Biodiesel production from waste cooking oil
Biodiesel production from waste cooking oil
Business Model Description
Biodiesel is a biofuel derived from vegetable oils and/or animal fats. It is non-toxic, biodegradable and produces less sulfur and hydrocarbons and can replace fossil diesel.
Expected Impact
The development of biodiesel industry provides consumers with green and renewable resources and solves the food safety and environmental protection issues due to the re-utilization of waste oils.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- China: Zhejiang
- China: Hebei
- China: Shandong
- China: Henan
- China: Hubei
Sector Classification
Renewable Resources and Alternative Energy
China's current energy structure is dominated by fossil fuel. Fossil fuels are limited and release large amounts of carbon dioxide when burnt, contributing to global climate change and the occurence of extreme weather events. Thus, renewable energy is crucial to China's green transformation and energy security.
The proportion of non-fossil energy in total energy consumption should be increased to about 20%. State Council's action plan for carbon peaking stated that wind and solar power generation, biomass power generation and heating should be developed. By 2030, the total installed generation capacity of wind and solar power will reach above 1200 gigawatts. (1)
Renewable energy employs about 32% women, compared to 22% in the energy sector. (2)
The IOAs in the renewable energy sector center around the utilization of solar energy, wind energy, and biomass energy.
The energy endowment and demand follow the contrastive distribution. Hydropower generation is centralized in southwest China, while wind and solar energy are centralized in northern China, which is far away from the centers of consumption in the eastern and coastal areas. Instable renewable energy makes consumption and stable operation of the grid challenging.
Alternative Energy
China's rapid development has boosted energy consumption. Renewable energy resources should be actively explored and utilized in order to reduce environmental pollution and mitigate climate change during the process. Biofuel has significant potential.
The ""14th Five-Year Plan for Bioeconomy"" issued by the NDRC in 2021 stated that bioenergy should be actively developed. The replacement, promotion and application of advanced biofuels in major areas such as municipal facilities and transportation were also highlighted to promote the transformation of fossil energy to green, low-carbon and renewable energy. (3)
The development of bioenergy gives people in rural areas more access to affordable clean energy.
Investment opportunities introduction
China's development of biofuels follows the principle that there should be no competition for food with people and no competition for land with grains. Thus IOA focus on biodiesel produced from waste cooking oil.
Key bottlenecks introduction
biofuel usually is not economic viable thus require subsidy
Biofuels
Pipeline Opportunity
Biodiesel production from waste cooking oil
Biodiesel is a biofuel derived from vegetable oils and/or animal fats. It is non-toxic, biodegradable and produces less sulfur and hydrocarbons and can replace fossil diesel.
Business Case
Market Size and Environment
USD 100 million - USD 1 billion
The diesel consumption in China is 190 million tons/year. The annual demand for biodiesel B100 is about 10 million tons calculated based on the percentage of B5 diesel (i.e. the allocation ratio of 5% biodiesel). The market size of biodiesel is about 70 to 90 billion yuan according to the current price at 7,000~9,000 yuan/ton.
Indicative Return
10% - 15%
The average gross profit margin of the biodiesel business in the past three years is around 13.9%, which is calculated based on the weighted average market value of Longyan Zhuoyue New Energy Co.,Ltd., Zhejiang Jiaao Enprotech Stock Co., Ltd., and the Hebei Longhai Bioenergy Co.,Ltd.
