What’s on my radar for 2025 (continued):
A quote to begin the year:
"Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it."
Ronald Reagan, 1986
Editor’s Note
I wanted to go ahead and get this out before the chaos of today’s Jan WASDE and potential 45Z updates.
« I’ve been getting blown up on social media the past ~24 hours or so for my posts/comments re UCO
« The evolution of the UCO market deserves an update all to itself because it’s fascinating. There has been no greater unintended consequence of government policy in recent years (stay tuned - I will put this on my to do list for the coming weeks)
« Again, don’t hate the players hate the game… the rules might be changing in short order, though
The “Used” Cooking Oil Conundrum
Two things for your UCO radar in 2025:
#1: We all know there is fraud within the system.
Sure, you can be mad at the Chinese company for selling and shipping it but have you ever stopped to think about the U.S. company who is a willing buyer?
The U.S. renewable diesel producer wants a cheaper feedstock that results in a biofuel with a larger subsidy.
Is it the chicken or the egg, folks, because this is a two-way street.
Even the countries shipping us the UCO know there is fraud. From a Reuters report earlier this week:
“Indonesia said on Thursday its exports of used cooking oil and palm oil residue in recent years had exceeded production capacity, indicating crude palm oil (CPO) had been mixed in and prompting it to issue regulation curbing shipments this week.”
Case in point : the two largest producers and shippers of palm oil in the world rank as two of the largest suppliers of “used” cooking oil to the United States:
#2: U.S. Customs and Border Patrol casts a wide net for “UCO”
The net is so wide that a shipment of 1% used cooking oil blended with 99% virgin palm oil would STILL be classified as UCO under current import designations.
Does our fine federal government address one or both of these in 2025?
Late yesterday, rumors were swirling that IMPORTED UCO will NOT qualify as a feedstock under 45Z.
Time will tell - and we may know sooner rather than later as Reuters is reporting the Treasury will release 45Z guidance at some point today.
Soybean oil is a fan of the rumors/news, rallying 6% since the market close on Wednesday, pushing oilshare to a 7-week high overnight:
What would it mean if imported UCO wouldn’t qualify as a feedstock in renewable diesel production under 45Z?
Keep reading with a 7-day free trial
Subscribe to No Bull to keep reading this post and get 7 days of free access to the full post archives.