produces bioethanol diesel and bionaphta from tall
from bagasse oil pitch and crude tall oil

Companies
producing biofuels
Enerkem is producing methanol and BioMCN is converting waste- out of Palm Oil Mill
ethanol from municipal solid waste based biogas into biomethanol Effluent (POME)

© ISCC System GmbH: For personal use only. Reproduction and distribution is prohibited. 6
 Next steps in the RED II process
§ Several Delegated Acts by the European Commission still
necessary:
- ILUC (published on 13 March 2019)
- Renewable fuels of non-biological origin and recycled carbon fuels (due
in January 2021)
- Co-processing (due in December 2021)

§ European Commission shall ensure that a Union database

is put in place to enable the tracing of liquid and gaseous
transport fuels:
• No timeframe defined
• RED II refers only to the final fuel (not covering the upstream
value chain

§ ISCC will implement the necessary changes in its ISCC

EU scheme to become recognized under the RED II (re-
recognition of ISCC in 2021 necessary)

© ISCC use
© ISCC System GmbH: For personal System
only.GmbH: For personal
Reproduction use only. Reproduction
and distribution is prohibited. and distribution is prohibited. 7
ISCC proves compliance with legal requirements for
biofuels/bioliquids in the EU and other important energy markets
Compliance with legal requirements
and initiatives
Energy
Transport
Biofuels
RED

Road
Recycled
carbon fuels ISCC EU to show ISCC PLUS for ISCC EU or PLUS
Aviation compliance with Japanese biofuel for compliance with
Renewable
RED/FQD in all EU sustainability Liquid Fuel Supply
fuels of non-
Member States requirements Regulation in
biological origin Maritime
Queensland
Heat & Power
RED

Bioliquids
ISCC EU to show Recognition for ICAO – Participation
Biogas / compliance with AIREG – Aviation in CORSIA for
Biomethane for renew. energy sustainable
RED/FQD in all EU
Solid Member States in Germany alternative jet fuels
biomass
RED Current Other
© ISCC System GmbH: For personal use only. Reproduction and distribution is prohibited. 8
Leading companies use ISCC for industrial applications
(e.g. plastics or chemicals) of bio-based and circular materials
Selected ISCC Compliance with platforms
certified companies & industry standards

Bio-based

Circular

Industrial
applications

Examples
© ISCC System GmbH: For personal use only. Reproduction and distribution is prohibited. 9
Development of number of valid ISCC certificates and valid certificates by
region

Number of valid ISCC certificates Valid certificates by region

4000 3700
3509 Africa (1 Australia
3500 3259 North America (3 %)
3010 %) (0,4 %)
3000 2817 2957 Latin America (5…
2459
2500

2000 Asia (21

%)
1500 1281
1000 695
500 EU (64 %)
0 Rest of
Europe (5 %)

e)
11

12

13

14

15

16

17

18

at
20

20

20

20

20

20

20

20

im
st
(e
19
20

Numbers as per June 2019

© ISCC System GmbH: For personal use only. Reproduction and distribution is prohibited. 10
The share of ISCC certificates covering waste/residues is further increasing

Certificates feed/food crops

Certificates with w/r

70 % UCO

Numbers as per 07 June 2019

© ISCC System GmbH: For personal use only. Reproduction and distribution is prohibited. 11
The number of valid ISCC certificates for China is increasing constantly. UCO is by
far the most important material
Valid ISCC EU certificates

180

160 Type of operation Certificates

140 Collecting Point 77

Refinery 1
120
Biodiesel Plant 29
100
Trader, Storage 122
80 169
144
60 Materials covered Share of
by certification certificates*
40 87
UCO 100%
20 40
W/R processing of
12 15 2%
0 animal/vegetable oil
June 14 June 15 June 16 June 17 June 18 June 19 Brown grease/trap
3%
fat
Numbers as of 28 June 2019
Each certificate can cover more than one material
ISCC global figures reported to the EC for 2018
ISCC certified UCO (feedstock): 2.522 kt
ISCC certified UCO based biofuels: 2.337 kt

