Rerefined base oils have steadily gained traction in the global lubricants industry over the past decade. Initially seen as a sustainable alternative to virgin base oils, rerefined oils are now transitioning into a mainstream option for many lubricant blenders and additive companies. This growth is driven by environmental regulations, circular economy principles and the need for high-quality lubricants in modern engines.
However, a significant technological shift is now reshaping the landscape, with the emergence of rerefined API Group III base oils. While there have been a few rerefineries that produced Group III, the year 2025 witnessed the traction gaining.
Group III base oils are highly refined, offering superior performance characteristics such as high viscosity index, low volatility and excellent oxidation stability. These properties make them essential for advanced automotive lubricants, especially in markets such as the United States and Western Europe, where original equipment manufacturer specifications demand premium-quality formulations for fuel efficiency and emissions control. This category of base stocks are also finding a wider demand base in the emerging markets.
Traditionally, Group III production was dominated by virgin base oil refiners; but now rerefiners are entering this space, leveraging technology upgrades and market gaps to produce Group III themselves. This move is significant because it positions rerefined oils as not only an eco-friendly option but also a high-performance solution.
Rerefined Group III Landscape
Despite years of momentum and a growing sustainability narrative, rerefined base oils remain a niche player in the global lubricants arena. According to Kline & Co.’s latest report, “Sustainability, Used Oil, and Re-Refined Lubricants 2025,” global rerefined base oil production hovers around 3.3 million tons per year, a modest figure when stacked against the industry’s scale. For context, it amounts to just 8% of global finished lubricant consumption.
The lion’s share of rerefined oils still sit firmly in Group I territory. The leap to Group III, the premium tier, is happening but only in small, incremental steps. For now, rerefined oil continues to straddle the line between promise and reality, waiting for the big break that could redefine its role in a greener future.
Figure 1. Used Oil Rerefineries Producing Group III Base Oil
* Processes vacuum gas oil feedstock from another used oil rerefinery; Source: Lubes’n’Greases
Company | Location | Base Oil Production Capacity (metric tons per year) | Group III Launch | |
Total | Group III | |||
Avista Oil | Peachtree, Georgia, U.S. | 125,000 | 20,000 | 2017 |
Puraglobe | Elsteraue, Germany | 100,000 | 50,000 | 2017 |
Safety-Kleen | Wichita, Kansas, U.S. | 38,000 | n.a. | 2025 |
Vertex Energy | Mobile, Alabama, U.S.* | n.a. | n.a. | 2025 |
Two factors stand between the rerefining industry and true Group III excellence: technology and feedstock quality. The first hurdle has apparently been addressed. Advanced rerefining technologies have been available for years, and a few of the plants in North America and Western Europe have been producing Group III-grade materials for a while now.
But here’s the catch: technology alone is not enough. The real differentiator is feedstock quality, which is the secret ingredient that elevates the final product from good to premium. The criticality of this factor can be gauged from an example from the market: A rerefining company using solvent extraction technology managed to hit Group III benchmarks, largely attributed to a rigorous feedstock quality control system. In short, the path to high-performance rerefined oil is not just paved with technology, but also built on the foundation of clean, consistent feedstock.
While the overall capacity to produce rerefined Group III base stock may be small worldwide, the market is increasingly considering it as an important material in the overall blending practices. Two notable projects highlight this trend:
• Safety-Kleen started producing Group III rerefined base oil at its rerefinery in Wichita, Kansas, United States, in early 2025. This marks a major milestone for the company and the industry, signaling confideçnce in the demand for high-quality rerefined products.
• Vertex Energy has repurposed its hydrotreater at Mobile, Alabama, to produce Group III oil, which it began doing in November using vacuum gas oil feedstock from its Marrero, Louisiana, used oil rerefinery. This strategic shift underscores how existing assets can be adapted to meet evolving market needs.
These developments are not isolated. Industry chatter suggests that more rerefiners are exploring similar upgrades, driven by strong demand and the opportunity to differentiate in a competitive market.
Market Drivers
Several factors are driving the transition toward rerefined Group III oils, and each plays a critical role in shaping the future of the rerefining industry. First and foremost is the growing demand for high-performance automotive lubricants. Modern engines are designed for efficiency and durability, which means they require low-viscosity oils with superior thermal stability and oxidation resistance, qualities that are strongly associated with Group III. This trend is particularly evident in regions such as the United States and Western Europe, where OEM specifications and stringent emission norms have raised the bar for lubricant quality.
Another major driver is sustainability pressure across the value chain. OEMs, lubricant blenders and even end users are increasingly committed to reducing carbon footprints and promoting circular economy practices. Rerefined base oils offer a compelling solution by reusing waste oil and minimizing environmental impact, making them an attractive choice for companies with aggressive environmental, social and governance sustainability targets.
Equally important is the endorsement from lubricant additive companies, which has significantly boosted confidence in rerefined oils. Leading additive suppliers have validated these base stocks for use in premium formulations, ensuring performance standards are met without compromise. This technical approval has removed a major barrier for lubricant blenders, allowing rerefined oils to compete head to head with virgin Group III oils in high-end applications.
Together, these factors create a strong foundation for the growth of rerefined Group III oils, positioning them as a sustainable and technically advanced alternative in a market that demands both performance and smaller carbon footprint.
Despite the optimism surrounding rerefined Group III, scaling up production comes with significant challenges. One of the biggest hurdles is the high capital expenditure required to upgrade rerefineries with advanced hydrotreating and finishing units that are essential for achieving Group III quality standards. In addition, used oil collection remains costly and logistically complex, particularly in fragmented markets where transportation and aggregation add to operational expenses.
Finally, smaller operating scales pose a structural disadvantage for rerefiners compared to large virgin base oil producers, limiting economies of scale and impacting overall competitiveness. These factors make expansion a demanding process, even as market opportunities grow.
The emergence of rerefined Group III is a promising development for the lubricants industry. It aligns sustainability with performance, offering a win-win for stakeholders. However, the road ahead still has technical, financial and supply chain challenges. If current trends continue, we could see more rerefined Group III base oil capacities coming online globally, reshaping the competitive dynamics of base oil supply.
ANUJ KUMAR is senior project manager in the Energy Practice of Kline & Co., a business management consulting firm in Parsippany, New Jersey, United States.