While collectable and rerefinable are not defined in the Rules, it is generally understood that these exclude greases, which cannot be rerefined, and process oils, which are consumed in, say, rubber manufacture and cannot be collected.

Capacity

“India is the third largest finished lubricant market in the world behind the United States and China, with a total demand of around 3 million tons spread across Automotive, Industrial and Process Industries,” Kedar Gore, a partner at Rosefield Energy Tech Pvt Ltd., based in Mumbai, India, told Lubes’n’Greases. 

According to Kline & Co. in a presentation to the Asian Lubricants Industry Association (ALIA) in November 2023, rerefining companies in India have a theoretical capacity to produce rerefined base oils (RRBOs) of around 1 million tons. In theory, this is sufficient volume to meet the rerefining requirements in the first few years while those rerefiners or new players invest in upgrading their technology. 

But that theoretical capacity is not matched by production capability. Kline pointed out that only 27 kilotons of RRBOs were produced in India in 2022—less than 1% of total lubricant sales that year. 

The capacity is also widely dispersed. There are more than 400 rerefiners in India, according to Arijit Basu, managing director of Tide Water Oil Company (India) Ltd., based in Kolkata, which markets the Veedol brand, one of the leading privately owned lubricant brands in India.

Rosefield’s Gore expects this to change, as much—probably most—of the collected used oil is currently consumed as fuel. Once producers are required to engage with licensed collectors and those collectors are required to engage with the rerefiners, then volumes flowing into the rerefineries will grow quickly.

Quality

Unlike earlier chapters of the EPR legislation, which dealt with solid wastes, there is no mention of use of RRBOs. “This is an acknowledgement by the committees that advised on the legislation that the rerefining process is a capital- and technology-intensive process,” Gore said.

However, during consultation on the draft legislation, end users expressed concerns about the quality of RRBO currently being produced by the Indian rerefining industry. Much would be described as a medium- to lower-grade API Group I base oil, with a relatively low saturates level and high sulfur. 

While some of this is a function of the technologies deployed in the rerefining industry, Gore does not see this as the critical issue for the short term. “A lot of quality issues with current rerefined base oils are due to the variable quality of the used oil delivered to the recyclers,” he said. Once volumes of used oil entering the rerefineries increase and segregation processes improve, he is confident that the quality of output will improve.

This is echoed by Gabriela Wheeler, base oil editor for Lubes’n’Greases. “The Indian government has made concerted efforts to improve the country’s air quality by implementing mandates that require new vehicles to meet stricter fuel economy and emissions standards,” she said. As a result, “automotive lubricants will have to incorporate greater quantities of [API] Group II and Group III base oils. As additional high-performance base stocks make their way into finished lubricants, more of them will also end up as a main component of the used motor oil that is collected to feed the rerefineries, thus enhancing the quality of output.”

Making it Work

Companies that produce, collect, recycle or import used oil must each register with the Central Pollution Control Board (CPCB). Any company active in more than one of those market segments must register for each segment. The CPCB is expected to create a portal through which all EPR certificates for used oil will be generated and traded from the implementation date. 

“The intention is that all used oil will be traceable,” Gore said.

From 2024, importing used oil will only be permitted for the purpose of rerefining, and used oil importers will only be allowed to import the same volumes as the previous year. Implicitly, therefore, 2022-2023 defines the maximum import year for used oil.

With around 5% of the finished lubricants market, Tide Water ranks as one of the larger independent lubricant manufacturers. “Sustainability is extremely important to Tide Water and the Veedol brand,” said Kalpendra Rajurkar, general manager, Technology & Technical Services at Tide Water. “We are making serious efforts to lead on sustainability, including use of clean energy and room temperature blending, robotics in operations, digitalization and the development of products of low environmental impact, based on bio-sources and RRBOs.” 

Rajurkar pointed to Sustainability awards recently collected by Tide Water from Rosefield Energy Tech and ASSOCHAM (the Indian association of Chambers of Commerce and Trade Associations).

“Tide Water is now using 30% recycled plastic in lubricants packaging, with a target for 50% by the end of 2025 and 100% as soon as is feasible,” Rajurkar explained. “As a responsible company, we will make our best efforts to collect used oil and send through authorized collectors for the rerefining in view of EPR compliance.”  

Franchised workshops should provide the first reliable tranche of used oil for recycling. These facilities are maintained to international standards, and used oil is already collected to be disposed of in a way that does not harm the reputation of the OEM. Thus, there should be few, if any, changes to working practices required to ensure appropriate segregation of contaminated waste oil from recyclable used oil. Administrative hurdles, such as ensuring the collector is properly licensed and that they follow the legislation in delivering the used oil to a licensed recycler, are also small.

Major industrial concerns such as steel, mining, utilities, manufacturing, shipping and railways, are sources of large volumes of used oil where the implementation steps are probably relatively simple. Indeed, an issue for the lubricants suppliers is that most of their major business-to-business customers fall into these categories and are classified as bulk generators under the EPR legislation. This might then leave lubricants marketers chasing the higher hanging fruit from the start.

RRBO Use? 

There is no mention in the Rules of usage of RRBO in finished lubricants, but in late 2023 there was some alarm, as it was reported that the Indian Government was mandating that 5% of rerefined base oils be used in all products from Day 1. This would have created a requirement for more RRBO than is currently available on the Indian internal market, with the prospect of an overnight switch and the knock-on effects on both the virgin and RRBO markets. 

“The Second Amendment Rules are purely about collection and recycling (rerefining) of used oil,” Gore said. Although, collection and rerefining will create API Group I quality base stocks that were previously unavailable.

Anticipating that the Rules will be amended at some time to require use of RRBOs, Rajurkar explained that “Tide Water has well-advanced development programs for products utilizing RRBOs and has already taken steps to source good quality RRBO for use in products.”

There is a wider issue around the ability of the Indian market to absorb up to 50% of base oil volume as Group I in the early 2030s, when projections call for increasing market share of Group II or Group III oils. “Approximately 60% of India’s base oil demand is fulfilled by imports, with large Group II and Group III base oil volumes secured each month from within Asia, the Middle East and the U.S.,” Wheeler said. 

State-owned producer Indian Oil Corp. Ltd. (IOCL) plans to add 1.28 million tons per year of Group II and Group III capacity at three of its refineries by 2027. Although there are market projections that India will only be importing Group II and Group III base oils by 2030, the country currently still needs to import Group I and is operating at least three domestic Group I base oil plants. 

Wheeler conjectured that “RRBO, together with the production from the existing conventional Group I base oil plants, will likely allow India to become largely self-sufficient in terms of Group I needs.” 

Can it Be Achieved?

Beyond the franchised workshop and large industrial segments, the major challenge for India may be collection of any significant quantities of used oil having consistent quality. Rerefiners want secure, consistent supply. Currently, any purchases of used oil from the small, informal collectors are priced like “spot” base oil purchases.

“Making it work will involve significant investment in managing all operations, including appropriate containers, specialized vehicles and trained personnel to handle the used oil safely,” Basu said. 

“It is essential to form consortia dedicated to organizing the collection, sorting and distribution of used oil,” Gore said. “This will address challenges related to the quality, consistency and volumes, while preventing diversion of used oil to unauthorized purposes, such as fuel adulteration. Establishing such consortia is crucial for ensuring the accurate pricing of used oil and facilitating rerefiners to align their prices with the Rerefined Base Oil price, bringing it on par with virgin oil.”

Trevor Gauntlett has more than 25 years’ experience in blue chip chemicals and oil companies, including 18 years as the technical expert on Shell’s Lubricants Additives procurement team. He can be contacted at trevor@gauntlettconsulting.co.uk