In reality, the overall outlook on the European rerefining industry is resoundingly positive, judging from several presentations at the annual congress of the Union of the European Lubricants Industry in Malta last October.

Christian Hartmann, president of the rerefining section of UEIL known as GEIR (Groupement Europen de lIndustrie de la Rgnration), held that while the whole industry has suffered from the rapid drop in prices, rerefined oils in Germany – where the company he heads, Puralube, has its European headquarters – are in healthy demand. Frank Vanderpooten of Valorlub, a consortium of Belgian associations that helps facilitate oil recycling and rerefining, touted the EUs Extended Producer Responsibility scheme and its positive impact on Belgiums oil regeneration industry. And Greek rerefiner and GEIR official, Dimitri Kontaxis, highlighted some successful strategies from Greeces waste oil management system, which he said is exemplary.

Europes Rerefining in Flux

Hartmann painted a picture of Europes current climate for rerefining, complete with the ups and downs of recent years. Of the EUs total lubricant demand of 4.3 million metric tons per year in 2014, around one-half, or 2.1 million tons, was collectable since a good portion of lubricants is lost during consumption.

A robust 80 percent of that volume was collected, based on GEIRs research, and around 40 percent of that was actually rerefined and put back on the market to be formulated into new, finished lubricants. In all, the rerefining industry managed to rerefine approximately 30 percent of what was possible.

One of GEIRs most pressing goals this year is to make headway toward boosting that number and having much more of collectable waste oils picked up, processed and put back on the market. The first step to getting that done, Hartmann said, is to track and lobby legislative processes and key stakeholders to help ensure that the EU implements suitable incentives for waste oil to be regenerated rather than burned for fuel.

In that light, GEIR has developed a position paper, and while its details are under wraps for now, he noted that it will be taken to meetings throughout the year with members of parliament, member states and the European Commission. We are promoting concrete targets – promoting a certain percentage of how much of the volume of collectable used oil should be mandatorily rerefined to base oils, Hartmann said.

First, the associations targets have each EU member state striving to collect virtually every drop of collectable waste oil. The goal is then to be in the practice of rerefining at least 60 percent of collectable oil by 2020 and 85 percent by 2025. If the targets are reached, rerefined base oils will make up 34 percent of Europes market within 10 years, a far cry from the approximately 16 percent share they held in 2014.

Germanys rerefiners, however, are already on the right track: Rerefined oils already contribute to around 20 percent of the nations lube oil consumption. With existing oversupply of virgin base oil, we think, Is it necessary to bring additional quantities of rerefined oils to the market? And we say yes, the market is actively responding to our oils.

This is possible due to a focus on redefining margins, the Puralube CEO said. As all prices come down, its important to manage gross margins. But what can you do? Examples he mentioned included targeting niche, quality-focused markets for sales, drawing up more long-term contracts, and either strategically utilizing a plants full capacity or tempering production while storing products until the market improves.

One method for managing margins, Hartmann related, is a necessary evil. Germany, along with much of Europe and the United States, has transitioned from a pay-for-used oil model in the collecting and recycling industry to a market in which collectors must charge oil change facilities and the like to pick up waste oils.

Burdening suppliers of feedstock with extra costs is not ideal, he noted, and must be carefully managed. One way to mitigate pitfalls of the charge-for-used oil system is for rerefiners to join forces with other players throughout the supply chain and cooperate to increase margins for all.

What goes quite well, even with the large companies, it to establish a closed-loop system with a partner, Hartmann said, meaning an agreement between lube producers, disposers of waste oil, collectors and rerefiners to recycle oil through that looping chain. A closed-loop system helps disposers of spent oil such as quick lubes manage their stream of waste oil. It also helps rerefiners procure feedstock at fair prices, and it supports finished lubricant suppliers fulfill their producer responsibility. If [lube producers] can contribute to the system and work together with rerefiners, then they know where their used oil ends up and that it does not harm the environment.

