Select Committee on Environment, Food and Rural Affairs Appendices to the Minutes of Evidence


Memorandum submitted by OSS Group Ltd


  As significantly the largest operator within the UK waste oil sector, the OSS Group would like to put to the Select Committee its views on a number of factors currently affecting the management of this hazardous waste stream insofar as they relate to recent and anticipated changes in waste disposal policies.


  This paper offers a very brief overview of UK waste oil management over the past 50 years and highlights some of the current challenges in managing this hazardous waste posed by EU policy objectives which derive from, in our view, untested assumptions in the 27-year-old Waste Oil Directive (WOD). It briefly reviews some possible innovative alternatives that are constrained both by this Directive and, potentially, by restrictive definition and interpretation of recovery and disposal operations set out in the Waste Framework Directive. A further challenge arises from the recent European Court of Justice ruling against Germany for failure to implement adequately the WOD and the corresponding policy response of DEFRA to infraction proceedings now faced by the UK and other Member States.



  Since the second world war, waste oils (see Annex) have been managed successfully throughout the UK in a responsible manner by a number of companies specialising in this field. Nationwide collection coverage has been provided for all producers of waste oils with the material undergoing treatment at a number of sites run by commercial operators. The resulting product (now known generically as RFO-recovered fuel oil) is used as fuel at a variety of outlets, predominantly roadstone coating plants in quarries and, more recently, coal-fired power stations; other significant users have been in the metallurgical sector. The economic value to the fuel end-user sustained this chain of disposal and even provided a modest incentive back to the waste producer. Positive value at all points in the chain provided incentive for all concerned to safeguard the material. Virgin fuels displaced by use of RFO are heavy fuel oil (HFO) and gasoil (heating oil) at the power stations and quarries, respectively.

  This system for managing waste oils within the UK has a creditable history of providing collection and environmentally sound recovery of energy from this waste stream.

Transition of collected oil to Special Waste

  In 1996, the Special Waste Regulations SI 972 defined waste oil as special and for the first time brought it under the more stringent controls used for the management of special or (soon to be) hazardous waste. Essentially, this introduced a cumbersome documentation regime that added little to the existing responsible management of this material. In practice, waste oil continued to be handled much as before but with a bureaucratic overlay that added significant cost and a data collection scheme which overwhelmed the ability of the Environment Agencies to use it constructively.

Emissions controls

  Regulatory control of RFO combustion is provided at the point of use whereby the burners must be authorised to burn "waste or recovered oil" under an EPA Part A (Integrated Pollution Control) or Part B (Local Authority Air Pollution Control) permit. Atmospheric emission limits were set out in Waste Oil Directive (WOD) 75/439 (amended by 87/101) and focussed primarily on species considered important when the original Directive was established. In particular lead, which was then in widespread use as an octane enhancer in petrol, and chlorine which tended to arise adventitiously from incorrect disposal of chlorinated solvent and also from legitimate disposal of metal-working fluids where chlorine-containing oil is a valuable consitituent. This, too, is a declining problem as use of chlorinated solvents and chlorine-containing metal-working oils progressively diminishes under pressure from general measures to reduce use of chlorinated materials.

Transition of treated oil (RFO) to Special Waste

  In 1996, when the Special Waste Regulations were introduced, no thought was given either by the Environment Agencies or the waste oil sector to extending the requirement to consign as special/hazardous through to the RFO produced by treatment of the waste oil. This continued to be moved as a product ie non-waste, albeit with its use as fuel subject to permit, as described above. During 2001, however, following a High Court judgement in the parallel, waste solvent sector, the Agencies concluded that traditional processing of waste oil might not lead to its recovery as a product and that it thus remained a waste until burnt. The sector is currently waiting upon guidance from the Agencies to implement this change which will mean that RFO must, very shortly, be handled as special/hazardous waste. Apart from short term adjustments whereby RFO users will have to obtain appropriate waste management licences to receive the material, this change will require treated waste oil to be subject to the Waste Incineration Directive (WID). At present, it appears that compliance with this Directive may prove beyond all currently employed uses of RFO as fuel; a possible exception is the cement kiln fuel sector which may have the ability to use this stream whilst meeting WID requirements. There are, however, unresolved issues of planning consent and permitting that may impact upon the uptake of this incremental waste derived fuel. With the limited number of operators in the cement kiln sector the likely economic rent for this disposal will result in dramatically reduced value ie increased cost, to the waste producer, compared with current levels.

Duty derogation

  To support the traditional and cost-effective use as a fuel, excise duty due on heating oils (approximately 3 pence per litre) has, for many years, been derogated for RFO. It is expected that this derogation will be foregone in the near future as part of DEFRA's response to threatened infraction proceedings regarding compliance with the Waste Oil Directive (WOD) as the Commission turns its focus from Germany to other, non-compliant Member States. If the option of use as fuel is to continue (and there are no short/medium term alternatives for the UK), the additional cost will have to be passed back to waste oil producers-a significant perturbation in a sector which, until the recent past, had been used to receiving (modest) payment for its waste oil. The impact of this change on current, satisfactory levels of collection performance remains to be seen but it should be appreciated that the UK does not yet have in place a robust waste producer inspection regime to support the transition. Nor, it should be noted, does it have an alternative infrastructure for disposal of the waste oil stream which currently amounts to approximately 400,000 tonnes per annum.

