Investigation Launched by EPA Into Renewable Fuel Producers Amid Fraud Concerns
The U.S. Environmental Protection Agency (EPA) has initiated investigations into the supply chains of multiple renewable fuel producers due to suspicions of fraudulent practices in securing government subsidies. Industry experts are worried that some companies may be using deceptive feedstocks for biodiesel production to take advantage of lucrative subsidies.
According to EPA spokesperson Jeffrey Landis, audits have been conducted over the past year, but the agency has not disclosed the names of the companies under scrutiny as the investigations are still ongoing. The production of biodiesel from sustainable sources, such as used cooking oil, qualifies refiners for various environmental and climate incentives at state and federal levels, including tradable credits under the Renewable Fuel Standard program administered by the EPA.
However, concerns have arisen that certain supplies labeled as used cooking oil may actually be virgin palm oil, a cheaper and less sustainable alternative associated with environmental harm like deforestation. The issue gained attention following a significant increase in used cooking oil exports from Asia, prompting suspicions about the legitimacy of the volumes compared to regional consumption and recovery rates.
The EPA audits were prompted by updated supply-chain accounting requirements for renewable fuel producers seeking credits under the RFS, implemented in July 2023. The investigations focus on evaluating the collection locations of used cooking oil used in renewable fuel production.
Senators from agricultural states have called for enhanced oversight of biofuel feedstocks, advocating for stringent verification procedures for imported supplies similar to domestic audits. In a letter addressed to federal agencies on June 20, six U.S. senators emphasized the importance of verifying American producers and imported feedstocks with equal rigor. Additionally, a separate letter from 15 senators to the Treasury Department on July 30 urged the exclusion of imported feedstocks like UCO from a clean fuel tax credit program.