The consortium, which is based in Rome, offered two reasons for the cut: extremely high prices for virgin base oils and healthy reserves in the group’s financial accounts.

Conou uses proceeds from the tax to pay private contractors to collect waste lubricating oil and transport it to the nation’s three rerefineries. Funds are also used to subsidize prices for rerefined base stocks sold by those rerefineries, to help keep them competitive with virgin mineral base oils.

With virgin base oil prices so high, rerefiners require less of a subsidy. In a news release posted Monday, Conou indicated that the savings from reduced subsidies more than offsets the increased energy and transportation costs incurred by waste oil collection and rerefining.

In September of 2020, the group hiked the tax from €120/t to €150/t to help rerefiners deal with a collapse in virgin base oil prices and with decreased finished lubricant demand. FOB prices for base oils in Northwestern Europe were down to U.S. $600/t at that point, and lubricant demand in Italy would fall 10% in 2020.

By November of 2021, however, virgin base oil values had risen to between $900/t and $1,000/t, and lubricant demand was rebounding roughly to 2019 levels. As a result, Conou cut the assessment on lubricant sales to €110/t.

Virgin base oil prices subsequently rose even further and are now around $1,600/t, the organization said.

Italy has among the highest rate of waste lubricant recycling in Europe. In 2021 it collected 186,000 tons of used oils – representing 46% of the country’s lubricant demand. Ninety-eight percent of the oil collected went to rerefineries, which produced 125,000 tons of base oils plus fuel and products such as additives for bitumen.