A Long ‘Carbon Saving’ Voyage for Used Cooking Oil

Credits: Brent Lewin/Bloomberg

Bloomberg Oil Strategist Julian Lee looks at the rationale behind China’s shipments of used cooking oil to the US. Meanwhile, the European Union has struck a landmark deal to fight greenwashing in the bond market, and China’s nuclear trade with Russia has America worried.

Today’s Take: Cleaning Up Diesel

What’s wrong with China shipping used cooking oil to the US, where it’s transformed into biofuel, reducing the carbon tire-print of American trucks?

On the face of it, nothing at all.

Sending a standard, midrange tanker of used cooking oil from China to the US Gulf Coast emits about 6,000 tons of greenhouse gases but burning that cargo’s worth of renewable diesel can save 100,000 tons of emissions over regular diesel, according to data from BloombergNEF.

Of course, there are more emissions to be taken into account in the onshore transportation and processing of the oil, but it’s still a big net benefit in carbon-reduction terms.

The quantities remain tiny — US processors imported about 530,000 barrels, or 78,000 tons, of used cooking oil from China in January and February, and they’re expected to bring in 239,000 barrels, or 35,000 tons, this month, according to analytics firm Kpler. That’s a small fraction of the 41 million tons of edible oil consumed in China each year. Of that, less than 3 million, or 7%, end up in the supply chain for biofuel.

Consumption of a range of edible oils in the US last year was much lower, at 17.7 million tons. But it’s not like there’s a shortage of local used cooking oil there. The advice from many municipalities is simply to dispose of it in the trash.

Granted, it’s much easier — and cheaper — to bring in a shipload from half a world away and let someone else worry about the logistics of collecting from a million homes. “But I can’t help feeling that good as the carbon-reduction credentials of the trade may be, even bigger CO2 savings could be made by converting China’s waste oil closer to home, where diesel and jet fuel demand are booming,” Julian Lee, Bloomberg Oil Strategist.

Russian oil exports hold up after further sanctions kick in

Russia’s oil exports remained resilient last month, despite sanctions. The EU banned seaborne fuel imports in early February, two months after imposing similar curbs on crude. The embargoes were coupled with price caps on Russian cargoes that third countries must observe if they want access to Western shipping and insurance services.

Russia has pushed more crude to its Pacific terminals, where it secures higher prices than at Baltic ports. But shipping the oil doesn’t always mean it’s found a ready buyer. Crude is going into storage in Ghana and Turkey, while Russian diesel in floating storage has jumped to the highest level since 2020.

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Source: Bloomberg


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