By Leah Douglas
(Reuters) – The U.S. Environmental Protection Agency has launched an investigation into the supply chains of at least two renewable fuel makers, amid industry concerns that some are using fraudulent biodiesel feedstocks to secure lucrative government subsidies.
EPA spokesman Jeffrey Landis told Reuters the agency launched audits over the past year but declined to identify the targeted companies because investigations are still ongoing.
Producing biodiesel from sustainable ingredients, such as used cooking oil, can provide refiners with a host 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 are growing that some materials labeled as used cooking oil are in fact cheaper and less sustainable virgin palm oil, a product linked to deforestation and other environmental damage.
The issue came into focus following a surge in used cooking oil exports from Asia in recent years, which analysts say involves unrealistically high volumes relative to the amount of used cooking oil used and recovered in the region. The European Union is also investigating raw materials due to concerns about fraud.
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, he said.
“EPA has been conducting audits of renewable fuel producers since July 2023, including an assessment of the sites where cooking oil used in the production of renewable fuels was collected,” he said. “However, these investigations are ongoing and we cannot discuss ongoing enforcement investigations.”
U.S. senators from agricultural states have called for greater oversight of biofuel feedstocks, saying federal agencies should be as strict in verifying imports as they are in auditing domestic supply chains.
“The Biden administration has created strong standards to verify, not just trust, U.S. producers, and it is imperative that the same scrutiny is applied to imported raw materials,” wrote six U.S. Senators, led by Roger Marshall and Sherrod Brown, in a June 20 report. letter to federal agencies.
Another July 30 letter from 15 senators to the Treasury Department urged the administration to exclude imported commodities such as UCO from a supplemental clean fuel tax credit program passed in the Inflation Reduction Act.
