There is a pattern in how energy crises and biofuel markets interact, and it is playing out again right now.
In late February 2026, coordinated US-Israeli airstrikes on Iran triggered the effective closure of the Strait of Hormuz — the waterway through which approximately 25% of the world’s seaborne oil trade and 20% of global LNG exports normally pass. The IEA has described it as the largest supply shock in the history of the global oil market. Brent crude peaked at $126 per barrel. In that environment, biofuels moved rapidly from a long-term decarbonisation mechanism into a short-term strategic substitute, with the Renewable Transport Fuel Obligation (RTFO) supply chains — built around waste-derived HVO, biodiesel, and sustainable aviation fuel — the nearest available lever to pull.
That repositioning has consequences. HVO — hydrotreated vegetable oil — is the commercially dominant RTFO product, capable of delivering lifecycle GHG savings of up to 90% versus fossil diesel when genuinely waste-derived. The qualification matters, because the verification system behind those claims was already under serious strain before the crisis accelerated demand. This post sets out where it is failing, what that means for organisations reporting biofuel-related carbon reductions, and what a defensible compliance position requires.
Where the Verification System Is Failing
The evidence of systemic failure in biofuel sustainability certification is no longer circumstantial. It is documented, involves the UK market directly, and is the subject of active government investigation.
The Department for Transport launched a formal investigation into HVO following BBC research and whistleblower testimony indicating that large volumes of virgin palm oil are entering UK supply chains falsely certified as waste-derived feedstock. The core technical problem is that virgin palm oil and palm oil mill effluent (POME) — the genuine waste material eligible under the RTFO — are chemically almost indistinguishable without advanced forensic testing. Certification under the International Sustainability and Carbon Certification (ISCC) system does not require physical or chemical testing of fuel. It audits paper records and mass-balance accounting — a system that tracks volumes on paper without requiring physical segregation of sustainable and non-sustainable material through the supply chain.
The scale of the problem is visible in the data. Transport & Environment’s March 2025 analysis found that POME volumes certified under the ISCC EU scheme likely exceeded the maximum global production potential of that feedstock — more certified material entered European and UK markets than could physically exist. European Commission data from December 2024 indicated that approximately a third of the UCO certified for European markets was fraudulent, most likely sourced from virgin palm oil.
The structural weakness is inherent to how voluntary certification currently operates. Certification bodies outside EU or UK jurisdiction face no legal oversight framework. ISCC cannot send auditors to China, and faces significant practical constraints in Indonesia and Malaysia — the primary origins of the feedstock in question. The DfT has updated its guidance to enable deeper supply chain investigations, and expected RTFO amendments include digital certificate management, stricter fuel chain audits, and new offences targeting intermediary misrepresentation. The DfT has signalled that non-compliant actors may face criminal charges under the Fraud Act 2006.
Why the Current Crisis Makes This Worse
Energy security-driven demand does not arrive gradually. The Hormuz closure has intensified pressure on supply chains already operating at or close to their sustainable feedstock limits. HVO and biodiesel depend on waste fats, oils, and greases — used cooking oil, animal tallow, and POME. These streams are finite, and the UK’s road transport RTFO obligations, the SAF Mandate for aviation, and emerging shipping sector requirements are all drawing on the same limited pool simultaneously.
There is a further complication that has received insufficient attention. Approximately one-third of global fertiliser trade transits the Strait of Hormuz. With the strait effectively closed, urea prices have risen sharply, threatening yields of the feedstock crops — rapeseed, soy, corn — that feed conventional biofuel supply chains. The same crisis driving demand for biofuels is simultaneously threatening the agricultural systems producing them. When feedstock is scarce and prices are elevated, the incentive to misrepresent cheaper or ineligible materials as qualifying feedstocks rises sharply — and that pressure falls hardest on the long, multi-jurisdiction supply chains where independent oversight has historically been weakest.
Why This Is a Carbon Reporting Problem, Not Just a Procurement One
This is not a problem confined to fuel suppliers and obligated parties under the RTFO. It has direct implications for any organisation using biofuels as part of its decarbonisation strategy and reporting that use in its sustainability disclosures.
When a logistics operator, fleet manager, or manufacturer switches from fossil diesel to HVO and records the associated emissions reduction in carbon accounting, that reduction is legitimate only if the fuel’s sustainability credentials are genuine. If the fuel was certified on the basis of falsified feedstock documentation, the carbon saving does not exist — and the organisation reporting it is, without necessarily knowing it, making a materially false claim. As UK reporting obligations tighten and sustainability disclosures become subject to independent assurance under the ISSA (UK) 5000 framework, the evidentiary basis of biofuel-related carbon claims will attract greater scrutiny.
Geovitia recently completed an independent supply chain audit for a UK-based transport operator purchasing HVO through a multi-tier intermediary chain. The audit identified a documentation gap at secondary trading level that meant a material proportion of the operator’s sustainability claims could not be substantiated against RTFO criteria. The operator remediated ahead of its annual compliance submission — but only because the audit was conducted before the DfT’s own investigations created external pressure. Had that gap been identified through enforcement rather than internal audit, the exposure would have been significantly more serious.
