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Used Oil in Australia

Prepared by Meinhardt Infrastructure & Environment Group
Environment Australia
January 2002


Issues

7.1 Introduction

There are a number of issues impacting upon the determination of the volumes of oil sold, collected, recycled or not recovered in Australia. Some of these issues relate to the size of the current flow in each of these segments, as well as the contribution of various participants in the industry and the impetus for increased recovery and recycling of used oil in Australia. These issues are discussed further in the following sections.

7.2 Assumptions

Throughout this report many assumptions have been made due for a variety of reasons. These assumptions are listed below.

Assumption 1: It is assumed that, based on information provided by DISR, the volume of base stocks reported by DISR excludes sales of base stocks to Valvoline.

Assumption 2: Lubricant sales reported by DISR and ABARE are comparable to one another. It is assumed that differences in reported volumes are most likely the result of different reporting periods, i.e. financial and calendar years.

Assumption 3: For the purposes of this report and in the absence of any alternative information, it is assumed that the quantity of base stocks sold in the year 2000 is that reported by DISR (viz. 105.8 megalitres).

Assumption 4: The majority of base stocks sold are used to produce lubricants for the automotive sector.

Assumption 5: As a result of additives to base stocks, the total quantity of finished product will be 132 megalitres (based on the DISR reported volume of base stocks sold in 2000).

Assumption 6: It is assumed that data provided by DISR with regard to the size of the Australian lubricants market and proportional lubricant sales within product categories is representative of the Australian lubricants market.

Assumption 7: The used oil generation factors posited by AIP have been assumed to be correct for all DISR categories. This assumption is based on a consideration of all available information.

Assumption 8: To determine the used oil generation factors for the 'Automotive Petrol Engine Oils', 'Automotive Diesel Engine Oils, 'Transmission Fluids' and 'Gear Oils' categories, AIP adjustments appear to assume that the rate of oil consumption increases significantly after 10 years of operation.

Assumption 9: In the absence of an estimate by AIP, the used oil generation factor for the 'Hydraulic Brake Fluids' category is assumed to be 0% based on all information available.

Assumption 10: AIP have assumed a used oil generation factor for the 'Railroad' category. There is no information for the basis of this factor, which has been assumed to be correct by this report.

Assumption 11: AIP have assumed that there is a high incidence of catastrophic loss in the Australian mining sector and have thus decreased the CONCAWE used oil generation factor for 'Industrial Hydraulic Oils'.

Assumption 12: AIP have included transformer oil and compressor oil in the 'Industrial Other' category and thus assumed an increase in the CONCAWE used oil generation factor for this category.

Assumption 13: In the absence of an estimate by AIP, it is assumed that 'Greases' are totally lost through use as per information in the US EPA and subsequent ANZEC studies.

Assumption 14: AIP determined the used oil generation factor for the 'Base Stocks' category based on the assumption that the majority of base stocks are used to produce automotive lubricants.

Assumption 15: Those collectors and reprocessors contacted during this study represent 75% of the total used oil collection market. This assumption is an informed estimate based on previous studies and stakeholder information.

Assumption 16: It is assumed that direct collection of used oil by industry is restricted to major companies with the facilities to use waste oil as a fuel, and that this fuel use constitutes a minor proportion of their overall fuel oil demand. The overall volume of waste oil collected for direct re-use is expected to be approximately 10% of the total volume collected by commercial operators.

Assumption 17: Based on stakeholder advice, previous surveys and additional information from collectors and reprocessors, it is assumed that the volume of used oil collected in Australia is between 150 to 200 megalitres.

Assumption 18: For the purpose of estimating the amount of used oil in the DIY market, it is assumed that oil sold in packs of up to 10 litres is sold to domestic householders for use in the DIY market. It is assumed that negligible amounts are sold to small workshops and service stations.

Assumption 19: In the absence of any additional information, it is assumed that all base stock is converted into automotive oil. Negligible amounts are used to produce other products.

Assumption 20: For the purpose of estimating the amount of recoverable used oil from the DIY market, in the absence of any additional information, it is assumed that the limited data obtained from second-tier companies can be averaged and extrapolated to all automotive oil. It is acknowledged that this will provide a broad estimate only.

Assumption 21: Based on stakeholder advice and available information, it is assumed that up to 49 megalitres of used oil is currently stockpiled throughout Australia.

Assumption 22: Based on available information and stakeholder advice, an informed estimate that 20% of used oil is not recoverable has been assumed to be correct.

The large number of assumptions that have been necessary in completion of this project underscore the dearth of definitive information currently available on used oil.

7.3 Data Reliability

A key theme of the preceding chapters has been the variability of data provided by a range of information sources, such as ABARE, AIP, ATO and DISR. In some cases the information is based on the same data set and there are differences in interpretation (e.g. ABARE data is based on information provided by DISR). In other cases there is a complete lack of data available (e.g. various sources of unaccounted for used oil).

