EPA probes US biofuel producers' UCO supplies

The US Environmental Protection Agency is auditing used cooking oil (UCO) supply chains of domestic renewable fuel producers to verify whether the feedstock qualifies under the Renewable Fuel Standard (RFS).

Under the RFS, EPA requires renewable fuel producers to submit UCO collection points that are used for biofuels production. Among other inspections, EPA is evaluating those UCO collection locations, the agency said on Wednesday.

After the EPA announcement, current-year biomass-based diesel D4 RINs traded as high as 60.5¢/RIN, which was 5.75¢/RIN higher than Tuesday's closing. Activity on renewable feedstocks was minimal on Wednesday, making it harder to gauge market reaction.

"These inspections and any follow-up investigations are part of EPA's routine evaluation of compliance with RFS under the Clean Air Act and reflect the agency's commitment to a stable RFS program that strengthens the nation's energy independence, advances low-carbon fuels, and supports agricultural communities," EPA spokesperson Tim Carroll said. The agency could not discuss the number of inspections, facility identities, and dates of the inspections, he said.

A coalition of US farm groups recently called on the Biden administration to restrict biofuels produced with foreign feedstocks from qualifying for a new tax credit as US imports of UCO continue to increase. The group argued that the imports are displacing US feedstocks.

US lawmakers also asked the administration to provide more visibility on the UCO supply chain and requested clarity from EPA on how they are ensuring that UCO imports are not blended with palm oil.

By Jamuna Gautam