ASB Biodiesel (Hong Kong) Ltd., the largest used oil refiner in Hong Kong, is seeking to expand its production to the Pearl River Delta region in southern China in the coming years.
“China has a lot of waste oil and has a big potential for us,” Roberto Vázquez, chief executive of ASB Biodiesel, told EJ Insight.
“By the end of 2017, we will utilize 80 percent of our capacity, which is enough for us to be profitable,” he said.
“We will start looking into opportunities in China next year.”
The company will seek a local partner such as a state-owned oil company, he said.
Any city and its neighboring districts, with a population of 20 million and strong law enforcement in the treatment of waste oil can be considered for ASB’s expansion plans.
The company’s existing factory in Hong Kong can be a showcase for future expansion.
ASB Biodiesel was founded by Abdulla Saif, an adviser to the Minister for Economic Affairs in Bahrain, in 2007.
Based in Tseung Kwan O, the factory began operations in 2014.
It converts used cooking oil or waste oil from vegetable and animal fat into biodiesel that can be blended with regular diesel and used in conventional engine without modification.
It has a maximum annual production capacity of 100,000 tons of low-carbon transport fuel, enough to fuel every diesel engine on Hong Kong’s roads with B10, a 10 percent blend, according to the company’s website.
It is also enough to offset 257,000 tons of greenhouse gas emissions — 3.6 percent of the total emitted by Hong Kong’s transport sector.
The other two players in the Hong Kong are Dynamic Progress International in Sha Tin and Champway Technology in Tuen Mun.
“We collect waste oil from restaurants in Hong Kong, Singapore and Guangdong province,” Vázquez said.
He said Hong Kong is a high-density city with strong law enforcement in the treatment of used oil.
However, the company has no plans to source used oil from residential buildings due to cost concern.
It said the idea would be feasible if the government encourages people to bring their used cooking oil to designated collection sites.
In Pearl River Delta region, the company works with a local partner to source waste oil from Foshan, Nansha and Dongguan.
“It is much more complicated to start collecting waste oil from China because its food and environmental hygiene standards are not that sophisticated,” he said.
“There’s always a risk that waste oil from China ends up improperly managed or used cooking oil ends up being recycled back to cooking oil.”
He hopes to see the mainland Chinese government continue to strengthen law enforcement in waste oil treatment.
There is much more used cooking oil in China due to its vast population and a high ratio of used cooking oil generated per capita, he said.
ASB Biodiesel’s final product is mainly sold to Europe and China, with a small amount sold in Hong Kong.
Sales in the Asian financial hub are mainly contributed by voluntary buyers as the price for fuel blended with biodiesel is higher than the traditional diesel given that there has been no levy on the latter since 2009.
“When we decided to build this plant in Hong Kong in 2007, there was a tax of HK$2.89 (37.3 US cents) per liter on the traditional diesel,” Vázquez said.
The levy was cancelled in 2009, eliminating the tax advantage for the biodiesel suppliers.
With sinking oil prices in recent years, the premium of biodiesel prices over the diesel prices have risen, making it more difficult for the voluntary buyers to implement their acquisition plans.
Vázquez hopes the Hong Kong government will launch a mandate program that would require fuel suppliers to have their products blended with biodiesel to create a market for biodiesel makers.
He said European countries now have mandates of 4 to 8 percent blend while the United States also has similar quota system.
Besides, the government should consider subsidizing biodiesel users as air pollution is mainly caused by emissions from heavy duty vehicles which use diesel, he said.
He said it is not cost effective for the government to reduce green house gases by subsidizing the electric car users as electricity is mainly produced by burning coal.
“The greenhouse gas policy has to be at government level. It is the responsibility of citizens to bear the cost of greenhouse gas reduction,” he said.
In 2015, the Hong Kong government launched The Energy Saving Plan for Hong Kong’s Built Environment 2015~2025+, which has set a new target of reducing energy intensity by 40 percent by 2025.
In January this year, Chief Executive Leung Chun-ying announced in his fourth Policy Address an inter-departmental committee, chaired by the chief secretary for administration, to address climate change.
This is the second article in a 12-part series. Read more at sparknews.com.
The Hong Kong Economic Journal and EJ Insight are among 20 global media organizations that participated in this year’s Solutions&Co, organized by Sparknews, an international social impact amplifier.
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