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The Used Cooking Oil Dilemma: Certification, Competitiveness, and the Future of Biofuel Policy

Updated: Jul 2

Sandro Steinbach


Bio-based diesel production in the United States has shifted rapidly toward waste-based inputs. Among them, used cooking oil (UCO) now plays a central role. This trend reflects policy choices that prioritize low-carbon feedstocks under programs like the Renewable Fuel Standard and California’s Low Carbon Fuel Standard. UCO benefits from favorable carbon intensity (CI) scores and cost advantages, which have made it a preferred input among fuel blenders.

 

At the same time, imports of UCO—mostly from China—have surged. These imports now represent a significant share of total feedstock use in U.S. bio-based diesel production. While this shift aligns with policy incentives, it raises new questions about sustainability, verification, and the ability of domestic producers to compete under current program rules.

 

The concern is not with UCO as a feedstock. Repurposing waste oils can reduce lifecycle emissions and help meet climate goals. The issue is that U.S. policy frameworks have not kept pace with the volume, complexity, and opacity of UCO trade. Certification standards remain fragmented. There is no consistent federal definition of UCO. Oversight varies across programs. Documentation for imported UCO often lacks detail about feedstock origin, handling, and transport emissions.

 

This creates two problems. First, imported UCO can claim CI credits without demonstrating the same level of traceability required of domestic oils. Second, there is growing evidence that some of what is labeled “used oil” is actually virgin vegetable oil—often palm oil—rebranded to benefit from credit systems designed for genuine waste inputs. In response, the EU has adopted stricter rules and built a centralized traceability system. The U.S. has not.

 

These shortcomings affect market outcomes. Soybean and canola oil, even when produced using climate-smart practices, struggle to compete with imported UCO that is cheaper and scored more favorably under current models. Domestic tallow and U.S.-collected UCO are already near capacity. Without adjustments, credit systems may continue to displace more traceable domestic oils with unverifiable imports, undermining both the credibility and impact of U.S. biofuel policy.

 

There is no silver bullet, but several policy options can improve alignment. Certification standards for imported UCO could be strengthened, following the example of the EU’s Renewable Energy Directive or the ISCC system. Carbon scoring methodologies should be revised to reflect the full emissions profile of feedstocks, including long-distance shipping and leakage risks. If preserving domestic capacity is a priority, temporary incentives could support bio-based diesel production using U.S.-grown oils. Trade tools—tariffs or quotas—should be used cautiously and only when there is clear evidence of fraud or dumping.

 

None of these options are costless. Stricter oversight increases compliance burdens. Revising CI models requires robust data and political will. Incentives must be carefully targeted to avoid inefficiencies. Trade instruments carry risk. But doing nothing also carries a cost: it weakens the policy framework and erodes confidence in programs intended to reduce emissions and support clean energy transitions.

 

The broader point is that sustainability standards must be enforceable. Incentives must be tied to credible data. And policy must be responsive to shifts in global supply chains. As U.S. tax credit structures change in 2025, the opportunity exists to close these gaps. A better-aligned system can protect environmental outcomes while ensuring that U.S. producers—who operate under tighter scrutiny—are not penalized in the process.


📘 Full article in Food Policy:

 
 
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