Issues regarding the reliability, accuracy and / or availability of data accessed during this report are discussed in more detail below.

Discrepancies

Estimates by each organisation providing used oil data for the same categories are generally inconsistent. For example:

For the purposes of this report, the DISR data was accepted with reservations due to the greater level of detail provided by this data.

Comparison of Data from Different Sources

Comparison of data was sometimes affected by different reporting categories being utilised by different reporting groups. Where possible, these different groups were reconciled by further discussion with the relevant parties. Examples of such differences include:

RECOMMENDATION #1: Environment Australia investigate and facilitate greater coordination between the reporting organisations (viz. ABARE, AIP, ATO and DISR) in order to more closely align reporting categories.

Conflicting Information

In some instances, reported data did not reflect stakeholder opinions. For example, information from DISR indicates that the approximate percentage of base stocks sold increased from 1998 to 2000. Stakeholder statements do not support this documented increase. Some stakeholders attribute the increase to misreporting of data in 2000.

There are also conflicting opinions held by key industry stakeholders regarding major issues in relation to used oil collection and recycling (e.g. the presence or absence of unaccounted for used oil). While variation can be expected in any industry, the existence or non-existence of additional used oil resources is a fundamental of the oil recycling market. It could reasonably be expected in a mature industry that the fundamental issues would be agreed upon by the major stakeholders, particularly where there are a limited number of participants. The conflicting views could be considered symptomatic of a fragmented industry. This is discussed further in Section 7.4.

Insufficient Information

In addition to discrepancies in data, insufficient information was available in some areas. For example:

As a result of the above reliability issues, the report has had to make several assumptions as listed throughout. All figures should be treated as estimates only.

Some of these issues of insufficient information can be addressed by further research or greater coordination between sources of information currently reluctant to release and / or provide such information (e.g. State / Territory statutory authorities). The area of unaccounted for used oil may benefit most from additional research, due to the scarcity of previous estimates on its composition or size. However it is likely that actions needed to determine this would require surveying or data collection activities on a national scale (e.g. surveying of rural properties to determine existence and volume of stockpiles, compulsory reporting of DIY sales by retailers). The expense involved in these activities may not be warranted given the estimated size of the total amount of unaccounted for oil.

Other data relies upon the willingness of commercial organisations to provide it. This may be subject to commercial confidentiality; alternatively it may be reflective of the status of the industry as a whole (this is discussed further in Section 7.4).

RECOMMENDATION #2: Environment Australia consider initiating investigations into the consumption of oil in key processes in Australia with a view to establishing benchmarks for generation of used oil.

RECOMMENDATION #3: Environment Australia investigate the provision and coordination of data from all Australian States and Territories on the amount of used oil collected in ChemCollect, household hazardous waste collections and other State / Territory programs.

RECOMMENDATION #4: Environment Australia investigate research into retained / recovered used oil from end-of-life vehicles.

RECOMMENDATION #5: Environment Australia consider the feasibility of additional research, surveys and reporting requirements to determine the amount and sources of oil currently unaccounted for.

7.4 Collection System

The amount of used oil collected is affected by the collection infrastructure available. The infrastructure available varies significantly from place to place, particularly between metropolitan, rural and remote areas.

Generally, better managed collection facilities are available in metropolitan areas with less well managed collection facilities available in rural areas. Remote areas do not generally have access to used oil collection facilities at all. The issues associated with collection facilities thus vary depending on the region that they are located in. The lack of infrastructure in rural and remote areas is a significant barrier to the collection of used oil.

Many used oil collection facilities suffer from a lack of awareness of their existence in the general population. Much of the general population are unaware that used oil can be collected for recycling. Many do not know where used oil can be recycled and thus do not bother. Raising the awareness of used oil collection facilities may thus increase the amount collected significantly.

Another barrier faced by collection facilities is that of cost. Whilst disposing of used oil to the domestic waste stream or a landfill is often free, there may be a charge associated with disposing of the oil to a collection facility. This reduces the amount of used oil taken to such facilities.

Potentially significant losses of used oil occur at used oil collection facilities with limited infrastructure. Practices that inhibit the recovery of used oil at such facilities are discussed in more detail in Section 6.2.3. Such practices result in a loss of used oil to the environment and reduce the amount of used oil available for recovery.

There are issues associated with the quality of used oil collected at centralised collection facilities e.g. drop off facilities. When such facilities are unstaffed, for example rural landfills, there is nothing preventing incorrect use of the facility. At such a facility, for example, paints, pesticides, sludges, etc. may be placed into a used oil receptacle. This contaminates all used oil in the receptacle and prevents it from being reused. Oil recyclers are thus reluctant to receive oil from such facilities. Oil recyclers are therefore most likely to concentrate their collections on more reliable sources of used oil, e.g. industry sectors. There may be a reluctance to accept and find a use for lower grades of used oil when better quality used oil is available.

