Environmental group criticises Italy's Eni for use of palm oil by-product

MILAN (Reuters) - European environmental lobby group Transport & Environment (T&E) criticised Eni in a report on Monday, saying the Italian energy group's use of a palm oil by-product in its biofuel output showed it was reneging on previous commitments.

Palm oil cultivation results in excessive deforestation, the European Commission said in 2019, telling member countries to cap its use in biofuel production until 2023 and then phase it out by 2030.

Eni in 2020 pledged to become palm-oil free in its refineries by 2023, and in October 2022 it said it had met the goal ahead of schedule.

However T&E's report, titled "Broken promise: how Eni's refineries are still relying on palm-oil based products" showed evidence of tankers transporting palm oil fatty acid distillate (PFAD), a palm oil by-product, to Eni's refineries last year.

"This is despite scientific studies showing that PFADs are a driver of deforestation alongside crude palm oil," the report said.

The campaign group said this evidence clashed with Eni's 2020 promise to phase out crude palm oil and its derivatives.

In response, Eni said it had been a palm oil-free company since the end of 2022 and the use of PFAD is allowed under both EU and Italian regulations.

"PFAD is a waste by-product of the palm oil refining process," it said. "We disagree with equating the use of such a waste product with the use of palm oil itself."

Many other biofuel producers, including Europe's market leader Neste, also classify PFAD as a waste product of the refining process.

When Eni announced an end to its palm oil procurement in October 2022 it said it would continue to use waste by-products, in a change of tack from a previous pledge to eliminate the use of both palm oil itself and PFAD.

T&E said oil companies and biofuel manufacturers typically consider PFAD as "waste and residue", in order to exclude upstream emissions from assessments of the climate impact of the by-product.

(Reporting by Francesca Landini, editing by Gavin Jones and Kylie MacLellan)