Biofuels Cheating in the U.S. and the 45Z Tax Credit: Domestic Sources Only, Argue Senators

 

     The U.S. is the world’s largest producer of biofuels. These include ethanol, woody biomass, renewable diesel, and derivatives. Sustainable aviation fuel (SAF) is another major focus of biofuels production.

     I wrote a post on this blog last year about Chinese biofuels cheating by cutting biofuel from palm oil waste with biofuel directly from palm oil crops and selling it to the E.U. as waste-derived biofuel. Now, it seems the U.S. is worried about similar kinds of cheating.

    U.S. Senators Sherrod Brown (D-OH) and Roger Marshall (R-KS) led a bipartisan group of colleagues in calling on the Biden administration to block taxpayer money from being used to subsidize biofuels produced using imported foreign feedstocks such as Chinese used cooking oil and Brazilian ethanol. They argue that the forthcoming 45Z Clean Fuel Production Credit be restricted to renewable biofuels fuels made only from domestic feedstocks. A surge in imports of Chinese used cooking oil to the U.S. for biofuels production is displacing domestic sources, they argue. They argue against subsidizing foreign biofuels feedstock producers, especially from sources like China. There may be very good reasons to suspect problems with Chinese feedstocks. 45Z is expected to be rolled out soon and operational in 2025.  

     Reuters reported on August 7 that the U.S. EPA “has launched investigations into the supply chains of at least two renewable fuel producers amid industry concerns that some may be using fraudulent feedstocks for biodiesel to secure lucrative government subsidies.” EPA audits revealed that the Chinese are suspected to be doing the same thing they are implicated in doing in Europe: mislabeling raw or virgin palm oil as waste-derived biofuel feedstocks. Virgin palm oil as a feedstock is not designated as sustainable but waste-derived feedstock is designated as sustainable. Reuters notes:

“The issue came into focus following a surge in used cooking oil exports from Asia in recent years that analysts have said involves unrealistically high volumes relative to the amount of cooking oil used and recovered in the region. The European Union is also investigating feedstocks over the fraud concerns.”

"EPA has conducted audits of renewable fuel producers since July 2023 which includes, among other things, an evaluation of the locations that used cooking oil used in renewable fuel production was collected..."

Attempts to pass fraudulent feedstocks as something they are not is a serious offense and should not be tolerated. It makes a mockery of the whole idea of sustainability. An article in Progressive Farmer points out some recent EU actions against Chinese cheating:

“In July 2024, the European Commission announced antidumping tariffs of 36% on biodiesel imports from China in part because of suspicions China had slipped palm oil into the used cooking oil supplies. Palm oil is considered to be a more carbon-intensive feedstock than cooking oil.”

Perhaps that will be the result here as well. Certainly, cheaters offering a cheaper product that is fraudulent should not be tolerated and should be punished for such deception.

     Used cooking oil is an especially popular feedstock due to its low-carbon designation as a waste product. Of course, it can be easily diluted, and it is not easy to determine if it has been diluted.

 

 

References:

 

Exclusive-US EPA says it is auditing biofuel producers' used cooking oil supply. Leah Douglas. Reuters. August 7, 2024. Exclusive-US EPA says it is auditing biofuel producers' used cooking oil supply (msn.com)

Brown, Colleagues Call on Biden Administration to Block American Taxpayer Money from Going to Biofuels Made with Foreign Feedstocks. Sherrod Brown for U.S. Senator website. July 31, 2024. Brown, Colleagues Call on Biden Administration to Block American Taxpayer Money from Going to Biofuels Made with Foreign Feedstocks | Senator Sherrod Brown (senate.gov)

EPA Auditing Waste Oil Claimed in RFS. Todd Neeley. Progressive Farmer. August 8, 2024. EPA Confirms Investigations of Biofuel Producers Using Waste Cooking Oil (dtnpf.com)