Some industry groups utilise large quantities of oil, for example mining, construction, etc. Much of the work conducted by these industries is done so in remote areas where used oil collection infrastructure does not exist. At permanent sites, on-site solutions can be investigated. At temporary sites, for example construction projects, on-site solutions are rarely appropriate due to the temporary nature of the site. As these sites can be up to 500 km from the nearest collection point, it is not viable to transport the used oil to collection points. Investigating infrastructure options for temporary remote works would increase the recovery of used oil.

When economic conditions are favourable, seasonal collectors often enter the used oil collection market. These collectors are non-licensed and undercut the licensed collectors. In some cases, where the collectors cannot dispose of their used oil to a recycling facility, they illegally dump the material. More stringent enforcement of existing legislation would help prevent this.

The above factors indicate the issues associated with the infrastructure utilised to collect used oil. It highlights a number of issues, some of which can be readily addressed and some of which will require further investigation.

RECOMMENDATION #6: Environment Australia encourage the establishment of better managed used oil collection infrastructure in regional areas. This may be achieved through infrastructure funding assistance.

RECOMMENDATION #7: Environment Australia encourage Local Government to provide supervision at waste disposal facilities to assist in correct disposal of used oil and used oil containers.

RECOMMENDATION #8: Environment Australia encourage the oil recycling industry to investigate the feasibility of establishment of temporary collection facilities for large construction, mining, etc. projects in remote areas.

RECOMMENDATION #9: Environment Australia encourage relevant statutory authorities to prioritise enforcement of regulations covering licensed collection and disposal of used oil.

7.5 Industry

The nature of the oil refining and recycling industry in Australia has a major influence on the flow and recovery of used oil. There are a small number of both 'first tier' industry participants involved in oil production and refining, and 'second tier' companies blending base stocks to produce lubricants. The number of companies involved in collection and recycling of used oil is also small (following market rationalisation in recent years), and most have formed associations with 'first tier' oil companies in order to retain market viability.

Following a split, the oil recycling industry currently has two associations representing its interests, viz. the Independent Oil Recyclers Association of Australia (IORAA) and ORAA. While there is no evidence to suggest that coordination between the two bodies is lacking, the existence of two industry associations could be considered as potentially divisive for the industry as a whole.

Some stakeholders have suggested that industry bodies have been slow to react to potential opportunities such as oil collection pilot programs initiated by statutory authorities. Other stakeholders have suggested that given the range of participants involved in the industry (e.g. collectors, recyclers, motoring organisations, service station operators), the strategic forward planning required may not be delivered by the fragmentation of industry bodies.

The competitive nature of the industry was particularly evident in the consultation conducted during this study. Some stakeholders expressed distrust of other players in the industry, with particular reference to oil collection and recycling. Most of these observations related to payment arrangements resulting from the sale of recycled oil (as established under the Commonwealth Government's waste oil product stewardship arrangements). The reliability of these comments and how indicative they are of the industry as a whole is not known. It is possible that these stakeholders were influenced by the general profitability of recycling and the competition between participants for market share.

The competition between industry players and issues of data confidentiality were reflected in the reluctance of some stakeholders to provide data or participate in this study. It should be noted that this reluctance is not specific to the oil recycling industry, and is common across other industry sectors as well. However it was more of an issue in this instance due to the lack of alternative sources of information.

7.6 Regulation

The impetus for change in recovery and recycling of used oil has been underpinned by Commonwealth legislation establishing the product stewardship arrangements.

Similarly the management of used oil is subject to individual State / Territory arrangements. However there are some inconsistencies of approach between the States and Territories. For example, the WA DEP issued a license to Alcoa to utilise used oil as a dust suppressant, something that some other States and Territories do not permit.

A commonality expressed by statutory environmental authorities in all States and Territories is that amongst the wide range of environmental management issues, used oil is not a high priority. Lack of focus on the issue of used oil may give rise to practices inconsistent with environmental protection, and be a disincentive to collection and recycling of all potentially recoverable used oil.

RECOMMENDATION #10: Environment Australia consider encouraging prioritisation of used oil as an environmental management issue at State / Territory level.

7.7 Education

Many of the issues highlighted in previous sections could be addressed by an education campaign aimed at raising awareness of the issues associated with used oil. A lack of understanding of how to appropriately dispose of used oil and of facilities that are available in specific regions inhibits the collection of used oil.

Education could be conducted on an industry level, potentially through industry associations, to raise awareness of the legal requirements regarding used oil disposal.

At a Local Government level, education of the domestic oil user could be conducted. This education could also be targeted at specific groups, e.g. advertising in car magazines.

RECOMMENDATION #11: Environment Australia support programs aimed at raising awareness of used oil collection and recycling at Commonwealth, State / Territory and Local Government level.