Palm fatty acid distillate or PFAD is one of the many waste and residue raw materials that we have in our portfolio. Although linked through supply chains, palm oil and PFAD are different renewable raw materials: palm oil is a crop-based vegetable oil whereas PFAD is a processing residue derived from the refining of food-grade palm oil for the food and chemical industry uses.
PFAD fully meets the EU RED definition of "processing residues":
…a substance that is not the end product(s) that a production process directly seeks to produce. It is not a primary aim of the production process and the process has not been deliberately modified to produce it.”
Some have argued that PFAD should not be considered a residue because it has market value and many uses. In a circularIn circular economy, however, all residues and wastes should have an avenue to be utilized, and thus have value.
When harvesting oil palm and handling fresh fruit bunches, normal bruising occurs causing the fat in the fruit to start degrading. The longer it takes for the fruit to be transported, processed, and refined into palm oil, the larger part of the fats degrade. When palm oil is being refined into food-grade oil, these degraded fats, free fatty acids, are removed from the oil by distilling. PFAD has to be removed to improve the oil's taste, odor, and color, as well as to increase its shelf life.
The formation of these rancid, degraded fats cannot be completely prevented. PFAD is, however, unsuitable for human consumption and undesired from the food oil production's perspective. Hence, PFAD needs to be removed before the oil meets the food industry’s quality standards.
Because the demand for palm oil by the food industry continues being high, there is plenty of this PFAD residue available for various uses. The use of residues like PFAD as a renewable raw material in biofuels production is fully accepted worldwide from a legal standpoint. In addition to biofuels, PFAD is used, for example, to produce candles, soaps, other oleochemical products, as well as animal feed.
The annual PFAD volumes available globally total approx. 2.5 to 3 Mt, as about 3.5 to 5% of the raw material input is removed as PFAD during palm oil refining process.
PFAD use does not increase pressure to expand oil palm farming
Palm oil producers get a lower price for PFAD than for the edible palm oil (olein and stearin). Therefore, palm oil refining aims to maximize the output of edible palm oil, not PFAD. PFAD is, however, generated despite producers’ continuous efforts to improve their processes to minimize PFAD volumes and maximize the output of more valuable fractions from the refinery.
Because PFAD is a non-desired output of the palm oil refining process that the producers are trying to minimize, its use does not drive palm oil production or expansion of its cultivation, nor does it accelerate deforestation.
Situation is similar with sawdust: nobody cuts down trees to produce sawdust. Instead, trees are harvested for logs that can be processed to planks at a saw mill. Sawdust is generated as an undesired residue, which however has value and can be used for useful purposes.
Norwegian environmental organizations Zero and Rainforest Foundation Norway pointed out in February 2016 that “it is not likely that producers make new investments as a result of price increases of a waste product accounting for about 4% of the value of the main product. It is not likely that an increase in the price of PFAD in itself leads to an increased production of palm oil."
PFAD as renewable raw material offers clear climate benefits
Waste and residue raw materials like PFAD provide the biofuels industry, among others, with alternatives to raw materials that can also be used in the food industry. In turn, biofuels producers offer vegetable oil refiners a sustainable avenue for their residue streams, which can help reduce the pressure to clear new areas of land for the cultivation or production of virgin raw materials, such as palm oil.
Using PFAD to produce renewable products is good for the climate: Neste MY Renewable Diesel refined from PFAD and other waste and residues helps replace crude oil based diesel in transportation, and enables all diesel-powered vehicles to reduce greenhouse gas emissions by 90% on the average over the life cycle of the fuel compared to similar emissions from fossil diesel (calculation method: EU RED).
The majority of PFAD is exported to countries where palm oil is not a viable replacement. This applies particularly to PFAD usage in animal feed, and implies that the elastic commodity that would replace PFAD is not palm oil, but soybean oil or corn (Informa Economics, 2016).
Sustainability of PFAD
Neste buys PFAD only from those suppliers that are committed to sustainable working practices and meeting our strict sustainability criteria and those set by authorities in our markets. These criteria include a proactive approach to preventing deforestation and mitigating its risk. The PFAD that Neste uses is traceable to the place of origin, as the law requires. The biofuels industry continues being one of the only industries that are required by law to meet strict sustainability criteria with the raw materials they use.
Read more about the other raw materials within our portfolio.
Read more about our future raw materials.