The oleochemical industry makes a range of products from detergents, soaps and cosmetics to paint, lubricants and surface coatings. The bases for these are oils and fats of which many are wastes from the processing of food or animal feed.
About 15% of the industry’s feedstock is petrochemical-based. Its other key feedstocks include rapeseed oil and beef fat or tallow.
Members include major companies like Procter & Gamble Chemicals, Shell Chemicals and Akzo Nobel. Yet the industry has led a relatively anonymous existence in the world of political lobbying until recently when, thanks to a number of legislative initiatives, it has seen seismic shifts in its raw materials base.
The earliest shock followed the BSE crisis that resulted in animal by-product legislation on both sides of the Atlantic prohibiting the sale of tallow.
As a result, the supply of tallow available to the industry has been halved in the last few years, according to Ad Hinze, technical and regulatory affairs manager for the European Oleochemicals and Allied Products Group (APAG). This in turn makes the industry more vulnerable to competition from products from Asia such as palm oil derivatives.
"Without tallow we cannot compete against such imports," warns Mr Hinze.
European oleochemical producers claim that the shortage of tallow could force them to switch to less sustainable feedstocks, such as petrochemicals and palm oil - currently the subject of much controversy (ENDS Report 357, p 38 ).
This situation is now exacerbated by efforts to promote biofuels. The EU biofuels Directive sets a target of 5.75% for the proportion of biofuels to be used to substitute conventional petrol or diesel by 2010. In addition, an amendment of a 1992 Directive enables Member States to set reduced excise duties on biofuels (ENDS Report 340, p 57 ).
As a result, biodiesel manufacture is rising rapidly, leading to increased demand for rapeseed oil - the most commonly used feedstock for biodiesel - and tallow, even though its technical properties make it a less attractive choice.
A recent example is the use of tallow, blended with used cooking oil, as the feedstock for Argent Energy’s 25,000 tonnes per year biodiesel plant in Motherwell, Scotland, which started commercial production in April. Argent claims its biodiesel offers better environmental benefits than either mineral diesel or biodiesel made from rapeseed oil.
A further consequence of biodiesel manufacture is that it inevitably results in the by-production of glycerine - one of the oleochemical industry’s major products.
APAG says the price of glycerine has halved in one year as a result. Because oleochemical plants produce glycerine in conjunction with oils and fats, the drop in its price means that the price of other oleochemical products has to rise to maintain each plant’s economic viability. To compete, Procter & Gamble and other oleochemical firms are rapidly seeking new applications and markets for glycerine.
The group also claims that other products that compete with glycerine, such as sorbitol and glycol, are also facing "unfair" competition from subsidised biodiesel production. It predicts trade disputes as a result.
At the same time, APAG is lobbying the European Commission and Member States to persuade them to stop subsidising tallow as a biodiesel feedstock.
"We have nothing against the use of tallow in biodiesel," says Mr Hinze, "but the fact that it is subsidised means that we do not have a level playing field."
While dealing with the present realities of biodiesel production, APAG’s members can see an even bigger danger looming on the horizon. Several Member States are now preparing to offer incentives to use tallow as a renewable fuel in power stations, as part of their efforts to combat global warming.
Although this possibility is only just emerging, APAG president Graham Beesley, of Procter & Gamble, warned at the World Oleochemicals Conference in Athens in April that "one small power station can consume more tallow in four months than the European oleochemical industry consumes in one year."