Biodiesel has faced a backlash in recent years, as critics charge the industry with razing land and pushing up food costs. But as its competitors struggle, one Hong Kong-based company is moving ahead with a US$165 million plant that turns recycled cooking oil into biodiesel, which it says could eventually power every diesel-powered vehicle in this smog-addled city.
When the 18,000-square-foot plant begins operating this month, it will be one of about a dozen globally of its kind, says ASB Biodiesel CEO Anthony Dixon. Controlled by majority shareholder Al Salam Bank-Bahrain, the plant will utilize the city's densely packed scale to collect used cooking oil in the region and from 4,000 restaurants across town, more than doubling local biodiesel production capacity.
Mr. Dixon said the company chose to build its plant-ASB Biodiesel's first-in Hong Kong because of the city's infrastructure, logistics and a need to clean up its dirty air.
"What sets us apart from 95% of all the other biodiesel plants is we have the ability to process really difficult wastes," such as grease trap oil as well as used cooking oil, Mr. Dixon said. That shrinks the plant's carbon footprint relative to others processing pure rapeseed, palm oil and or other food crops, he said. When burned, waste oil biodiesel is also generally cleaner for the air than diesel, emitting lower levels of pollutants, including particulate matter.
Regionally, according to the Global Renewable Fuels Alliance, countries from Malaysia to the Philippines are requiring their fuel mix to include blends using some percentage of biodiesel. However, ASB Biodiesel will sell its biodiesel manufactured in Hong Kong in Europe, where the EU has mandated that by 2020, 10% of transport energy must be renewable, and where biodiesel made from waste also commands premium prices.
Hong Kong does not require use of biodiesel, and a government spokesman said the city—home to some of China's worst roadside air pollution levels—isn't actively considering similar requirements. Hong Kong has some 120,000 diesel-powered commercial vehicles, the oldest of which the government says cause 80% of roadside air pollution and which it intends to scrap by 2020 through a US$1.5 billion subsidy plan.
Steve Choi, executive director of fellow Hong Kong biodiesel producer Dynamic Progress International, said the city's biodiesel industry has struggled without government mandates. Obtaining waste oil is particularly difficult, as the amount producers can afford to pay per drum is considerably less than the HK$100 (US$13) mainland Chinese buyers will pay for used cooking oil, which is then resold—despite its often toxic nature—for use in restaurants across the border.
"It's just so painful," said Mr. Choi, adding that his company's money-losing plant produces about 60 tons of biodiesel per month, well below its initial projection of 50 daily tons. "Money talks, and people walk," "he said. Dynamic Progress sells all its biodiesel locally to private companies.
During its first year, ASB Biodiesel expects to get about 20% of its waste oil from Hong Kong—a figure it hopes to eventually raise to around 45%–and plans to source the rest from countries such as Singapore and Malaysia.
Like Mr. Choi, Mr. Dixon of ASB said higher prices offered by mainland buyers are a challenge for some in the industry.
"Nobody can compete with unscrupulous recycling of waste oil into the food market," he said. Still, he said the company is attracting restaurants and established chains that don't want to taint themselves by selling into a dubious supply chain.
"We're able to compete on the basis of transparency and reliability," he said. "Every single liter of waste cooking oil that we collect, I can tell you where it came from and where it ends up."
While some green groups have praised the recycling of cooking oil, others have expressed reservations. Friends of the Earth Europe biofuels campaigner Robbie Blake cites concerns in the EU that companies have sold virgin palm oil as waste oil because it sells for a higher premium.
He also noted that a trial round-trip flight from Amsterdam to Paris powered by a 50% biodiesel mix in 2011 required the equivalent of 10 years' worth of used cooking oil from each passenger. “The trouble is that cooking fat will only drive you so far," he said.
Without more government support, said University of Hong Kong professor Dennis Leung, Hong Kong's industry is likely to sputter.
"Whether a driver [in Hong Kong] uses biodiesel or not depends on their own wishes," he said. "And it's still more expensive than normal diesel, so of course not everyone makes that choice."