Waste Policy issues

Driving Forces

  UK performance in waste oil management, driven by market forces, has been good by EU standards although sustained commercial viability has never rewarded the various attempts to meet the product recycling objectives prioritised by the Waste Oil Directive 75/439 (amended 87/101). There have been occasional periods where high crude oil prices made recycling seem attractive but overall viability fell away as prices declined. In addition, the technical challenge (and thus investment required) of recycling oil to a quality acceptable to the market has become progressively harder as performance standards led, in particular, by demands of the automotive sector move on. Further barriers to recycling are posed a) by the specialist protocols for certifying new formulations of baseoils which involve extensive and costly accreditation testing and b) by the restrictive nature of the lubricants market where high-profile brand identity plays a major role. These costs may prove prohibitive unless recovered across significant sales volumes which thus favours larger recycling plants where economies of scale are possible.

  The 1975 Waste Oil Directive (amended by 87/101) was strongly influenced by producer interest lobbying and set out to underpin recycling to lubricant base oil by seeking priority for regeneration which it defines as

    any process whereby baseoils can be produced by refining waste oils, in particular by removing the contaminants, oxidation products and additives contained in such oils.

  It further defined processing as

    operations designed to permit the re-use of waste oils, that is to say, regeneration and combustion

  and disposal as

    the processing or destruction of waste oils as well as their storage and tipping above or under ground

  and finally, combustion as

    the use of waste oils as fuel with the heat produced being adequately recovered.

  Article 3.1 of 87/101 requires Member States to give priority to the processing of waste oils by regeneration although balancing clauses recognise that the issue of practical viability cannot be ignored. The call for support mechanisms (both fiscal and legislative) around the world by advocates of oil recycling suggests that few, if any, examples exist where open market conditions support sustainable, commercially viable oil recycling. Indeed, the OSS Group itself has a small regeneration plant at one of its sites but has struggled to achieve commercial success; the unit has been mothballed for the past two years.

  The validity of the assertion of the 1975 Waste Oil Directive, that regeneration of base oil is more energy efficient than production of virgin material was never challenged although the continued calls for support suggest that, in practical terms, this must be questionable, for a number of reasons. For example, establishing incremental recycling capacity reduces virgin baseoil production across a wide number of existing units and thus the marginal energy per tonne of production is very much less than assumed by simply considering total energy cost for each process. Comparison is further exacerbated because few, if any, commercial recycling plants produce the complete range of baseoil grades available from virgin plants. Note also that, at the time of its gestation in 1974/5, dramatic increases in crude oil price levels were being accommodated and so a measure that appeared to promote hydrocarbon resource conservation was accepted somewhat uncritically.

  Also worth noting is the fact that all other waste oils of non-lubricant origin are not addressed by the WOD; thus mineral oils such as Fuel Oils (Light, Medium and Heavy), gasoil, kerosene and gasoline all of which arise as waste from time to time are managed without reference to this Directive. It is important to retain options for disposal both of this material and for the fraction of the waste lubricant stream which is not regenerable, due to contamination for example; this may represent a significant amount of waste oil. Narrow interpretation of what constitutes "product" versus "waste" and restrictive application of the WID may mean that material which may be safely used as fuel could face severely limited disposal options if regarded as a waste.

  To this day, the 1975 WOD is called in support of demands for market-influencing regulation although circumstances are changed in so many relevant areas that it must be asked whether this remains an appropriate basis for policy formulation.


Thermal Cracking

  This is a well-established refining technology whereby, at very high temperatures, larger molecules break apart into smaller molelcules; it may be used to crack waste oils to produce a lighter product similar to gasoil/diesel. For a number of technical reasons, primarily sulphur content, the resulting material can meet neither diesel nor heating fuel specifications, unless subject to further relatively costly desulphurisation treatment. It might be used, however, to produce electricity in a diesel generator provided that suitable emissions abatement is used on the exhaust gases.

  Thus may the waste oil stream be converted to a more usable, distillate energy source and this technology is being actively promoted by a variety of suppliers.

  It cannot be overstressed that whilst thermal "cracking to distillate fuel" may have potential as a route for recovering energy from waste oils, the technology fails to comply with the the WOD since it does not lead to production of lubricant baseoil.

Production of Clean Fuel Oil (CFO)

  OSS is developing an innovative physico-chemical process for producing a cleaner fuel product from the waste oil stream that offers an attractive alternative in the heating oil market. Not only does it have reduced emissions compared with conventional RFO but also when compared with virgin heavy fuel oil (HFO).

  This is particularly cost-effective compared to the thermal cracking route since it has negligible yield loss and the process requires considerably less energy. Nonetheless, this too fails to comply with the requirements of the WOD since it does not lead to production of lubricant baseoil. Here again, prescription in a 30-year old Directive are frustrating development of new alternatives to manage this waste stream.

  A further constraint is the complexity and lack of transparency of the rules governing when a waste material may be considered "recovered" ie no longer a waste, with all that that entails. Notwithstanding that CFO is in many respects a cleaner fuel than "virgin" HFO, advice from the Environment Agency is that it remains a waste to the point where combustion occurs and is thus limited by the constraints of the WID.


  As the leading UK waste oil specialist, OSS is keen to engage in oil regeneration as envisaged by the 1975 Waste Oil Directive but only where such investment can be economically justified. The company is committed to resource conservation through recycling wherever this is supported by sound economics and, indeed, practices this for a number of the other waste streams which the it manages.

  OSS wishes to see less prescriptive and more intelligent interpretation of waste policy in this specialist area so that regeneration can be pursued if viable. Nonetheless, policy should leave room for other, possibly more cost-effective, management options where these can offer environmentally sound alternatives.

OSS Group Ltd

May 2002

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