12/04/2024 (The Western Producer), Saskatoon - Canada’s canola oil is facing stiff competition from used cooking oil (UCO) and tallow in renewable diesel markets.

The amount of UCO being imported into the United States has surprised everyone, including the U.S. government. Imports in 2023 were large enough to produce 600 million gallons of the fuel.

That exceeds the U.S. Environmental Protection Agency’s estimates by about 550 million gallons, according to the American Soybean Association (ASA).

To put that in perspective, the amount of canola oil imported for renewable diesel production in 2023 was enough to produce 240 million gallons of the fuel.

The tsunami of UCO and tallow imports means reduced use of competing feedstocks like soybean oil and canola oil, according to the ASA. That is because strict blending levels have been established by the EPA for 2023, 2024 and 2025.

Feedstock demand is fixed, so any increase in imported UCO and tallow means a reduction in North America’s “marginal feedstocks” like soybean and canola oil.

“Thus far, this has displaced over 500 million renewable diesel gallons worth of domestic feedstock and could easily rise to a billion or more gallons in 2024,” ASA chief economist Scott Gerlt stated in a recent article he wrote for the association’s website.

Chris Vervaet, executive director of the Canadian Oilseed Processors Association, said UCO imports into the U.S. are “substantial,” but so are canola oil shipments.

“We continue to see record utilization for canola oil in biofuels in the United States,” he said.

The U.S. Energy Information Administration reports that 376 million pounds of canola oil were consumed by the U.S. biofuel sector in January. That compares to 631 million lb. of tallow and 616 million lb. of UCO.

UCO and tallow are highly sought by biofuel manufacturers because they have very low carbon intensity scores since they are essentially waste products.

“It’s more or less going to be disposed of,” Gerlt said in an interview. “They’re pennies from heaven.”

Most of the used cooking oil is coming from China, where there are huge supplies. Imports of Chinese UCO into the U.S. are on the rise at the same time shipments to the European Union are declining due to ongoing fraud investigations.

There are allegations that some UCO and UCO-based biodiesel from China is actually palm oil product, which is frowned upon in the EU for environmental reasons.

An estimated 80 percent of the UCO used for biofuel production in the EU is imported and 60 percent of that comes from China, according to an article published by Oils and Fats International.

That is why many EU states are investigating allegations of UCO becoming a back door for palm oil into the EU market.

The result is that EU imports of Chinese UCO fell by almost 600 million tonnes in 2023 compared to 2022, while imports to the U.S. increased by over 700 million tonnes during the same time.

“The U.S. is not looking at those imports with much scrutiny at this point,” said Gerlt. “Whenever that happens it could change some of the trade.”

That is why the ASA is raising awareness about the impact of Chinese imports. “It definitely bears looking at more closely by the regulators and auditors just to verify that we’re not getting an issue here like the EU is investigating,” he said. There’s a lot of groups that are very concerned about this.”

Vervaet said crop-based feedstocks face intense scrutiny from regulators to ensure they comply with program requirements. “It is important that if there is important rigour on things like sustainability for crops, there also needs to be rigour on other feedstocks that are coming into the system,” he said. “There has to be a level playing field.”

https://www.producer.com/news/used-cooking-oil-amount-proves-surprising/