Investment Timeframe
Short Term (0–5 years)
Only a few waste fat biodiesel projects are disclosured in China now. Longyan Zhuoyue New Energy Co.,Ltd.’s project with an annual output of 100,000 tons has a construction period of 2 years. It can make positive cash flow in 1st year after the completion of construction. (4)
Ticket Size
USD 500,000 - USD 1 million
Market Risks & Scale Obstacles
Capital - Requires Subsidy
Business - Supply Chain Constraints
Impact Case
Sustainable Development Need
In 2020, China's transportation industry accounted for about 10% of China’s CO2 emissions. Further efforts are needed to promote the decarbonization of the transportation sector and reduce emission of pollutants in the transportation industry. (5)
Expected Development Outcome
Biodiesel is renewable, clean, and safe. Compared with conventional diesel, the biodiesel produced from waste fats and oils can reduce GHG emissions by up to 80%.(5)
Gender & Marginalisation
Primary SDGs addressed
13.2.2 Total greenhouse gas emissions per year
China's greenhouse gas emissions is around 15 billion tons of CO2 equivalent in 2020.
China strives to achieve carbon peaking before 2030 and carbon neutrality before 2060.
Secondary SDGs addressed
Directly impacted stakeholders
People
Planet
Indirectly impacted stakeholders
People
Outcome Risks
In high-altitude area, biodiesel’s nitrogen oxide emission is relatively high, leading to air pollution. (7)
Impact Risks
Oil and fat products are likely to incur fire, carrying potential safety hazards.
Impact Classification
What
The waster cooking oil are less likely to be reused by small resturant. It will also contribute to air pollution and CO2 emission reduction.
Impact Thesis
The development of biodiesel industry provides consumers with green and renewable resources and solves the food safety and environmental protection issues due to the re-utilization of waste oils.
Enabling Environment
Policy Environment
In 2014, NEA issued the "Development Policies for the Bio-diesel Industry", which put forward comprehensive regulatory requirements for the biodiesel industry in terms of ensuring the supply of raw materials, industrial layout, industry access, supervision and management. (9)
China will promote the development of biogas industrialization and the transformation and upgrade of methane use in rural areas. The country should improve the quality of biodiesel products, and promote the liquid bio-fuel production via non-grain biomass. (17)
In 2021, the NDRC issued the "14th Five-Year Plan for Bioeconomy". It stated that pilot projects for biodiesel promotion should be carried out in areas where conditions permit, and the demonstration application of aviation biofuel should be promoted. (3)
In 2022, the NEA and the NDRC issued the "14th Five-year Plans for Energy Resources", which stated the principle that there should be no competition for food with people and no competition for land with grains, actively developing cellulose fuel ethanol and biodiesel, etc. (11)
Financial Environment
Shanghai governemnt issued policy to subsidize B5 biodiesel preparation and sales companies. The subsidy should not be more than 0.24 yuan/liter. (14)
China introduced consumption tax exemption and 70% immediate refund upon payment policy for qualified biodiesel production. (10)
Regulatory Environment
In 2005, the "Renewable Energy Law" stated that renewable energy refers to wind energy, solar energy, hydroenergy, bioenergy, geothermal energy and ocean energy, etc. It also stipulated that petrol selling enterprise should incorporate liquid bio-fuel into its fuel selling system. (12)
According to the "GB 19147-2016 National Compulsory Standard for Automobile Diesel" issued in 2016, less than 1% of BD100 biodiesel can be blended into the diesel. (10)
1~5% of BD100 biodiesel should be blended into the diesel. It also integrated the two national standards for biodiesel products into one national compulsory standard. (10)
