Brazil appears to be falling behind on meeting its targets for used oil collection. In the first half of 2014, according to government data, the whole country reached a 35.7 percent collection rate. However, its goal was to collect 38.1 percent – meaning that the used oil collection network came up short by about 14.7 million liters (4 million gallons).
Since 2005, Brazil has strictly regulated the collection of used oil, which it deems a hazardous waste, under a system it calls reverse logistics. The reverse logistics process encourages the reuse of various products for the purpose of capturing value and/or proper disposal. Each year, Brazil had raised collection targets to encourage greater recycling, and it seemed to be working. In 2008, 33.4 percent of used oil was collected; by 2011 it hit 37 percent – better than expected.
With 2014s setback, the question now is whether Brazils reverse logistics system has been compromised, and what actions – if any – the government will take to get used oil collection back on track.
According to Brazils Resolution No. 362/2005, all lubricating oil used or contaminated (OLUC) must be collected for recycling, preferably through rerefining, which is considered the best alternative for the waste.
Today, there are 14 rerefiners authorized and registered in the National Petroleum Agency, and only they may work in this business, said Pedro Nelson Belmiro, Lubricants Committee coordinator for the Brazilian Petroleum, Gas and Biofuels Institute (IBP).
CONAMA, Brazils National Council for the Environment, has oversight for used oil collection, and key players such as producers, importers, retailers and generators (consumers) share in legal responsibility for compliance. In practice however, lubricant producers and importers bear the greatest responsibility for collection, which must be done through agents properly registered at the Brazilian National Petroleum, Natural Gas and Biofuels Agency (ANP).
In Brazil, the rerefining industry is one of the most well organized segments of the lubricant market, in terms of reverse logistics, observed Demetrio Florentino de Toledo Filho, general substitute coordinator of the Brazilian Ministry of Development, Industry and Foreign Trade. As he explained to LubesnGreases, the contract between any lubricant producer or importer and its collection agent must be presented to ANP before the company can begin its sales activity in the country. The company also must commit to collect a minimum percentage of used oil, which is established by law for each region of the country.
This resolution applies to all regions in Brazil: North, Northeast, Midwest, South and Southeast regions, said Florentino de Toledo Filho, adding that Brazilian legislation also determines the payment to be made for used oil to prevent improper disposal of this waste.
Brazils Ministries of the Environment and Mines & Energy together set the used oil collection goals to be achieved for each region and publish them in ministerial ordinances. The ordinances consider the characteristics of each individual region, including its potential to boost oil recycling rates. The latest Interministerial Ordinance came in 2012 and established targets through 2015. The ministries are reviewing these figures in order to publish new targets for the coming years.
Prior to 2014, industry seems to have met the targets. According to the last presentation of the rerefiners representative, Nelson Belmiro told LubesnGreases, the percentages of the collected used oil were very close to those established in the law, and it was never an issue until the third quarter of last year when they became worried about not matching the target. However, they did not close the [full-year] numbers yet, and we cannot ensure anything now.
In the future, CONAMA may establish more ambitious and more restrictive policy goals, but the industry must first meet the minimums established in the current law. The expectation is that CONAMA may increase the percentage for collecting for other regions than South and Southeast. The industry is pushing the government to increase the inspection and control of the used oil at the end users point. Government is trying to give more responsibility to the producers; and producers will push the collectors and rerefiners to collect all the amounts contracted by them, said Nelson Belmiro.
According to Nelson Belmiro, Brazil still imports about 40 percent of its base oil needs. The base oil price in Brazil follows the international trend, and Petrobras adjusts their prices to it. Rerefined base oil prices are normally around 5 percent to 10 percent less than the fresh base oil.
The latest research from Editora Onze in Rio de Janeiro, which specializes in lubricants and publishes Lubes em Foco magazine in partnership with IBP, shows that Brazils demand for finished lubricants was 1.37 million metric tons in 2013. It expects that when final data is in, 2014 lubricants demand will show a small reduction of about 3 to 4 percent.
Based on these figures, we can understand the importance of collecting the used oil produced and the great impact on the environment if it is not done, stated Nelson Belmiro, who is also Lubes em Focos editor.
Additional complications are the recent dramatic drop in crude oil prices and consequently base oil prices worldwide, together with rising collection costs, Brazils inflation rate, and its slowing GDP growth.
For the year ahead, Nelson Belmiro said, the main challenge for the rerefiners today is the low international price of the base oil and the high internal cost for collecting and processing the used oil. Besides that, there are some situations of illegal deviation of the used oil for burning, since the price of fuel oil is higher than the one rerefiners pay to the industry for the used oil.
This will be a very interesting year, with a lot of discussions about this subject, and everybody is very careful with any statement at the moment.