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Load of Hogwash

(Global Times)

09:58, August 25, 2011

In a restaurant kitchen, workers are drawing out used, waste oil, known as "hogwash," from an iron container and putting it into a recycling bin.

But these are not the illegal collectors who "recycle" the waste oil and sell it back cheaply to restaurants so they can use it again to cook your next meal. These collectors are from Beijing Hailianghongxin Bioenergy Ltd, one of the eight licensed collectors of hogwash oil in Beijing.

"We have contracts with 300 catering firms, including most McDonald's, and collect 3,000 tons each year," Li Dong, president of the company, told the Global Times.

The hogwash oil they collect is transported to a plant in Gu'an county, Hebei Province, and processed into biodiesel. The plant is owned by Gu'an Zhongde Lihua Petrochemical Co, the largest hogwash-to-biodiesel processing company in Beijing.

When hogwash oil is used in restaurants, it can cause a wide range of diseases and even cancer; but it can also be used to make biodiesel, a clean fuel, Lu Xinuo, technical director of Zhongde Lihua, told the Global Times. So not only is the growth of the industry beneficial for "green" power, it could also help protect public food safety.

Short supply

With more than 50,000 restaurants, hotels and canteens citywide, Beijing can produce 90,000 tons of hogwash oil each year. Unfortunately, most of it is still being siphoned off illegally, to be used again in restaurants.

The Gu'an plant, which opened in May and can process 40,000 tons of hogwash oil a year, only expects to receive 15,000 tons to process in its first year, said Lu.

China has many biodiesel processing plants, but only 20 to 25 percent of their capacity was used in 2010, said Sun Shanlin, deputy secretary-general of the China Biodiesel Industry Association. Sun pointed out that insufficient materials are a big restraining factor for the industry, as the collection and disposal of hogwash oil is not properly organized.

"The largest difficulty for the industry is the short supply of hogwash oil. The profits in the manufacturing of biodiesel from hogwash oil cannot compare with the profits in selling it as edible oil, so it's hard for enterprises in the biodiesel sector to get sufficient raw materials to expand their production scale," Shen Hongwen, a new-energy researcher with Shenzhen-based CIC Industry Research Center, told the Global Times.

"Our costs include an oil-water separator for each restaurant and always payment to them in order to collect hogwash oil, recruitment of staff, buying vehicles and renting storehouses," said Li.

But the illegal collectors don't need so much investment. "A tricycle and a big scoop are all they need, and at the cost of 300 yuan per ton they can recycle the hogwash oil to be edible oil and sell it to restaurants for 9,000 to 10,000 yuan per ton," Li noted, adding that many restaurants are driven by profits to sell hogwash oil to illegal collectors.

"More than 90 percent of the hogwash oil in Beijing is controlled by illegal collectors," said a research report by the China Association of Senior Scientists and Technicians last August.

Lack of support

"For processing enterprises, we have to bear large costs, including labor, equipment, raw materials for processing such as methanol, as well as development and research and sales, so the total cost amounts to 6,800 to 7,000 yuan per ton, including the 5,500 yuan that we use to buy each ton of hogwash oil from collecting enterprises. And we can sell the processed biodiesel at no more than 7,300 yuan per ton, yielding a profit of 300 to 500 yuan per ton," said Lu.

With such meager profits, many enterprises will not be able to survive, he added.

The Ministry of Finance and the State Administration of Taxation decided in 2010 to exempt biodiesel produced from hogwash oil from consumption tax. However, this only benefits the gas stations selling the biodiesel rather than the enterprises processing it, said Lu.

According to the Biodiesel Fuel Blend (B5) standard implemented in February, gas stations can add up to 5 percent biodiesel to standard diesel fuel, a policy aimed at boosting sales. However, sales are still limited.

"We haven't been able to sell our processed biodiesel to the two petrochemical giants (China National Petroleum Corporation and China Petroleum Chemicals Corporation)," said Lu.

"We don't have to worry about sales at the moment as we can sell half our products to private gas stations and half to make chemical agents. However, if the processing business should get bigger, sales would be a big problem," said Lu.

Big potential

"The amount of available fossil fuel is gradually declining, and it needs to be replaced by new energies, so I'm still quite optimistic about the future of the industry," said Lu.

KLM Royal Dutch Airlines announced in late June it would use a biofuel-petroleum blend on 200 Amsterdam-to-Paris flights starting in September. The biofuel will be produced from waste cooking oil, showing a new way forward for the application of biodiesel.

"To realize the potential, government policies are needed. A recycling system should be established in which special companies are responsible for the recycling of hogwash oil at fixed times, places and reasonable prices. Illegal workshops processing hogwash oil to edible oil must be resolutely cracked down on and restaurants selling and using hogwash oil must be strictly punished," Shen suggested.

Early this month, the government announced it would spend 630 million yuan to support the transformation of kitchen waste into new resources in 33 cities and districts nationwide, including Chaoyang district, Beijing.

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