It’s an unexpected journey, from one part of the world to another. A few liters of oil, waste from the copious Chinese fondues so popular in the province of Sichuan, are collected in the kitchen of a restaurant by a specialized company. The product is then poured into silos, processed at a local factory, and then transported across the Pacific to California. There, he joined another factory, which manufactured biofuels for the engine of an American plane. Let gutter oil fly (let the sewer oil fly) sums up the slogan of Sichuan Jinshang Environmental Protection Technology, a collection company operating in the city of Chengdu.
It is no coincidence that China has become the world’s largest exporter of used cooking oil. The resource is abundant: experts estimate that at least 3 million tonnes of oil are recovered each year in restaurants, canteens and other noodle factories. “Collection infrastructure has expanded in recent years as the demand and price of cooking oil has increased, but the sector remains very opaque,” warns Ryan Standard, biofuels market analyst at Fastmarkets.
Marginal before 2022, American imports of used cooking oil jumped with the implementation of the Inflation Reduction Act (IRA) by President Joe Biden, who allocated an envelope of 3.3 billion dollars to increased production of sustainable fuels and set a target of reducing emissions from the aviation sector by 20% by 2030. “The United States introduced incentives for biofuels, but did not have the quantity of raw material sufficient to produce them, explains Alessandro Giraudo, professor of geopolitics at Inseec. This hiatus forced the country to import large quantities of this oil, which was previously reused only in China.
Low carbon content
Beijing has thus established itself as the leading supplier of cooking oil to the United States, intended to produce biodiesel and aviation fuels. Volumes from China are growing rapidly: with more than 680,000 tonnes from January to August, they already represent more than half of American imports, according to Fastmarkets. The advantage of using this oil compared to other resources? Its low carbon content qualifies for higher subsidies for biofuel production. This second generation product – already in use – therefore competes traditional vegetable oils such as rapeseed or soybean. “Used cooking oil offers a very good return,” explains Manish Marwaha, founder of the company Byufuel, specialized in the supply of raw materials for biofuels.
Its price depends on many factors, such as the cost of vegetable oils and petroleum, and the amount of subsidies. These can be combined: the tax credits granted within the framework of the IRA are added, for example, to the mechanism of Low Carbon Fuel Standard (LCFS) in California. “American manufacturers have found that used oil has become almost competitive with kerosene obtained from petroleum. They are willing to pay more to obtain the raw raw material and process it locally, which creates added value on American territory”, notes Alessandro Giraudo.
The American biofuels industry is worried. The Nopa producers’ association, which includes the giant Cargill, has called for IRA tax credits to be reserved for producers using raw materials of American origin. Their demand found an echo: this summer, a group of senators, mostly Republicans, pointed out the threat that Chinese cooking oil would represent for the national biofuel industry, calling for stricter verification of their composition. “The idea, taken to Washington, is that American taxpayer money finances products imported from China, some of which could turn out to be fraudulent,” notes Susan Stroud, founder of the American agricultural analysis company No Bull.
Between the two rival powers on the international scene, the time has come for cooperation. “It’s a constructive dialogue, one produces, the other consumes,” explains Professor Alessandro Giraudo. For now. While none of the US presidential candidates have officially spoken on the subject, Ryan Standard of Fastmarkets admits that an immediate restriction of Chinese oil imports is more likely if Donald Trump wins than if Kamala Harris wins. ‘election. “Trump cannot outright repeal the provisions of the IRA, but changes are possible,” notes Susan Stroud.
The first hitch could, in fact, come from Beijing. “It is not unthinkable that China would introduce a tax to restrict its own exports and develop this sector internally, with a view to meeting its objective of carbon neutrality. Which would jeopardize American supplies,” explains Sébastien Kahn, responsible for the decarbonization of industry for Capgemini Invent France and teacher at Sciences po.
A considerable market
In Europe, Brussels has introduced customs barriers on Chinese biodiesel, partly produced from used cooking oil, following an anti-subsidy investigation. Added to this are suspicions about the composition of the product. “It is difficult to distinguish oil that has been cooked from virgin oil. In the past, there have been cases of palm oil from Indonesia being falsely labeled as used cooking oil. This risks fraud is recognized by the European Commission”, warns Cian Delaney, representative of the NGO Transport and Environment.
In the future, Europe could import its sustainable fuels from the United States, according to Manish Marwaha. Because if the EU imposes numerical objectives on the aviation sector, across the Atlantic the incentive is on the supply side, explains Coco Zhang, social and environmental governance analyst at ING. As a result, “the United States will generate a surplus, and the product will probably be exported,” she adds.
The stakes are considerable, and the steps are still very high. “Industrialists are ready to produce: European airlines must achieve the objective of 70% sustainable fuels in 2050, while they are at around 0.1% today,” notes Sébastien Kahn. Irish low-cost carrier Ryan Air bought 1,000 tonnes from oil giant Shell last March. TotalEnergies has also turned to aviation fuels, partly produced with cooking oil from Europe.
In the United States, around thirty biofuel manufacturing units should be put into service in the next five years. China intends to meet this exponential demand. Its potential for collecting used oil could exceed 5 million tonnes per year, according to the NGO International Council for Clean Transportation. However, volumes are insufficient to decarbonize the entire sector, tempers Cian Delaney, at Transport & Environment: “We will not be able to cook enough fries or donuts in the world to make all the planes fly.”
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