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Circular Economy: Offering an alternative to fossil fuels

Circular Economy: Offering an alternative to fossil fuels

26 Jan 2023

A unique characteristic of oil is that it never loses its properties. Used engine oil, for instance, can be transformed into fuel oil to power boilers in factories.

The flip side of this quality is that when used oil is dumped, it becomes a dangerous pollutant that does not go away. The 2019 Kim Kim River pollution incident, which affected over 6,000 people, was due to the illegal dumping of marine oil. Waste oil is considered a scheduled waste and requires proper disposal.

“There was an incident once where someone dumped collected waste oil into the sewage system. Sewage has gas, so this one now has oil on top of it. There’s the potential for the whole thing to blow up. Can you imagine that gory scenario? We were called to provide a solution to this,” says Oon Kin Seng, group executive director of Pentas Flora Sdn Bhd, a company that specialises in hazardous waste management.

Pentas Flora, which is a member of the Exsim group of companies, was founded in 2007. One of its main services is collecting used engine oil and other related substances from waste generators such as motor vehicle service centres. It then treats the waste oil and turns it into fuel and base oil for the premix, food, laundry and lubricant blending industries.

Many of these industries consume huge amounts of energy for heating. Instead of using virgin oil or fossil fuels like natural gas, they use the re-refined oil produced by Pentas Flora.

“The road builders, for instance, need to heat bitumen to liquefy it. They put it in boilers, which need to be heated up. That’s where my oil comes in. The same thing [goes] for laundry facilities that need energy to heat big vats of hot water,” says Oon.

“This could have a lower carbon footprint. Why? Because it is recycled fuel. Diesel (which many industries use) is virgin oil that is mined and extracted. Oil never loses its properties. You must know how to segregate the dirty oil and eliminate the metal shavings, moisture and dirty stuff to get oil, which is then mixed through our formulas to become fuel oil.”

Oon has not yet calculated how much emissions can be reduced by companies using re-refined oil. However, he emphasises that the appeal for their clients is more than just lowering emissions. It is to save money.

“If you use fresh oil from the ground, it’s more expensive than what we have. I am taking away the oil that, in the old days, would be dumped into the longkang [drain]. But today, there’s money in this longkang oil,” says Oon.

Many industries now use diesel or natural gas to generate energy for heating processes. But the prices of these resources are high, especially after the Russian invasion of Ukraine last year. The most competitive re-refined oil products by Pentas Flora could be almost 40 times cheaper, according to Oon.

The demand for recycled oil has increased over the years due to the focus on sustainability, he acknowledges. “I would say in the last 10 years, the awareness and desire to do more [on sustainability] have gained traction. It helps when we go to companies and tell them about this. But at the end of the day, it’s still about ringgit and sen for a lot of them.”

Different re-refined oil products by Pentas Flora

Investment in quality

Pentas Flora also handles scheduled waste from other industries, including glove and shipping companies. It can deal with maritime waste, whether it is de-slopping or desludging.

All the waste oil that is collected goes to its plant in Banting, Selangor, for treatment. There is a fully accredited lab on site to test the waste and fuel oil that enter and exit the plant.

“Eight years ago, we put in around RM5 million to invest in the lab. In the waste management business, we are the only ones who have invested in a lab. Why? Because we want to make sure that the waste oil that we buy has more dirty oil than water or chemicals,” says Oon.

The end product is also tested before it is sold to customers for quality assurance. “We have a certificate of analysis that tells [clients] what is in the product.”

The focus on quality, however, also means its cost may be higher than its competitors who do not have the same standards. According to Oon, the company invested over RM100 million in the machines to treat the waste oil, blend it according to the customers’ needs and certify that the end product is authentic through lab tests.

“It’s all a question of money. Some people just put a piece of cloth over a drum and pour the dirty oil over the cloth. Then they remove the stuff above and process the oil,” says Oon. The quality of this “recycled” oil is untested, he adds, and in the long run, using this kind of oil could damage factory equipment.

Pentas Flora is determined to do things the right way, Oon emphasises. This includes using its own tanker trucks to collect dirty oil from waste generators, which is required by law.

Irresponsible waste management operators that do not adhere to these rules or standards can offer more competitive rates to buy waste oil. This is a challenge for Pentas Flora.

“We put our money where our mouth is. If [our product] doesn’t work, we will send you a replacement. If we don’t have enough oil, we even send them diesel. The brand promise that we have is very important,” says Oon.

Another challenge that the company is juggling with is the cost of running the plant. Treating the waste oil requires huge amounts of energy. At first, the company used its own re-refined oil to do so.

“But five years ago, we found out that it made more financial sense for me to sell off the recovered fuel oil than to burn it myself,” says Oon. The company then began using natural gas to power its processes. But the high gas prices are a problem.

“We are now looking at the efficiency of the machines. While I like to be ESG compliant [and use my own recovered fuel oil], I need to balance my costs. Do I want to spend so much on gas? No, but I’ve got long-term clients and not enough oil to supply them,” he says.

To prevent further instances of illegal waste oil dumping, Oon regularly engages with the Department of Environment. One way of identifying players that are not properly treating the waste oil is by looking at their electricity bills, because the process requires huge amounts of energy, he says. It is one of his suggestions to help the authorities catch bad players.

He is also eager to expand the company’s capabilities to manage other types of hazardous waste, namely electronic waste, batteries and clinical waste.

“People are talking about clean energy. That requires batteries. But where does it go [after it is used]? It needs to be stripped down. There is mercury, silver and acidic water inside,” he says.

As the amount of waste continues to increase alongside rising awareness about the value of recycling waste, waste management operators have a lot of work to do.

“Essentially, if you are concerned about this planet, somebody has got to do this. Waste management is not a cheap business,” he says.

Source : The Edge Markets