Final Recommendations: Improving Used Oil Recycling in California Presentation to the California Integrated Waste Manage

1. Mackenzie R. Johnson, Dr. John G. Reynolds, Dr. Adam H. Love, Final Recommendations:Improving Used Oil Recycling in California Presentation to the California Integrated Waste Management Board May 2008 Lawrence Livermore National Laboratory, P. O. Box 808, Livermore, CA 94551 This work performed under the auspices of the U.S. Department of Energy by Lawrence Livermore National Laboratory under Contract DE-AC52-07NA27344 LLNL-PRES-403541

2. Original Task: Using existing refineries Original Task: Determine feasibility for re-refining used oil through existing facilities • Technical requirements • Non-technical requirements • Recommend appropriate steps Initial Results: • Capacity was not the only limit to increased re-refining of used oil • CA hazardous waste designation for used oil is a barrier to re-refining through existing refineries • Mixing used oil with crude oil results in more complications than benefits for existing refineries Rapidly concluded that re-refining was not limited by technical feasibility, but by dynamics of current used oil market system

3. Modified Task: Optimize “highest and best” use Modified Task: Perform system analysis of used oil market and evaluate potential changes that would promote “highest and best use” of recycled oil products • Used oil system description • Used oil system forces • Recommended system changes Evaluation criteria of “highest and best” use: • Contaminants released • Energy conservation • Resource sustainability Recycling to automotive lube oil evaluated as the “highest and best use” Significant environmental benefits from some other recycled product

4. Overall Lube Oil System Current $0.04/qt Fee Collected Numerous stakeholders within the used oil system. Generators Collectors Current $0.04/qt Incentive Paid Haulers Recyclers

5. Recycling Products/Processes in California Base for Lube Rerefined Base Lube • Dehydration/ Filtration • Distillation • Hydrotreatment Marine Distillate Oil • Dehydration/ Filtration • Distillation Recycled Fuel Oil • Dehydration/ Filtration • Re-refining proposed as the best solution from both energy resource preservation and environmental conservation perspectives. DOE (2006) “Used Oil Re-refining Study to Address Energy Poly Act of 2005 section 1838” • Compared with lubricant production from virgin crude: Re-refininig takes 50-85% less energy and produces ~20% of the GHG emissions. American Petroleum Institute; ENSR (2008) • End-of-life impacts on air quality from re-refining and MDO are approximately equivalent, and both are significantly better than burning RFO. Boughton and Horvath (2004) • Direct burning, such as burning RFO, is advantageous compared to burning coal. Fehrenbach (2005)

6. Characteristics of used oil recycling Closed-loop recycling: Process where the quality of the recycled product equals or exceeds the quality of the original material and can itself be recycled through the same processes in a repeatable cycle Single-use Recycling: Process where the recycled product can not be recycled again and thus has a single finite reuse. Downcycling: Process where the quality of the recycled product is less than the quality of the original material. Each of the products from used oil recycling are valuable products to the end users

7. Demand for Recycled Lube Oil Used Oil Re-refining Capacity Price for Recycled Lube Oil Volume of Used Oil to Re-refineries Recycled Lube Oil Produced Used Oil Market Dynamics 1. Increase volume collected • Improve collection efforts • Encourage hauling to re-refinery 2. Increase market demand • Improve public awareness of re-refined products • Mandatory recycled content • Incentive on product 3. Increase closed-loop capacity • Ease permitting procedures • Incentive for production Each of these components has complicated dynamics and interdependencies that need to be considered and included in system optimization

8. Externalities to California System • Demand for Used Oil from OOS recyclers • National/International Lube Oil Supply • Air quality regulations • Permitting Difficulties in California • API Standards for lube oils • CalEPA Hazardous waste categorization of used oil

9. Externalities to California System • Demand for Used Oil from OOS recyclers • Used oil is a valuablecommodity so OOS recyclers compete with CA recyclers • National/International Lube Oil Supply • Air quality regulations • Permitting Difficulties in California • API Standards for lube oils • CalEPA Hazardous waste categorization of used oil

10. Externalities to California System • Demand for Used Oil from OOS recyclers • Used oil is a valuable commodity so OOS recyclers compete with CA recyclers • National/International Lube Oil Supply • Impacts market for additional lubeoil production • Air quality regulations • Permitting Difficulties in California • API Standards for lube oils • CalEPA Hazardous waste categorization of used oil