What Defensible Compliance Requires
For fuel buyers, obligated suppliers, and sustainability teams relying on biofuels in their carbon reporting, three controls distinguish a defensible position from an exposed one.
Independent audit of the full feedstock supply chain. RTFO criteria apply to feedstock origin, not just the finished fuel. Certificates issued by bodies operating outside regulatory oversight, based on paper audits, provide limited assurance. Verification needs to trace the feedstock to its claimed origin, with on-site capability in producing countries where risk is elevated. The Renewable Fuels Assurance Scheme, operated by Zemo Partnership, mandates full supply chain traceability as a minimum benchmark.
Documented due diligence on intermediaries. The fraud mechanisms identified in current UK and EU investigations operate through intermediary chains — traders, blenders, and aggregators inserted between feedstock origin and delivery to obscure misrepresentation. Knowing who those entities are, what documentation they hold, and what audit rights you have over them is a basic control that many fuel buyers currently lack.
Review of biofuel carbon claims against documentation actually held. If your emissions reporting includes reductions attributed to HVO or other biofuel consumption, those reductions need to rest on documentation that would withstand independent examination. An internal review — assessing what you hold, whether it is sufficient, and where the gaps are — is the starting point, and it is the kind of structured work that an independent environmental consultant should be conducting alongside your sustainability team.
Conclusion
The energy security argument does not make fraudulent feedstock documentation acceptable. What it does is create market conditions in which the pressure to accept weak verification is higher, and in which organisations that maintain rigorous audit standards face a short-term commercial disadvantage relative to those that do not. Regulatory tightening is already in motion — from the DfT’s HVO investigation and RTFO reform, which will move to greenhouse gas-based reporting from 2027, to EU pressure on ISCC and the coming assurance requirements for sustainability reporting. Organisations that are building robust, independently verifiable GHG data for their fuel supply now will be better placed when that scrutiny arrives.
Geovitia provides independent supply chain auditing, sustainability verification, and technical compliance support for organisations operating under the RTFO and SAF Mandate. If you are reviewing your feedstock documentation, your audit coverage, or the evidentiary basis for biofuel-related carbon claims, contact us at
geovitia.com to discuss what a robust verification framework requires in the current environment.
Sources
- International Energy Agency — Strait of Hormuz Factsheet, February 2026
- gov.uk / Department for Transport — Renewable Transport Fuel Obligation (RTFO) Statistics: 2024 Final Report and 2025 Provisional Releases
- gov.uk / Department for Transport — RTFO and SAF Mandate Technical Guidance 2025
- gov.uk / Department for Transport — SAF Mandate: Crop-Derived Sustainable Aviation Fuel — Call for Evidence, December 2025
- Transport & Environment — Palm Oil in Disguise? POME Fraud Report, March 2025
- Transport & Environment — Used Cooking Oil: The Certified Unknown, December 2024
- Forecourt Trader / BBC — Government Investigating HVO over Claims of “Large Amounts” of Fraud, April 2025
- Wikipedia — 2026 Strait of Hormuz Crisis (sourced from IEA, Reuters, and official government statements)
- ResourceWise — 3 Key Learnings for Q2 2026 Biofuels Market, April 2026
The Hormuz closure is the largest fossil fuel supply shock in the history of the global oil market. Brent crude peaked at $126/barrel.
And within weeks, biofuels shifted from a long-term decarbonisation mechanism into a short-term strategic substitute.
That shift matters — because demand acceleration and sustainability verification do not move at the same speed.
Three things UK organisations reporting HVO-related reductions should be checking right now:
→ Can you trace your feedstock origin independently of the ISCC certificate?
→ Do you have documented audit rights over every intermediary in your supply chain?
→ Does the documentation you hold actually support the carbon reductions you report?
We recently audited a UK transport operator purchasing HVO through a multi-tier intermediary chain. The audit found a documentation gap at secondary trading level — a material proportion of their sustainability claims could not be substantiated against RTFO criteria. They remediated before the DfT’s own investigations created external pressure. That window is narrowing.
There is also a dimension of this crisis that has received almost no attention: approximately one-third of global fertiliser trade transits the Strait of Hormuz. Urea prices have risen sharply. The feedstock crops feeding conventional biofuel supply chains — rapeseed, soy, corn — are under input cost pressure. The same crisis driving demand for biofuels is simultaneously threatening the agricultural systems that produce them.
The full analysis — covering the RTFO verification failures, the ISCC certification problem, and what defensible compliance requires — is on the Geovitia blog.
When Energy Security Overrides Sustainability: The Biofuel Credibility Problem
#BiofuelSustainability #RTFO #HVO #CarbonReporting #EnergyTransition #SupplyChainAudit #Sustainability #NetZero #UKRegulation
Geovitia Limited · Auditing & Compliance