Used Cooking Oil (UCO) Saga

As we know, petrol, diesel, kerosene etc are all different extracts of the same underlying material – what we call “oil” when we think of the Middle East. Purify that oil to different extents, and you get different outputs, all very useful because they are all storehouses of energy that we can use for various purposes.

 

Until I read Pranay Kotasthane’s post, I didn’t know that:

“Cooking oil is used to make sustainable aviation fuel.”

It gets better – we are talking of used cooking oil (UCO) here!

“UCO is the oil that’s left after you have cooked food in it four or five times; thereafter, it is no longer suitable for cooking but can be used as a fuel.”

What drives this trend is that the aviation industry gets brownie greenie points for being environmental friendly when it converts UCO into aviation fuel.

 

As always, there are second- and third-order behaviors that then kick in. Malaysia, for example, subsidizes its palm oil:

“Hence, the new oil's market price is less than UCO's trading price. So, smart Malaysians in Melaka started buying this subsidised oil and selling it as UCO without going through the pain of cooking food with it!”

This defeats the entire intent of reuse and environmental sustainability. First, Malaysians are not using the same oil to its maximum utility – cooking first, aviation next. Second, it increases the demand for this subsidized palm oil (since it can be sold as UCO for a profit), which leads to more of its cultivation and attendant deforestation.

 

In India, we have a different thing going on. UCO is often converted into ACO (Abused Cooking Oil). What’s that?

“There’s an entire underground network which enables restaurants to sell their UCO to roadside stalls, which keep reheating this oil well beyond its permissible capacity to prepare their own products. This ACO has several harmful health effects.”

 

In theory, if India sold its UCO as aviation fuel instead of ACO, it would (1) benefit the environment; (2) avoid the health problems created by ACO. Why isn’t that happening?

 

Several reasons for that: (1) The price difference between new cooking oil and UCO is high; so smaller restaurants and road side stalls find UCO taken to the point of ACO attractive; (2) In turn, the price difference is so high because India imposes high tariffs on imported cooking oil to “protect” our domestic farmers; (3) India’s MSP (Minimum Support Price) for grains means farmers prefer using their land for grain farming than switching to other crops like cooking oil which doesn’t have MSP. Market forces of demand and supply are subverted by MSP; (4) All of the above means the price of UCO is high due to its demand as ACO. It is so high that aviation companies won’t pay that much to use it as aviation fuel.

 

Greed and poverty aside, this is yet another unintended consequence of MSP. But farmers are a huge vote bank, so in a democracy, it is almost impossible to touch certain schemes (even improving them is politically hard), no matter how harmful (unintentionally though it be) they end up being.

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