11. Externalities to California System • Demand for Used Oil from OOS recyclers • Used oil is a valuable commodity so OOS recyclers compete with CA recyclers • National/International Lube Oil Supply • Impacts market for additional lube oil production • Air quality regulations • May require additional processing for recycling to fueloil • Impacts construction/expansion of re-refiningfacilities • Permitting Difficulties in California • API Standards for lube oils • CalEPA Hazardous waste categorization of used oil

12. Externalities to California System • Demand for Used Oil from OOS recyclers • Used oil is a valuable commodity so OOS recyclers compete with CA recyclers • National/International Lube Oil Supply • Impacts market for additional lube oil production • Air quality regulations • May require additional processing for recycling to fueloil • Impacts construction/expansion of re-refiningfacilities • Permitting Difficulties in California • Time and cost make construction/expansionprohibitive • API Standards for lube oils • CalEPA Hazardous waste categorization of used oil

13. Externalities to California System • Demand for Used Oil from OOS recyclers • Used oil is a valuable commodity so OOS recyclers compete with CA recyclers • National/International Lube Oil Supply • Impacts market for additional lube oil production • Air quality regulations • May require additional processing for recycling to fueloil • Impacts construction/expansion of re-refiningfacilities • Permitting Difficulties in California • Time and cost make construction/expansionprohibitive • API Standards for lube oils • Require greater degree of processing for certification as lube oil • CalEPA Hazardous waste categorization of used oil

14. Externalities to California System • Demand for Used Oil from OOS recyclers • Used oil is a valuable commodity so OOS recyclers compete with CA recyclers • National/International Lube Oil Supply • Impacts market for additional lube oil production • Air quality regulations • May require additional processing for recycling to fueloil • Impacts construction/expansion of re-refiningfacilities • Permitting Difficulties in California • Time and cost make construction/expansionprohibitive • API Standards for lube oils • Require greater degree of processing for certification as lube oil • CalEPA Hazardous waste categorization of used oil • Increases costs, limits handlingpossibilities • Provides greater accountability that has greatly reduced used oilcontamination

15. Externalities to California System • Demand for Used Oil from OOS recyclers • Used oil is a valuable commodity so OOS recyclers compete with CA recyclers • National/International Lube Oil Supply • Impacts market for additional lube oil production • Air quality regulations • May require additional processing for recycling to fueloil • Impacts construction/expansion of re-refiningfacilities • Permitting Difficulties in California • Time and cost make construction/expansionprohibitive • API Standards for lube oils • Require greater degree of processing for certification as lube oil • CalEPA Hazardous waste categorization of used oil • Increases costs, limits handlingpossibilities • Provides greater accountability that has greatly reduced used oilcontamination These factors outside California’s used oil system will continue to impact the overall supply and demand for recycled lube oil

16. Stakeholder Feedback • “Highest and best use” evaluation • Criticized by producers of “single-use” recycled products having a low environmental impact • Collection and Incentive • Amount collected through fees needs to increase in order to implement improvements • Maintain incentives to CCCs • Regulatory Issues • Environmental benefits of hazardous waste designation exceed the associated costs and handling restrictions • Mandatory recycled content infeasible • Preference for market pressures over government mandates • Market Considerations • Feedback often related to issues that adversely impact respondents’ own market share • Preference for a fair, open market over a closed market: OOS facilities should handle, test, and treat used oil received from CA according to rules followed by in-state facilities Stakeholders gave incredibly useful and detailed information about process and system dynamics

17. Recommendations Enable and encourage “highest and best use” at every level 1. Reevaluate the fee on lube oil sales 2. Reduce the fee on lube oil sales with recycled content 3. Implement effective “Green” education for recycled lube oil 4. Encourage and support curbside used oil collection 5. Provide a monetary incentive to recycling facilities producing API certified base lube oil * Additional Recommendation: Provide a lower monetary incentive torecycling facilities producing industrial lube oil or marine distillate oil over recycled fuel oil

18. Evergreen Evergreen Oil, Inc. Acknowledgements ** Numerous CCC’s and Haulers (Pete Kotoff) Dennis Batchelder Kyle Reed Shane Terry CIWMB Glenn Gallagher Howard Levenson Jeffrey Lin Bert Wenzel Shirley Willd-Wagner Brenda Smyth Christopher Harris Numerous members John Denholm N. Bonnie Booth Jim Ennis Bill Briggs Charles Johnston Ame LeCocq DTSC: Bob Boughton Charles Corcoran Reports Library Pacific Operators Offshore, Inc. Gary Colbert Bob Sulnick Michael Ebert Bill Ross Mark Phariss Mike Sommer