Producers Responsibility

Apart from the benefits of improved margins, the closed-loop system is a perfect embodiment of a successful Extended Producer Responsibility strategy, said Vanderpooten, the head of Brussels-based Valorlub, which helps facilitate all involved in closing the loop. EPR, a part of the European Commissions waste hierarchy and circular economy plans, is an environmental policy that mandates producers of certain classes of environmentally hazardous, yet recyclable, products to be responsible for those products for their entire lifespan – which even extends past the consumer stage in the case of most lubricating oils.

EPR plays out in myriad ways throughout different member states and across product categories, In Belgium, where Valorlub facilitates lube recycling, it means that lubricant suppliers are responsible for ensuring that 90 percent of the collectable quantities of their products are reclaimed and that 85 percent of that volume is recycled in some way.

Valorlub – which consists of the Belgian Petroleum Federation, the Lubricants Association of Belgium, distribution arm Comeos and lube garage representative Traxio – works with producers, disposers and collectors of lubricants, along with the authorities overseeing EPR. Producers could fulfil the obligation individually, he explained, but a producer would need to introduce an individual waste management plan and prove that it collected 90 percent of the collectible quantity that it put on the market.

Vanderpooten noted that it is neither practical nor economical to fulfil these obligations individually, so concerned federations have initiated an environmental policy agreement with the regional governments in Belgium. In the agreement, producers provide Valorlub information about the quantities of oil they put on the market, and they contribute to have it collected at the end of its usable lifespan.

Both disposers and collectors of waste oils report on the quantities they process and receive corresponding compensation from Valorlub in exchange. Producers and importers of packaged motor oils contribute around 0.20 per liter. This offsets the higher volume of industrial oils, which contribute just 0.01 per liter.

If we have the data from the producers and importers, and we have the data from collectors, we can calculate the percentage of collection and the percentage of treatment to give to the authorities, he said.

As evidence that the scheme was working, Vanderpooten pointed out that around 69 percent of oil (including emulsions) put on the market in Belgium was collected in 2014 – up 3 percent from when Valorlub started in 2007. Sixty-four percent of that approximately 46,000 tons was rerefined, and 27 percent was reused in another way. Only 4 percent of collectable used oil was used as fuel, and only 5 percent was released to waters.

Everyone wins, he suggested. Participating producers can rest assured they are fulfilling their environmental responsibility, collectors benefit financially from collecting and providing data, and rerefiners are funneled more feedstock because disposers have their collection costs covered.

Success in Greece

The conversation then turned to Greece, which could be used a case study for the successful application of EPR, according to Kontaxis, who is also CEO of LPC S.A. Since an EPR scheme was implemented in Greece in 2004, rerefining rates in the country have jumped to 43 percent of the countrys total lube consumption, which he noted was one of the highest rates in Europe.

The EPR scheme in Greece achieved, in Kontaxis words, the establishment of a waste oil hierarchy with clear priority to rerefining. Greek legislation, in general, favors rerefining, he said. Greeces distributors are prohibited from marketing lubes from producers that dont participate in the EPR scheme, and collectors are obligated to separate collection of reusable oils from other types of waste that would normally be burned as fuel.

Most importantly, he continued, burning of spent lube oils is illegal in Greece. You cannot mix waste oil with fuels. Furthermore, legislation has protected the local rerefining industry by imposing transboundary shipment controls – so shipping waste oils to another country to be incinerated abroad is restricted as well. As a result, regeneration of waste oils can be implemented in the territory.

For rerefiners, forbidding the burning of used oils as fuel and restricting transboundary shipments are both welcome measures to adopt in other countries throughout Europe, Hartmann told LubesnGreases. If [every member state] had sourcing for rerefining alone, it would be much easier to find the right pricing among competition, but as long as there are outlets for burning, then that destroys our natural pricing system. Although its challenging at the moment, he concluded, the industry is moving in the right direction.