A circular economy is based on the principle of using, recycling and reusing products in a closed-loop. Moving towards a circular economy could provide many opportunities, including the enhanced security of supply of raw materials, reduced pressures on the environment, increased competitiveness as well as growth, jobs and innovation.
The world should be moving away from the traditional focus on natural resources and move towards a more circular economy instead, especially when it comes to oil and related waste. Such a shift, however, poses challenges such as consumer behaviour, financing, skills, business models and multilevel governance.
“One South African industry that could greatly benefit from becoming an entirely closed circular economy through re-refining is the used-oil industry. However, this will take time,” says Recycling Oil Saves The Environment (ROSE) Foundation CEO Bubele Nyiba. “There is a significant international trend towards the re-refining of used oil back to the base oil. It is predicted that in Europe, 70% to 80% of used oil will be re-refined back into base oils by the end of 2020,” he adds.
“Re-refining offers not only the obvious environmental benefits – coupled with this are economic benefits to creating a closed-loop economy. Currently, South Africa is over-reliant on base-oil imports. These imports have long lead times and are impacted by logistics, weather patterns, exchange rates and port operations. All of these make refining a very appealing option for us,” states Nyiba.
High cost of installing oil re-refining infrastructure
South Africa may struggle to transition towards a closed-loop or circular economy model. It is very expensive to set up a refinery to produce high-quality re-refined base oil, in a local market that is price-driven. Very few businesses can afford the millions it will cost to install the re-refining infrastructure.
“In addition, we have a very high demand for burner fuels in South Africa,” says Nyiba. “ Out of 350 million litres of new oil sold annually, 120 million litres are collected for recycling. Then, 90% of this oil is processed into fuel oil to be used in boilers, furnaces and other industrial heating requirements,” he explains.
Another concern held by Nyiba is that there are currently no government incentives supporting re-refining or products made from re-refined base oil. Adding to the problem, the cost of power is high, which has an impact on the energy-intensive processes involved in re-refining.
SA’s future will focus on a circular economy for re-refining used oil
“Europe has an extremely high level of environmental awareness among consumers. Over there, they label their re-refined base oil with environmental endorsements. Locally, our market is mainly price-driven. Here, re-refined oil needs to compete with virgin oil on price,” Nyiba says.
South Africa’s re-refined oil market is estimated to be worth R500 million annually and is staffed by a combined workforce of 1500 people. However, there are currently only three re-refiners in the country that produce base oil from used lubes.
We are hopeful to see a growth in re-refining in SA and in Africa as a whole. Re-refining could support sustainability, reduce reliance on imports, create jobs and lower Africa’s environmental impact,” says Nyiba.
He states that, while South Africa may not yet be able to adopt a European approach to used oil, the future will focus on a circular economy. This will lead to other companies upgrading their plants to have the capacity to produce base oil. “We must encourage those who can make the transition, without talking down our burner fuel producers,” concludes Nyiba.
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