Exclusive US EPA says it is auditing biofuel producers’ supply of used cooking oil

By Leah Douglas

(Reuters) – 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 biodiesel feedstocks to secure subsidies profitable government.

EPA spokesman Jeffrey Landis told Reuters the agency launched audits last year but declined to identify the companies targeted because investigations are ongoing.

Producing biodiesel from sustainable ingredients like used cooking oil can earn refiners a range of state and federal environmental and climate subsidies, including tradable credits under an EPA-run program called the Renewable Fuel Standard. But concerns have been growing that some products labeled as used cooking oil are actually cheaper and less sustainable virgin palm oil, a product that is linked to deforestation and other environmental damage.

The issue has come to light following a surge in exports of used cooking oil from Asia in recent years, which analysts say involves unrealistically high volumes relative to the amount of cooking oil used and recovered in the region. The European Union is also investigating raw materials due to fraud concerns.

The EPA audits began after the agency updated national supply chain accounting requirements in July 2023 for renewable fuel producers seeking credits under the RFS, he said.

“The EPA has been carrying out audits of renewable fuel producers since July 2023, which include, among other things, an assessment of locations where cooking oil used in the production of renewable fuels has been collected,” he said. “These investigations, however, are ongoing and we cannot discuss ongoing enforcement investigations.”

U.S. senators from farm states have called for greater oversight of biofuel feedstocks, saying federal agencies should be as rigorous in checking imports as they are in auditing domestic supply chains.

“The Biden administration has created vigorous standards to verify, not just trust, American producers, and it is imperative that the same scrutiny be applied to imported raw materials,” wrote six US senators, led by Roger Marshall and Sherrod Brown, in a statement of June 20th. letter to federal agencies.

Another letter from 15 senators to the Treasury Department on July 30 urged the administration to exclude imported raw materials like OAU from an additional clean fuels tax credit program approved in the Inflation Reduction Act.

(Reporting by Leah Douglas in Washington; Editing by Richard Valdmanis and Matthew Lewis)