Used Cooking Oil Demand Outstrips Supply - Major shortage looming...

• World’s largest used cooking oil (UCO) producer, China, will soon have insufficient UCO to meet demand from Europe and US as it soars
• Europe needs more than 130,000 barrels of UCO per day - 8 times more than it collects. The US now consumes 40,000 barrels a day and will grow in the months to comes
• On top of pre existing traffic fuels and maritime demand, global airlines are set to triple demand for UCO by 2030 creating an even tighter supply dynamic
• As demands grows, it is critical for the market to become more structured - giving market participants impetus to invest in improving supply chains and ensure total traceability

For decades now, Used Cooking Oil (UCO) has been a feedstock for biofuels production - however every year we see more and more demand for sustainable biofuels, which can be deemed a good thing to decarbonise the world and work our way towards mitigating the effects of climate change and global warming.

Biofuels originally started to replace conventional diesel in trucks, busses and cars, then worked its was to replacing bunkering fuels for ships and has now started to decarbonise the aviation sector by replacing conventional jet fuel with sustainable aviation fuel - hence it is not just the volumetric demand increase for each stream as consumer change their behaviors and governments priorities more carbon efficient policies but we are seeing the increase in stream / use cases for used cooking oil as a biofuels feedstocks - we could soon see it being used as the base material for bioplastics manufacturing, among various other applications.

Demand for UCO from USA and Europe outstrips local supply by a few order of magnitudes - they are reliant on import from more populated countries where these waste streams are generated, aggregated and exported to refiners. This doesn't make much sense, but this will slowly change - as more and more refining investments are being made in Asia, before the end of the decade we will see a significant amount of UCO be consumed by refiners in home countries, especially in China, India, Indonesia and Malaysia which account for almost 40% of the global population with more than 3 billion people

These countries will eventually become refining hubs for the region importing feedstock from neighboring countries to push on the development of bigger and better refineries, creating better economies of scale and bringing the effective cost of sustainable biofuels lower and lower for the consumer.

Cian Delaney, biofuels campaigner at T&E: “Europe simply cannot collect enough used cooking to fly its planes. Ryanair’s targets for 2030 alone would need all of Europe’s UCO, while all the UCO in China won’t be enough to decarbonise the continent’s airlines, cars and trucks either. UCO is not a silver bullet and can only play a limited role in decarbonising the transport sector. Europe needs to stop shipping waste oil across the world and limit itself to what it can collect at home.”

Demand for UCO has already outstripped supply, but we are not seeing this reflected in the prices of the commodity just yet, it is believed that prices will begin to escalate in the upcoming months with more refineries coming online towards the end of the year. The need to decarbonise is also becoming more pressing, as we make our way towards the next COP - target and commitments are becoming more apparent and everyone knows real action has to be taken now

Demand for UCO across the world is set to spike as targets for aviation fuels kick in. Ryanair alone would need all the UCO in Europe to run just 12.5% of its flights on UCO - its voluntary target for 2030. Global SAF targets in 2030 would require at least twice the UCO that can be collected in the US, Europe and China combined, the study finds.

A midst growing demand and collectors globally originate more and more UCO every year, it is important for more investments to flow into downstream UCO Collection to support oil and gas companies demands as well as global decarbonisation targets. We have not seen any formidable investment into UCO Aggregators in Asia resulting in the inability to form market structure, reporting metrics and robust traceability systems and procedures - which is becoming extremely critical.

Biofuels is one of the formidable decarbonisaiton solutions the world currently knows, that requires no infrastructure change and further assets reinvestment. However from a feedstock perspective we will need to proactively increase the diversity of the feedstock pool that the biofuels industry depends on for advance biofuels production. There are many other waste and residue biofuels feedstocks that have been discovered and commercialized that if evaluated pragmatically will be able to elevate the pressure on UCO supplychains around the world