Hong Kong-based biofuels refiner EcoCeres, backed by Bain Capital, has entered into a collaboration with Shenzhen Expressway Group, a waste management firm supported by the Chinese city of Shenzhen. The partnership aims to secure feedstock for EcoCeres as it increases the production of low-carbon fuels to meet rising global demand.
Shenzhen Expressway Group, managing over 2.5 million metric tons of food waste annually across China, is set to play a key role in supplying feedstocks, including used cooking oil (UCO). The move aligns with China's initiative, endorsed by the National Energy Administration in September, urging local authorities to establish integrated “closed loop” systems for efficiently collecting waste cooking oil, processing it, and refining it into low-carbon fuels.
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EcoCeres highlighted that the collaboration with Shenzhen Expressway Group will establish a novel model for feedstock procurement, ensuring a stable and high-quality source of bio-grease.
China, recognized as the world's largest producer of UCO with an anticipated output of approximately 11.4 billion liters this year, faces challenges in collecting a significant portion of its waste oil, currently ranging between 25% to 30%, in contrast to about 80% in the U.S. and other developed economies. This collaboration seeks to address this gap by leveraging the waste management expertise of Shenzhen Expressway Group.
James Tam, managing director at Bain Capital, emphasized that despite relatively low domestic demand for biofuels in China, the nation's role as a major supplier of waste oil feedstocks is gaining traction in the global market, driven by foreign demand for lower-carbon fuels.
EcoCeres, which received a $400 million investment from Bain Capital earlier this year, has expanded its footprint, with plans announced in June for a 350,000-metric ton per year biofuel refinery in Johor, Malaysia, to cater to the growing global demand for sustainable fuels.
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The market value of UCO, trading at approximately $800 a ton in North Asia in mid-November, underscores the commercial opportunity in waste oil collection and treatment. At present prices, the 10.37 million tons of UCO produced annually in China could be valued at around $8.3 billion, according to Reuters' calculations based on USDA figures.
“People are sensing this is a commercial opportunity and building an ecosystem for collecting the oil,” remarked James Tam of Bain Capital.
