Most Affordable Diesel in UAE Comes from Recycled UCO

The existence of Lootah Bio Fuel LLC (LBF), a fully owned subsidiary of the S.S. Lootah Group, in the UAE proves to be an oasis in the desert for car owners in the country. A leading pioneer in the alternative fuel and waste-to-energy industry, the company produces premium quality biodiesel from used cooking oil (UCO), and succeeds in pricing it more affordably than petroleum diesel, making it by far the cheapest diesel in the UAE.

Before the oil price deregulation in the country, the cost of diesel was higher than petrol in the UAE which is the opposite of the situation in most countries across the globe. The price gap offered an immediate incentive for LBF to produce and sell biodiesel at rates below the market rate for petroleum diesel.

However, the UAE’s oil price deregulation, which started in August this year, brought about an issue that required effective planning and strategizing to retain the low-price policy of the company. In a statement, Yousif Saeed Lootah, CEO of LBF, said that with the deregulation of oil prices, they suddenly had a situation where petroleum diesel was more affordable than petrol which put them in a predicament and forced them to come up with new strategies.

Compounding the costs of biodiesel production is the collection of used cooking oil, a waste product that is abundantly available in the UAE. However, the challenge lies in the difficulty of the process entailed in collecting UCO from food courts, restaurants and other food and beverage establishments due to the number of unauthorized collectors. Generally, LBF collects nearly 200,000 liters of UCO monthly but can collect more if not for the unauthorized collectors.

Lootah explained that the issue with unauthorized collectors of UCO is not only that it reduces their feedstock, but some of them are involved in unethical practices of exporting the UCO to certain countries where it is treated and resold for construction. “This is extremely dangerous to health.”

In a quest to fight unauthorized UCO collection and exportation, LBF is spearheading efforts to launch regulation of the UCO sector in partnership with Dubai Municipality, other government institutions and other stakeholders in the alternative fuel industry. While this approach may take a huge amount of time for finalization and implementation, it will be an effective policy instrument for the future of alternative fuel and waste-to-energy markets.

In the meantime, LBF has designed certain strategies to help deal with the cost of biodiesel production. This is why the company is raising awareness for biodiesel, and its effectiveness is a priority. Speaking on the functions of the in-house UCO collection department at LBF, Lootah said that they primarily provide information on the dangerous disposal of UCO either through the unauthorized collectors or sewage lines. He also noted that they build awareness of the environmental benefits of using biodiesel. Highlighting the reduction of carbon dioxide or green-house-gases (some studies suggest that 100 percent pure biodiesel can reduce emissions by 78 percent) does little if it is not used widely.

LBF offers a variety of biodiesel blends that can be concocted in accordance with customers’ needs. B5 is by far the most popular blend, which is a combination of 95 percent petroleum diesel and 5 percent biodiesel. It is usable in any diesel engine without modification to the engine or voiding vehicle warranty. This serves as a huge benefit to companies aiming to establish and maintain corporate social responsibility (CSR) campaigns as there is no extra operational cost. In fact, there have been studies suggesting that biodiesel’s high lubricity can have a positive impact on the longevity of the engine.

Aiming to stay competitive in the market, LBF has also implemented groundbreaking pricing policies that include biodiesel delivery (in addition to the three refueling stations across Dubai), a credit scheme, and contractual collaborations that involve UCO collection and return supply of biodiesel. However, with plunging oil prices, and in an unregulated UCO sector, the challenges to producing, marketing and promoting the use of biodiesel in the UAE remain huge, but with the company’s commitment to sustainability and continuous innovation, these challenges are anticipated to be dealt with.