Rerefining in Asia
Rerefining in Asia – As global environmental concerns and sustainability efforts continue to grow, many governments have started to implement more stringent regulations focusing on waste reduction, segregation and recycling.
In India, Extended Producer Responsibility (EPR) regulations applicable to used oil collection went into effect in April of this year, on the back of similar rules governing the disposal of e-waste, plastics, batteries and tires.
Under EPR regulations, manufacturers and producers are required to set up mechanisms for efficient collection and disposal of waste after their products’ end-of-life phase. More specifically, the EPR regulations set a recycling target of 5% of all collectable rerefinable products in fiscal year 2024-2025 for base oil and lubricant producers and importers. This figure will gradually increase to 50% by 2030-2031. Not surprisingly, there has been a stronger push to increase lubricant oil rerefining operations in India.
Other countries are implementing similar initiatives, with rerefining considered to be one of the keys to achieving more responsible waste management and sustainable business practices. However, the extent and reach of rerefining enterprises vary across Asia.
Four industry experts gathered at the 16th ICIS Asian Base Oils and Lubricants Conference held in Singapore in June to discuss some of the advantages and challenges that the rerefining industry faces in the region.
Satyan Gupta, Director, Energy Team at advisory consultancy Kline & Co., noted that despite the significant push by the Indian government to encourage used oil rerefining in India, rerefined base oil (RRBO) penetration is abysmally low in the country. India comes in last compared to other countries where rerefining efforts have taken off, such as Brazil, Italy, Germany and the U.S., with Indian RRBO penetration rates hovering around 1% compared to about 26% in Brazil or 22% in Italy and Germany.
Gupta explained that there are many challenges for RRBO operations. Burning used oil rates are extremely high in India, and the infrastructure and mechanism of collecting used oil is inadequate and unorganized. The rerefining infrastructure is also deficient. The biggest challenge is probably the relatively low profitability of the rerefining base oil business because of the cost of feed and low tier demand of the RRBO.
Some issues have been addressed, but there are still many operational challenges, with the EPR program expected to evolve based on the ground realities. For example, producers can buy EPR certificates from recyclers or pay environment compensation fees, but there is no obligation to use RRBO.
Gupta said that his company had evaluated the supply-demand gap for EPR Certificates based on three potential scenarios and came to an unsettling conclusion: Even with 100% disposal of collected used oil for RRBO processing, the current EPR obligation target cannot be achieved.
Nevertheless, he praised India’s Used Oil EPR Program as an excellent initial attempt to address some specific market challenges and broader objectives, but admitted that there is still a long way to go.
The used oil collection process in India is expected to become more organized going forward, with more transparency on both volume and monetary transactions. The quality of the collected used oil is also likely to improve with more stringent and high-performance virgin oil specifications.
Raj Padmanabhan, Asia-Pacific regional product line manager of additives and chemicals manufacturer Chevron Oronite, concurred that RRBO quality is generally improving thanks to technological advancements.
Joshua Park, CEO/president at Chemical Engineering Partners – an advanced process technology company – explained that a typical barrel of used oil is made up of water (5%), light fuel such as gasoline (4%), heavy fuel such as diesel (4%), asphalt (14%) and lube oil (73%). He added that all RRBO processes use a “distillation method” followed by one or a combination of other processes, including a clay or bauxite polishing unit, a solvent extraction process, and hydrotreating. The technology employed in the processing of used oil is of utmost importance, as it allows the rerefiner to produce consistent, high quality base oils, despite the variability of the feedstock.
Padmanabhan noted that Chevron Oronite’s approach to qualify RRBOs in finished oil formulations follows the same rules as it would for virgin base oils. Aside from developing formulations for RRBO use in heavy duty engine oil and passenger car motor oil applications, the company is also introducing RRBO in additives manufacturing.
He insisted that the critical requirements for qualification or approval of an RRBO should be quality and consistency, and that each RRBO manufacturer should adhere to the API Base Oil Group definitions to accelerate the adoption of an RRBO and ensure its approvals are maintained. “If an RRBO varies between Group II and Group III, it is a big issue for use in qualification programs,” he said.
Chevron Oronite had tested and qualified a wide number of RRBOs produced by rerefiners in Asia and Australia, including those of Finas in China, ALP Petro Service in Indonesia, Pentas Flora in Malaysia, IFP and Mangalam Lubricants in India, and Cleanaway and other rerefiners in Australia.
Speaking from the point of view of a rerefiner, Ernie Henderson, Technical Director, Base oil and Lube Products at Malaysian waste management company Pentas Flora, explained that rerefining is a sustainable process, because it represents a closed loop where used motor oil is collected, processed, formulated and re-introduced into high performance products. All used oil products, including base oil, water, fuel and asphalt bottoms, are recovered and reused. He also noted that base oils are returned to their original quality as most base oil components do not degrade, but that additives might be the main source of oil degradation.
Henderson underscored that the process of rerefining is good for the environment, because one can collect, recover and reuse lube oil after it has been used in an automobile or an industrial application and the process can be repeated indefinitely. Rerefining also contributes to carbon dioxide reduction, with studies showing that it produces up to a 78% less CO2 equivalent versus crude oil. RRBO can be used to formulate mid-to-top tier engine oils, industrial oils and driveline products.
But he warned that the feedstock selection was the key to a successful processing of the used oil, since it is collected from many sources and locations and this variability makes the initial feed assessment critical. He explained that it is not unusual to extensively test used oil deliveries for key properties prior to acceptance, checking for viscosity, gravity, water content, flash point and contents such as metals, chlorides, glycols, etc. An analysis of the used oil feed would be able to determine its value and disposition: it can be rerefined, recycled, burnt, used in landfills or rejected altogether. He cited engine oils, transmission fluids, gear oils and hydraulic oils as acceptable sources, while heat transfer oils, metalworking fluids, cutting oils, parts washed fluids and some transformer oils could prove problematic. “Remember, what you collect reflects what you make,” he cautioned.
Henderson also said that the quality of the feedstock will continue to improve in Asia as the industry shifts to a higher viscosity index, higher saturates and lower sulfur found in Group II and Group III base oils to support emission controls and fuel economy efforts. Low SAE grades require Group II and Group III base stocks, and this aligns with a strong regional position in terms of Group III capacity, as some of the largest Group III facilities are located in Asia. A significant growth in China of Group II and Group III production also supports this trend.
Henderson is convinced that rerefining opportunities will only grow in Asia given the huge volume of used oil available and the fact that technology will continue to advance, with high-pressure hydrotreating and improved catalysts becoming more affordable and commonplace.
Gupta agreed, adding that rerefining offers quite a significant business opportunity considering the regulatory imperatives, incentives and current state of the industry.
Indeed, financial incentives seem to be a top priority for those considering the use of RRBOs in their formulations. When the panel asked the audience what factors would most influence their decision to use RRBOs in their operations, a majority of respondents (45%) said that cost savings would be the main priority, followed by environmental benefits (35%), performance and reliability (15%) and company policy/sustainability goals (5%).
