There are concerns about potential fraud in used cooking oil (UCO) trade as demand for feedstocks to produce biofuels in the U.S. increases. There are suspicions that some virgin vegoils (like palm oil) may be mislabeled as UCO, as there are indications of irregularities in collection and export rates from some Asian countries. For example, Malaysia is reported to export three times more UCO than it collects, suggesting potential fraud. Also, some analysts and traders note a big increase in Indonesian virgin UCO exports to the U.S. specifically for biofuels production. Of note: So much UCO is being imported, some predict a building of U.S. soybean oil stocks.
Last week a bipartisan group of six Senators urged the Biden administration to increase scrutiny of UCO imports from China. Concerns have arisen that some of these imports may be fraudulent, blended with virgin oils like palm oil, which have higher carbon intensity and are linked to deforestation. This could undermine U.S. renewable fuel policies by displacing cleaner, domestically grown feedstocks and leveraging U.S. renewable fuel incentives. The lawmakers noted UCO imports into the U.S. have skyrocketed from less than 200 million lbs. annually in 2020 to over 3 billion lbs. in 2023, with more than half coming from China. They emphasized the need for rigorous verification of UCO imports, like the scrutiny domestic feedstocks undergo. The lawmakers pointed out that Europe has already acted against UCO fraud, leading to a shift in shipments to the U.S., where demand for renewable feedstocks is high, particularly in states with clean fuel policies. They urged U.S. agencies to ensure the authenticity of UCO imports and to prevent counterfeit feedstocks from receiving American tax incentives.
