U.S. producers were already skeptical of used cooking oil entering the country from several other countries, including China. But now there is a federal investigation underway into whether imposter oil could be originating from within the borders, too.
The oil is oil. The concern is that it could be virgin palm oil, not the used cooking oil needed to qualify for the federal and state subsidies. And if you are a producer or investor in a biofuels facility following the rules, then you might not be too thrilled that another producer is claiming credits for an unqualified cooking oil.
That is the crux of a federal investigation underway.
Reuters first reported the story Wednesday that the U.S. Environmental Protection Agency is investigating the supply chains of renewable fuels producers following concerns that producers could use fraudulent biodiesel feedstocks, so that they can get federal subsidies.
Which renewable fuels producers are under investigation? The EPA declined to confirm to Reuters since the investigation is not complete.
How many renewable fuels producers are part of this investigation? “At least two,” according to the Reuters report.
Members of Congress have been concerned for months about used cooking oils coming into the U.S. market from foreign countries. They want federal agencies to investigate as the volume of imported used cooking oil has increased.
Are foreign countries like China, Malaysia, and Indonesia exporting used cooking oils into the U.S. that are mixed with virgin palm oil?
That type of oil isn’t viewed as environmentally friendly, since it is full of carbon.
That also would make it ineligible for the federal tax credits, which is another reason why the foreign supply has drawn the ire of U.S. soybean crush facilities. Those facilities want their share of the available tax credits.
RELATED: The Storm Lake Times Pilot in Storm Lake, Iowa, reported on a local soybean crush facility’s frustration with the rise of foreign oil entering the country. Read that story here.
Farm Progress reported in April how foreign-made used cooking oil has been shrinking profits for U.S. soybean processors. That oil influx was so large that it forced some U.S. producers to pull back on production and rethink expansion plans.
The oil from soybeans can be used to make renewable diesel. That energy source can qualify for government incentives. Those incentives, along with consumer expectations, have fueled demand for cleaner-burning alternatives. But foreign sources like the used cooking oil and canola oil threaten U.S. producers’ market share.
In July, a bipartisan group of U.S. senators called on the Biden administration to stop taxpayer money from going toward biofuels produced from foreign sources like China’s used cooking oil and Brazil’s ethanol.
Lawmakers established a tax credit that was part of the Inflation Reduction Act called the 45Z Clean Fuel Production Credit to add to the country’s energy independence and increase biofuels production.
But the senators want to make sure those credits go to U.S. farmers and producers rather than companies that rely on foreign suppliers.
In their letter to U.S. Department of Treasury Secretary Janet Yelling, the senators wrote, “As Treasury works to craft 45Z guidance, we urge you to restrict the eligibility to renewable fuels made from feedstocks sourced domestically.”
They added, “If drafted and implemented correctly, the credit will help to support robust American energy independence—incentivizing the production of biofuels made with domestically-produced feedstocks. In order to ensure this objective, it is essential that the 45Z rule articulate clear, workable pathways for domestically-produced renewable fuels derived from domestically-produced feedstocks.”
Watch: Perdue AgriBusiness explains how it extracts oil from soybeans through its multi-step process at its soy crush plant in Salisbury, Maryland. See that video here.
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