Marketplace Participants
Private Sector
Longyan Zhuoyue New Energy Co.,Ltd., Zhejiang Jiaao Enprotech Stock Co., Ltd., Hebei Longhai Bioenergy Co.,Ltd., Tangshan Jin Lihai Biodiesel Co.,Ltd., Zhejiang Eastriver Energy S&T Co., Ltd., and Jing Zhou Dady Bioengineering Co.,Ltd. (13)
Government
A biodiesel pilot project was carried out in Shanghai, China. As of June 2020, Shanghai Petroleum had built a B5 biodiesel blending base, which has an annual delivery capacity of 400,000-600,000 tons of B5 biodiesel. (15)
Target Locations
China: Zhejiang
China: Hebei
China: Shandong
China: Henan
China: Hubei
References
- (1) State Council, 2021, Action Plan for Carbon Dioxide Peaking Before 2030, http://www.gov.cn/zhengce/content/2021-10/26/content_ (2）IRENA, 2019, Renewable energy: a gender perspective. https://www.irena.org/publications/2019/Jan/Renewable-Energy-A-Gender-Perspective
- (3) Notice by the NDRC of Issuing the "14th Five-Year Plan for Bioeconomy" http://www.gov.cn/zhengce/zhengceku/2022-05/10/content_5689556.htm
- (4) Longyan Zhuoyue New Energy Co., Ltd. Prospectus http://www.cninfo.com.cn/new/disclosure/detail?plate=sse&orgId=9900029007&stockCode=688196&announcementId=1207092002&announcementTime=2019-11-15
- (5) Promoting the Development of Diodiesel Prepared From Kitchen Waste Oils and Fats, 2019, http://news.cnpc.com.cn/system/2021/09/28/030045895.shtml
- (6) Forward Intelligence, 2021, 2021-2026 China Biodiesel Industry Market Prospect and Investment Strategic Planning Report, https://bg.qianzhan.com/trends/detail/506/210729-22247f73.html
- (7) Effects of biofuels on performance and emissions of diesel engine under high-altitude hypoxic condition, http://www.cnki.com.cn/Article/CJFDTotal-NYGU201413007.htm
- (8) Development status and suggestion of biodiesel industry in China, 2021, https://kns.cnki.net/kcms/detail/detail.aspx?dbcode=CJFD&dbname=CJFDLAST2021&filename=GJJJ202108012&uniplatform=NZKPT&v=Zxy_nGTAa3z-xW6j0jIWdSqOpk7t6NAStLmpFHjHMQb65L5WJqmGrSxxyAZlMbrK
- (9) National Energy Administration, 2014, Development Policies for the Bio-diesel Industry, http://zfxxgk.nea.gov.cn/auto83/201501/t20150123_1882.htm
- (10) National Energy Administration's Responses to Biodiesel Policy Consultation, http://www.nea.gov.cn/2021-09/27/c_1310212584.htm
- (11) National Development and Reform Commission and National Energy Administration, Notice on Issuing the Plan for Modern Energy System during the 14th Five-year Period, http://www.gov.cn/zhengce/zhengceku/2022-03/23/content_5680759.htm
- (12) National People's Congress, Renewable Energy Law, 2006, http://www.gov.cn/ziliao/flfg/2005-06/21/content_8275.htm
- (13) Forward Intelligence, 2021, Panoramic review of biodiesel industry chain and regional heat map, https://xw.qianzhan.com/analyst/detail/220/210927-7ea7c80b.html
- (14) Shanghai Municipal Development and Reform Commission, etc., 2021, Measures for the Administration to Support the Promotion and Application of Biodiesel Prepared from Kitchen Waste Oils and Fats in Shanghai, https://fgw.sh.gov.cn/fgw_gfxwj/20211123/8acf7d3bee904b8587cefd3fa37d3655.html
- (15) People's Daily Shanghai, 2018, Shanghai Petroleum's biodiesel business dealt with 30,000 tons of "swill-cooked dirty oil", http://sh.people.com.cn/n2/2020/0612/c134768-34083491.html
- (16) Zhejiang Jiaao Enprotech Stock Co., Ltd. 2020 Annual Report, http://www.sse.com.cn/assortment/stock/list/info/company/index.shtml?COMPANY_CODE=603822&tabActive=1 Hebei Longhai Bioenergy Co.,Ltd. 2020 Annual Report, http://www.cninfo.com.cn/new/disclosure/detail?plate=neeq&orgId=gfbj0836344&stockCode=836344&announcementId=1208197864&announcementTime=2020-08-17
- (17) General Administration of Press and Publication and the Information Office of the State Council, 2020, "Energy in China's New Era" White Paper, http://www.gov.cn/zhengce/2020-12/21/content_5571916.htm