APPENDIX 1
Memorandum submitted by OSS Group Ltd
INPUT FROM
THE WASTE
OIL SECTOR
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.
SUMMARY
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.
BACKGROUND
History
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.
SOME ALTERNATIVE
WASTE OIL
MANAGEMENT OPTIONS
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.
CONCLUSION
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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