ClonBio stalls Irish and European Union investment

Favourable regulations and incentives prompt focus on United States

So-called skewed incentives have prompted specialist agribusiness group ClonBio to stall investment in the Republic and the rest of Europe, it has emerged.

ClonBio earns revenues of €400 million a year making proteins, animal feed, biofuel, ethanol and alcohol from grain in Europe and the US, and renewable gas at a plant in Co Kildare.

The group is working on a US project on which it could potentially spend hundreds of millions of dollars, but says poor regulation and incentives have forced it to stall investment in the Republic or Europe.

ClonBio shifted focus within the last year to the US, where James Cogan, its policy and industry analyst, says it bought a disused ethanol plant in Wisconsin and got it up and running within six months.

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“We are now investing in manufacturing proteins, renewable gas and high-grade refined ethanol,” he says.

Mr Cogan notes that the project could also create opportunities for carbon capture and storage.

Funds and incentives for renewables and clean energy that the US government offers under President Joe Biden’s Inflation Reduction Act clinched the Irish group’s decision to invest there.

“They have a progressive, transparent and reliable regulatory system, but in Ireland and the EU it’s erratic and hostile,” said Mr Cogan.

He stresses that his company is Irish and “wants to do big things here”.

ClonBio highlights the Irish and EU approach to biofuel incentives as one of the barriers that the group faces.

In the Republic in particular, this favours the use of processed waste cooking oil, known as hydrogenated vegetable oil (HVO), as biodiesel.

The Renewable Transport Fuel Obligation requires oil companies to ensure that 17 per cent of the motor fuel they sell is renewable, that is biodiesel or bioethanol.

But if companies use HVO, the obligation falls by about two-thirds, giving them an extra incentive to use that fuel instead.

Irish HVO consumption is rising rapidly on the back of this, while it works against manufacturers such as ClonBio, which produces biofuels from grain and other sources.

Observers believe that this trend will continue as the Government continues to increase its obligation in the race to meet climate targets.

At the same time, biodiesel is coming under scrutiny in the EU, where European Commission officials are investigating allegations that imports from Indonesia are mislabelled.

The EU imposes an extra 6 per cent duty on Indonesian biodiesel to balance extra aid given by that country’s government to producers there.

The European industry claims that to evade this, Indonesian biodiesel is relabelled in the UK and China before arriving in the EU.

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The commission’s trade directorate, DG Trade, began investigating the alleged bid to evade import duty in August as it emerged that disproportionate amounts of the fuel were arriving from some regions in China.

Separately, fears are growing some Asian HVO is not made from cooking waste, but virgin palm oil, which the EU does not classify as sustainable.

If this were the case, it would mean that supposedly green HVO was manufactured from palms grown on plantations created by clearing native rainforest.

Trade publications reported earlier this year that auditors suspended certificates awarded to some Chinese producers as they could not verify that their biodiesel was made from waste cooking oil sourced in Indonesia and Malaysia.

Mr Cogan agreed that the huge quantities of HVO coming from southeast Asia implied that the region was producing “impossible” amounts of waste cooking oil.

The Department of Transport confirmed that it recently set up a working group to establish if the Republic’s pledge to continue increasing biofuel consumption left it vulnerable to fraud.

Barry O'Halloran

Barry O'Halloran

Barry O’Halloran covers energy, construction, insolvency, and gaming and betting, among other areas