© ISCC System GmbH: For personal use only. Reproduction and distribution is prohibited. 12
 Fraud investigation in The
Netherlands, UK and Belgium
§ Joint investigation by authorities in UK, NL and BE
§ ISCC system user Biodiesel Kampen BV allegedly committed
fraud and sold non-sustainable biodiesel as sustainable and
double-counting biodiesel to the market
§ ISCC certificate was withdrawn by the CB on 08 May 2019
Source: Reuters immediately after information about the allegations was received
§ The CB conducted a surveillance audit at the company revealing
non-conformities with ISCC requirements
§ As the investigation by the authorities against companies in
biodiesel supply chains is still ongoing, no official information is
available
§ The authorities aiming at reducing GHG emissions in the
transport sector, customers, the certification body and also
ISCC have been defrauded
§ As aggrieved party, ISCC has pressed for criminal charges
against Biodiesel Kampen
Source: Energy Census
Source: deVolkskrant © ISCC use
© ISCC System GmbH: For personal System
only.GmbH: For personal
Reproduction use only. Reproduction
and distribution is prohibited. and distribution is prohibited. 13
ISCC regards the case as very serious and takes the opportunity to further
strengthen the certification process in dialogue with its stakeholders
§ ISCC had already implemented several measures in particular for waste and processing residue (w/r) based supply chains to
safeguard the integrity of the scheme
§ In mid 2018, ISCC set up a specific technical working group for waste and processing residue supply chains. The ISCC
working group already proposed some additional measures prior to the ongoing investigation
§ Discussion of suggested measures with multiple stakeholders, including associations (EWABA and MVO), Stakeholder
Committee Europe (meeting on 21 May) and Certification Bodies (CB meeting on 22 May)
§ ISCC working group agreed on measures that should be implemented by the system (see presentation by the WG)
§ Tighten audit requirements and double-checks of transactions and deliveries of sustainable supplies during audits.
Introduce analysis / inspections of consignments as part of verification procedure
§ “Whistleblower“ section on ISCC website for easy submission of information to ISCC
§ ISCC Integrity Program with increased focus on and more assessments of waste and residue supply chains
§ Comprehensive ISCC training program for system users and auditors; additional mandatory trainings for w/r auditors
§ Adopt “Terms of Use” to give further rights to auditors and ISCC, and to tighten sanction mechanisms
§ Database solution, to support the transmission of correct sustainability information within the supply chains and to ease
double-checks of transactions for double counting renewable fuels (ISCC developed aleady TYC some years ago)
© ISCC System GmbH: For personal use only. Reproduction and distribution is prohibited. 14
 The ISCC Impact Assessment Report
2018 has been published in June 2019
§ Critical review of what has been achieved, and what is
the impact on the ground
§ Definition of the ISCC Theory of Change
§ Gathering of data about impact is challenging
§ Assessment includes sample data taken from audit
reports and a survey with certification bodies
§ Improvements in the ISCC system will provide more
digitally accessible data about impact
§ Continuous improvement process with involvement of
stakeholders
§ ISCC will report about impact on a regular basis in the
future

© ISCC use
© ISCC System GmbH: For personal System
only.GmbH: For personal
Reproduction use only. Reproduction
and distribution is prohibited. and distribution is prohibited. 15
ISCC is an open multi-stakeholder association with 119 members.
Become a member of the ISCC family!

MINNESOTA
BIO-FUELS
ASSOCIATION
Minnesota Grown Energy For Today And Tomorrow

© ISCC System GmbH: For personal use only. Reproduction and distribution is prohibited. 16 16
 Many thanks for your attention!

Dr Norbert Schmitz, ISCC System GmbH

Hohenzollernring 72, 50672 Cologne, Germany
Follow us on Email: schmitz@iscc-system.org
© ISCC System GmbH: For personal use only. Reproduction and distribution is prohibited. 17