EPA Investigating Used Cooking Oil Import Authenticity

Reuters’ Leah Douglas reported Wednesday that “the U.S. Environmental Protection Agency has launched investigations into the supply chains of at least two renewable fuel producers amid industry concerns that some may be using fraudulent feedstocks for biodiesel to secure lucrative government subsidies.”

“EPA spokesperson Jeffrey Landis told Reuters that the agency has launched audits over the past year, but declined to identify the companies targeted because the investigations are ongoing,” Douglas reported. “The production of biodiesel from sustainable ingredients, like used cooking oil, can earn refiners a slew of state and federal environmental and climate subsidies, including tradable credits under a program administered by the EPA called the Renewable Fuel Standard. But fears have been mounting that some supplies labeled as used cooking oil are actually cheaper and less sustainable virgin palm oil, a product that is associated with deforestation and other environmental damage.”

Bloomberg’s Kim Chipman and Jennifer A Dlouhy reported Wednesday that “an EPA spokesperson described the inspections as part of ‘routine evaluation of compliance’ with US biofuel policy. ‘EPA has conducted inspections of renewable fuel producers which include, among others, an evaluation of the locations that used cooking oil used in renewable fuel production was collected,’ the agency said in an emailed statement. The agency declined to elaborate or identify producers.”

“It’s not clear if the EPA has a presumption about possible fraud taking place, which includes suspicion that UCO from Asia may not be authentic and instead is mixed with fresh vegetable oils, such as palm, potentially distorting commodity values and undermining US biofuel laws,” Chipman and Dlouhy reported.

Concerns Over Imports Mounting for Months

Bloomberg’s Kim Chipman reported at the end of June that “a flood of used cooking oil from China and elsewhere is prompting US senators to question whether some of the shipments meant to supply the biofuel market may be fraudulent.”

“Six senators, including Republican Joni Ernst of Iowa and Democrat Sherrod Brown of Ohio, sent the Biden administration a letter asking what steps were being taken to ensure that imports of the oil, known as UCO, do not contain virgin vegetable oil,” Chipman wrote. “Imports have surged from less than 200 million pounds a year in 2020 to more than 3 billion pounds last year, according to the June 20 letter.”

Then in late July, Progressive Farmer’s Chris Clayton reported that “a bipartisan group of U.S. senators wants the Biden administration to ensure the 45Z Clean Fuel Production Credit doesn’t go to biofuels using imported feedstocks such as used cooking oil from China or ethanol from Brazil.”

“The latest letter from U.S. senators comes amidst a surge in imports of Chinese used cooking oil being used to produce biofuels and displacing the use of domestic feedstocks in the process,” Clayton reported. “The senators warn that a poorly crafted 45Z rule will hurt American farmers, undermine the American biofuel industry’s competitiveness, and undercut American energy independence.”

“‘Growing imports of foreign feedstock such as used cooking oil and animal fats to produce biofuels are a serious concern for U.S. soybean farmers. This new supply of feedstock directly impacts soybean oil prices and is contributing to declining margins for farmers and fuel producers. If record imports continue, foreign feedstocks could displace the oil from nearly 990,000 soybean acres in Iowa and create significant market uncertainty for the rapidly expanding soybean crush industry across Iowa and the greater Midwest. We urge the Treasury Department to ensure domestic feedstocks are prioritized in U.S. biofuels tax policy to increase domestic energy security and improve rural outcomes,’ said Suzanne Shirbroun, president of the Iowa Soybean Association,” according to Clayton.

Investigations Began in 2023

Douglas reported Wednesday that “the EPA audits began after the agency updated domestic supply-chain accounting requirements in July 2023 for renewable fuel producers seeking to earn credits under the RFS, Landis said.”

“‘EPA has conducted audits of renewable fuel producers since July 2023 which includes, among other things, an evaluation of the locations that used cooking oil used in renewable fuel production was collected,’ he said. ‘These investigations, however, are ongoing and we are not able to discuss ongoing enforcement investigations.'”