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Suspected Chinese cooking oil is hurting US biofuels business




Suspected Chinese cooking oil is hurting US biofuels business

(Bloomberg) — China is flooding the U.S. with used cooking oil that the biofuel industry says could be contaminated, hurting American farmers and President Joe Biden’s push to promote climate-friendly energy.

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U.S. imports of used cooking oil, an ingredient for renewable diesel production, will more than triple in 2023 from a year earlier, with more than 50% coming from China, according to the U.S. International Trade Commission. U.S. industry groups and biofuel executives are increasingly concerned that a significant portion of these deliveries are fraudulent, and are urging the government to tighten controls on imports.

The heightened suspicions come after the European biofuel industry raised similar concerns about cooking oil from China last year. Used cooking oil has a better carbon intensity score than commodities produced at scale in the US, such as fresh soybean oil, so any potentially contaminated imports benefit from Biden’s incentives for renewables, at the expense of US farmers.

Read more: Asia is flooding Europe with green fuel believed to be fraudulent

“We’re putting more pressure on the U.S. government to say what we’re actually importing,” said Todd Becker, CEO of Green Plains Inc., which sells corn oil to distillers through ethanol production, also an ingredient for green diesel. “Someone needs to figure out that this isn’t all Chinese used cooking oil.”

Spoiled used cooking oil would exacerbate a challenging situation for farmers and agricultural businesses. Companies such as Bunge Global SA and Archer-Daniels-Midland Co. are counting on rising demand for crop-based green diesel feedstocks, but competition from foreign imports is hurting profits and jeopardizing ambitious expansion plans. More broadly, there is a risk that illicit shipments could exacerbate trade tensions between China and the US.

Imports of used cooking oil, or UCO, reached 1.4 million tons (3.1 billion pounds) in 2023, equivalent to the oil pressed last season from more than 6% of U.S. soybeans milled to make soybean oil. to make. In addition to a more favorable carbon intensity score, UCO is also priced about a third cheaper than refined soy oil.

Read more: Rising imports of green diesel feedstocks are disrupting the US soy market

One of the biggest concerns is that Chinese shippers are adding UCO to fresh palm oil. Palm, the world’s most widely used vegetable oil, is anathema to environmentalists and many countries because the industry is a major driver of deforestation in countries like Indonesia and is also linked to labor abuses.

China’s Ministry of Commerce did not respond to a faxed request for comment.

The Environmental Protection Agency has been in discussions with industry stakeholders, including the National Oilseed Processors Association, about concerns about increased imports of UCO and other food waste, agency spokesman Nick Conger said. He said the EPA is aware of the increased imports and that it will be a factor in setting volumes for and implementing the Renewable Fuel Standard Program, a law that determines how much biofuel enters the nation’s fuel supply annually must be mixed.

Under RFS, producers using UCO or animal waste such as beef tallow are required to maintain records pledging that the ingredients meet the legal definition of “renewable biomass”, as well as describing the ingredient and identifying the process used to obtain it .

“We are concerned that unless EPA and other agencies get a handle on this fairly quickly, it could undermine the integrity of the Renewable Fuel Standard,” Geoff Cooper, CEO of Renewable Fuels Association, said in an interview.

Clean Fuels Alliance America, which represents producers of renewable diesel and sustainable jet fuel, has been tasked by the board to investigate the increase in UCO from China and the possibility of fraudulent gallons entering the US.

“Our goal is to protect our members and combat any unfair trade we encounter,” said Paul Winters, director of public affairs and federal communications. “We don’t assume that the practices are unfair just because there is more trade,” he said, but the alliance wants to ensure that homegrown raw materials do not face unfair competition from imports.

The increase in UCO imports is also a top issue for NOPA, the trade group that represents U.S. seed processing industries for soybeans, canola and other crops. CEO Kailee Tkacz Buller said the group has had conversations with federal lawmakers and agencies, including the EPA and the U.S. Department of Agriculture.

Asia is by far the largest UCO supplier in the world, led by China. Last year, the European Union launched an investigation into imports from Asia at the request of European biodiesel producers, but that request was withdrawn. While the producers did not explicitly provide a reason for the change, they noted that biodiesel shipments to the EU from China’s Hainan Island – a green fuel hotspot – stopped immediately after the start of the investigation.

“There is a lot of suspicion and a lot of stories and anecdotes circulating,” said Cooper. “It seems to be one of the worst kept secrets that this is happening.”

–With help from Jennifer A. Dlouhy and Gerson Freitas Jr..

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