The Asia-Pacific region has seen tremendous economic growth during the last decade. China, South Korea, Malaysia, Singapore and few others together contribute almost 20 percent of global GDP now – roughly equal to the European Union or United States. China in particular is an economic powerhouse and the worlds biggest energy user. Its 1.35 billion consumers have growing needs for food, clothing, housing, new passenger cars and other vehicles, plus the large-scale industrial and infrastructure projects that will make all this possible.
Today, Asia Pacific accounts for over 30 percent of the worlds lubricants demand and is, accordingly, a tremendous producer of waste oil. But unlike the United States and the European Union, it has few significant waste oil treatment facilities or regulations. Collection and recycling of waste oil is in its infancy, as smaller, local players gather and sell used oil mostly for combustion purposes. A few base oil rerefineries exist, but they generally produce only low-quality Group I base stock, says one expert.
In terms of geography, national policies, municipal implementation and local practices, the development of used oil treatment in the region has a lot of challenges, Victor Li, business development director of Dunwell Enviro-Tech, a used oil recycler and developer of a rerefining technology, told LubesnGreases. Weve made a lot of efforts to adopt the right [waste oil rerefining] technology for this part of the world. There is no absolutely perfect technology for oil treatment and recycling, and definitely, to run a successful recycling business it should be a demanding and sensitive balance between economics and practicality, he said. Hong Kong-based Dunwell offers a low-temperature vibratory membrane technology, which can serve as a pretreatment option for base oil rerefining. This system has been installed in China, Indonesia and elsewhere.
The region is a tremendous lubricant consumer, Li told the Global Business Club CIS Fuels and Lubes conference in Moscow, in May. Japan, for example, is the second biggest lube market in Asia Pacific, and consumed over 2 million tons of finished lubes in 2010. Half was recovered as waste oil, and 95 percent of that was burned.
Japan is a typical oil-importing country, he pointed out. [Unfortunately] a very high percentage of its used motor oil is recovered, treated and burned for heating, while rerefining is very limited, he said. This is because Japan lacks the local resources and government subsidies that could help develop a substantial rerefining industry.
Similar scenes prevail in Indonesia, Mongolia, Singapore and Vietnam. Singapore has 22 licensed waste oil collectors and Vietnam has 13 companies that handle waste oil collecting and recycling. Some of these companies do simple thermal cracking and fractional distillation, Li said. Meanwhile all these countries havent seen any investment in large-scale base oil rerefining businesses that are capable of using more advanced hydrotreating technologies that could result in production of higher-quality Group II base oils, similar to that achieved in Europe or North America.
Australia, Malaysia and South Korea each have some legislation that compels waste oil collection and treatment, and the result is that over 50 percent of their produced waste oil is collected and treated, according to Dunwell. Malaysias legislation contains some responsibility for the manufacturers and producers regarding waste oil collection and disposal. The country has 40 licensed contractors with facilities for oil, mineral sludge and spent coolant recovery, and 28 active recyclers in the oil industry – but only a few have the ability to treat waste oil and transform it into base oil, Li said. These market players are mostly engaged in turning waste oil into feed for manufacture of other lubricant products.
Australia consumes more than 500 million liters of lubricants a year, and collects and treats about 230 million liters of it. The country encourages oil recycling and rerefining with high state subsidies, but it also gives small subsidies for burning low-grade oils and there is no subsidy for treatment of reclaimed industrial oil, Li related.
There were 240,000 tons of waste lubricants produced in Korea in 2007, he added, and almost 70 percent was collected and recycled – mostly by burning.
According to various estimates, lubricants demand in China will reach almost 10 million tons by 2015 – resulting in a gusher of used oil. Chinas government identified used oil as hazardous waste back in 2001, but much of it continues to be burned, cracked into low-grade fuels, or acid-clay treated; little is recycled as base oil or lubricants. Over 350 oil recycling companies treat about 1 million tons of waste oil annually, but they all use outdated technologies and the country lacks systematic regulation that would sanction elaborate handling of used oils, Li said.
According to Dunwell, China has but one base oil rerefinery, a Group I producer in the city of Shenyang in the northeast province of Liaoning. But it also found that some of the countrys waste oil recyclers are adopting technologies such as centrifuges, hydrogenation, membrane filtration, fractional-, molecular- and short-path distillation, and acid-clay treatment. Cost can be an obstacle for these operators, so the Hong Kong technology company offers waste oil recycling systems and cost-effective post-treatment methods that are designed to be affordable by the regions players.
You dont drive a Porsche in a swamp where the infrastructure is not well established and sometimes irrelevant, Li said in a later conversation, stressing that during the past decade Dunwell put lot of effort into establishing a well-regulated used oil recycling industry in China. This included lobbying the government on regulatory enforcement and educating waste producers, the general public and environmental groups.
Chinas waste oil handlers must tackle some basic questions, Li pointed out. Do you need a centralized approach to channel all the used oil to a single location, processing a large capacity, or would you prefer a regional pretreatment to eliminate waste-water and other contaminants before the next phase? he asked.
On a local level, in the special administrative region of Hong Kong, Dunwell has demonstrated that it can be done successfully. There it operates an oil recycling plant capable of processing 12,000 tons per year of waste oil; it now recycles and treats 85 percent of the used oil generated in the city. This is recycled into [finished industrial] oil that we sell to different government or construction companies in the city. The company uses vacuum membrane technology to produce an oil permeate that achieves 6 to 8 cSt viscosity at 100 degrees C, he said, while its concentrated oil reaches 35 to 50 cSt viscosity at the same temperature.
Dunwell is a founding member of the China Used Oil Regeneration Association. The group provides a platform for large and small local collectors and recyclers to exchange information and share experiences, explained Li. It also consolidates efforts to align the momentum with Chinas national policy, the 12th five-year plan. One big challenge for the players is how to manage a cost-effective and efficient collection network across the huge territory, as the country is consuming over 8 million tons of lubricants yearly.