RRBO (Re-refined Base Oils): A Shift Towards Sustainable Solutions For The Lubricant Industry

Normally, it is a tendency of many to loosely use the terms Used Oil and Waste Oil, however, they are distinctly different. If we consider the definition provided by EPA (US Environmental Protection Agency). The two are separately defined.

When used or contaminated crude oil or any such synthetic discarded fluids are refined Used Oil is produced. This means that any Lube Oil which has reached the end of its service life can be termed as Used Oil.

Whereas, Waste Oil terminology is very broad-based which can be any discarded oil either harmful or hazardous or may not be categorised as non-hazardous.

Normally the waste oils are utilized as a source of fuel for burning in furnaces, brick kilns, and landfills, used in asphalt laying while making roads etc. These waste oils are in general picked up by many unauthorised recyclers and refiners who do not follow any quality control for disposal. Hence it is always a challenge to collect good quality waste oil or used oil which can be treated by authorised recyclers and refiners for making good quality RRBO which in turn can be used as a raw material for good quality lubricants.

Re-Refined Base Oil: Re-refined base oil (RRBO) is a type of base oil that has undergone a re-refining process. During the re-refining process used oils are generally treated to regain specifications of original quality base oils by removing the contaminants thus making them fit to use as a raw material to produce finished Lubricants. The environmental benefits of RRBO are worth mentioning as it reduces the need for the use of fresh base oils and minimizes waste disposal. Thus, Re-refined base oil (RRBO) is used for several key reasons, such as environmental Sustainability, Regulatory Compliance and performance benefits.

India's Extended Producer Responsibility (EPR) guidelines for re-refined base oil (RRBO) which kicked in earlier this year include:

A ) RRBO content in finished lubricants: All finished lubricants sold in India must contain at least 5% RRBO by April 2024. This requirement will increase annually, reaching 50% by 2029.

B ) Used oil recycling: Producers of base oil or lubrication oil and importers of used oil must purchase extended producer responsibility certificates from registered recyclers.

C ) Used oil recycling targets are set for the next 5 years till 2030: In May 2023, GOI published a draft notification of proposed RRBO EPR guidelines. From 1st April, the usage of RRBO was first fixed at 10% of overall production by a Lubricant Player but is now reduced to 5%. However, this requirement is set to increase annually. In line with the reduction in targets, the initial benchmark of 60% by 2029 is now reduced to 50%.

While the EPR direction looks good, it also poses real challenges in actual implementation on the ground. As a result, actual adoption remains as low as 10% to 15% of the total used oil generated. Re-refiners and recyclers face huge challenges in the collection of waste oils. Collectors of used oils are not sure of the quality and quantity often at the source. The inspection method and Lab facility are inadequate to separate a good feedstock from a poor one. As a result, the re-refining cost remains very high, often higher than virgin base oils to meet quality standards where as it should have been the opposite for faster adoption of RRBO in the Lube Industry.

Hence confidence is still low among OEMs for the use of RRBO based lubricants in their portfolio. Many Lubricants companies are in dilemma that their brand value does not get diminished in front of major accounts for use of RRBO.

Hence to increase the adoption of RRBO several measures are being taken by stakeholders to make it successful at various levels:

1. BIS has done a great job of bringing RRBO under the specification standard of Group I Base Oils while framing standards for Group II and Group III (preferred by OEMs) as a work in progress. This provides confidence amongst users about the lower performance of RRBO.
2. Collection agents and their roles are very vital as they are primarily responsible for ensuring good quality Used Oils come to refiners. Hence collectors with on-site testing facilities can ensure the elimination of Heavy metals in the sludge. Collection points at every district/state must facilitate quality and quantity to ensure a lower cost of collection.
3. Technology in RRBO is a major challenge now to reach consistency in quality output. Basic technology to produce RRBO involves Acid Clay Technology and Vacuum Clay distillation however modern technologies like Hydrotreating and hydro finishing are expensive and need larger investment at the refinery level making it expensive and less attractive for faster adoption at this moment. The basic technology used by Indian re-refiners currently caters to Group I kind of base oils which are less preferred by OEMs slowing adoption.
4. Currently, there are as many as 400 recyclers in India and for faster adoption of RRBO at least 30-40 more re-refiners’ capacity needs to be added to reach the target set for the Industry. Larger investments by Refiners to adopt high-end technology might support the scenario
5. Recyclers and Re-refiners must address the consistency issue to reduce variance in Sulphur content, saturates and maintaining Viscosity Index in RRBO. Shifts in oil properties pose a significant challenge for the Lubricant manufacturers as of date. Inconsistency in RRBO is a challenge to manufacture lower viscosity grades like 0W20/5W30 /10W30 etc.
6. The other cause of slow adoption is that virgin base oils come at an import duty of only 5% where as almost 4 MLMT of Base oils are currently imported. The 40% mark to be met through RRBO at this stage looks like a steep task as the gap is too high and economic motivation for such adoption is low. Hence several agencies like Invest India initiatives under Start Up India are ready to look at Green Funding to boost up the space for RRBO. Strong collaboration between Industry and Government is required for infrastructure building for collectors, re-refiners, testing agencies and users.

Now let us look at some of the developed economies and how they fared in terms of RRBO adoption

1. Big Global Testing agencies like Intertek Caleb joined hands with collectors for on-site testing for carbon content impurities, HC composition, and stability testing which makes it easy for re-refiners as used oils are thoroughly tested at the source itself thereby ensuring quality feedstock.

2. Excellent collaboration between Exxon Mobil (Lubricant Player), Academicians (NTU) and A-Star Corporate Lab matured to come together to manage waste oil collection to re-refining to produce RRBO in Singapore.

3. France in Europe is quite advanced in waste oil collection and refining. Companies like Esso SAF are expected to produce base oils from regenerated used oils in the later part of 2025. ECOHUB a leader in the collection of waste oils which can cover almost 50% of waste oils in the country will support Esso SAF.

4. Pura-globe, a leading Base Oil refining company joined hands with Shell to conclude a 12-year deal on the supply of Re-refined base Oils.

5. Recently Pentas- Flora, a Malaysian company started building its refinery to produce Gr II+ based RRBO.

6. Australia stands out as one of the leaders in RRBO markets boasting a well-established value chain and usage. Good quality RRBOs are available from Southern Oil and Northern Oil refineries.

7. The United States has a very high rate of collection of used oils among developed countries ( approx. 72%). There is an organised ecosystem where many re-refiners take the benefit of properly used oil collection to reduce raw material costs and also maintain the superiority of the collected used oil. With most re-refiners producing Group II/II+ base, 60% of collected used oil gets converted into RRBO.

8. In Asia-Pacific, the largest producer of RRBO is China which has been leading with numerous producers and a steadily increasing consumption rate.

Looking at the above model it can be concluded that the RRBO Industry in India is at a stage of early take-off with immense potential for acceleration. The role of large investors, technology partners and research houses together with Government Agencies will be a catalyst for the early adoption of RRBO thus addressing the call for Sustainability and Circularity.

About the Author

ESG Thought Leader / Sustainability Champion / P&L Management / Building High-Performance Teams. Contributions to Global Organisations like Shell and GS Caltex with 29 Years of Channel / Key Accounts / OEM Management expertise in B2B sectors. Experience in blending Strategy with implementation in Down Stream Lubricants segment managing Global/ Local Business Units through multiple channels in India and Export markets, and championing the cause towards organisational development. Mr Jayanta Ray can be reached at:jayantaray@gscaltexindia.com

Mr. Jayanta Ray
Vice President Industrial, OEM and ESG | GS Caltex India Pvt. Ltd. | India