The U.S. Environmental Protection Agency (EPA) has initiated audits into the supply chains of at least two renewable fuel producers amid rising concerns about the potential use of fraudulent feedstocks for biodiesel. This investigation comes as some producers may be using cheaper and less sustainable materials, such as virgin palm oil, instead of the required used cooking oil, which is essential for securing government subsidies.
EPA spokesperson Jeffrey Landis confirmed that the agency started these audits over the past year but did not disclose the names of the companies under investigation due to the ongoing nature of the inquiries. The production of biodiesel from sustainable sources like used cooking oil allows refiners to benefit from various state and federal subsidies, including tradable credits under the Renewable Fuel Standard (RFS).
Concerns have escalated following a significant increase in used cooking oil exports from Asia, which some analysts believe are inflated compared to actual cooking oil usage in the region. The European Union is also examining feedstocks amid similar fraud concerns.
The EPA’s audits were prompted by updated domestic supply-chain accounting requirements established in July 2023 for renewable fuel producers seeking RFS credits. U.S. senators from agricultural states have called for enhanced oversight of biofuel feedstocks, urging that the same rigorous verification applied to domestic sources should also extend to imports.