Skip to Content

Australian low emission canola wins EU approval

22 March 2018


Australian canola farmers have ended the 2017 harvest with good news after securing approval for their crop to be sold into the European Union (EU) market as biodiesel feedstock.

“This is a great outcome for farmers and follows a concerted lobbying effort by the Australian Canola industry,” said Andrew Freebairn, Glencore Agriculture Senior Trader Oilseeds.

“In short, the decision allows Australian canola to continue to be sold into the EU for use in the biodiesel sector with specific greenhouse gas savings levels attached.”

The EU has an energy policy known as the Renewable Energy Directive (RED). This policy mandates a target of life cycle greenhouse gas savings for feedstock used in biofuel production in the EU, compared to fossil fuels such as mineral diesel.

To meet its own greenhouse gas reduction targets, Europe would have shut its doors to Australian canola from 1 January 2018 unless the industry demonstrated that they grow low-emission canola.

Relief for canola farmers
“The EU is Australian canola’s largest export market, so the news will be a big relief to Australian canola farmers,” Andrew said.

In 2016/17, Australian canola exports to the EU were worth more than $1 billion – with the majority finding use in biodiesel production.

According to the Australian Export Grains Innovation Centre (AEGIC), the vast majority of Australian canola is non-GM, which attracts a price premium of approximately $20-$40 per tonne in the EU.

This earned the Australian industry around an additional $100 million in 2016/17. Australia’s non-GM canola offers more options for the European supply chain, as residues can be used for animal feed and surplus for human consumption.

In 2015, with some fore-knowledge of the likely new policy requirements in the EU, and with funding assistance from some members of the Australian Oilseed Federation, the AEGIC and the AOF set up a project with CSIRO researchers and emission experts to measure and report life cycle greenhouse gas emissions associated with the production of canola in each Australian State.

Lifecycle assessment report
The lifecycle assessment report found that the greatest emissions came from the manufacture of fertiliser, the breakdown of crop residues and emissions from soils.

This investigation produced a Country Report for Australia in mid-2016. The report was reviewed by experts in the EU throughout 2016 and 2017. Finally, on 17 December 2017, EU officials announced their formal acceptance of the report.

Until the end of 2017, the EU’s RED required feedstocks to deliver greenhouse gas savings of at least 35 per cent compared to fossil fuels.

From 1 January 2018, this target increased to 50 per cent for biofuel refineries built before 5 October 2015 and 60 per cent for installations commissioned since then.

Any country selling feedstock for use in EU biodiesel must demonstrate it meets these higher levels of emission savings to comply with EU targets. With an average carbon footprint at the farm gate of 468kg CO2-eq/tonne of seed, Australian canola will be very competitive in this important market. Australia was one of the first non-EU Member States to submit a Country Report to the European Commission outlining its emission profile of canola.

A timely decision
The news by the European Commission is timely for oilseed farmers, who have faced many challenges during the season.

“For the past several months the oilseed markets have been dealing with supply side issues that have weighed heavily on prices,” Andrew said.

“Continuing strong production of soybeans in the United States and South America and bigger canola crops through Canada, Europe and Australia have seen prices drift as demand struggles to keep up.”

Andrew said vegetable oil markets have also contributed to the decline with palm oil values through South East Asia dropping on higher supplies.

Locally, the market had a mixed season with harvest surprising many through almost all the growing areas.

“A combination of improving farming practices, better varieties and rainfall during critical windows has seen a big increase in production after initial fears of a below average crop.”

EU/FSU oilseed crushing plants
Glencore Agriculture operates six oilseed crushing plants in Europe as part of its global business.

The crushing plants are located in Germany (two), Poland, Czech Republic, Hungary and Ukraine with a total crushing capacity of more than 2.8mmt annually, to produce oil and meal.

Rape seed (canola) is the main commodity crushed with a crushing capacity of 1.7mmt, along with sunflower (crushing capacity 1.1mmt) and some soy beans.

The rape seed oil is mostly destined for the biodiesel industry, as well as the food industry. Sunflower oil is mainly produced for the food industry and human consumption. Both oils are typically sold in bulk or bottled for consumers.

The meal is used in compound feed products for the cattle, pigs and poultry industries.