With such an abundant supply of petroleum, the GCC has never seriously been considered as a market for bio-fuels. From the onset, the economic arguments against producing alternative transportation fuels are often considered too pressing and will quickly deter interest.
Not only are traditional transportation fuels in this region among the cheapest in the world, but the common perception is that it would be too costly to produce the necessary feedstock such as corn or soybeans to make such products price competitive at the pump.
“Frankly, biofuels for me, aren’t just a longshot, they just aren’t economical and they are not even environmentally friendly,” said Louis Besland, managing partner of Alix Partners. “It doesn’t make a lot of sense for me because if you use organic waste, you need to collect it, which is very environmentally unfriendly, and here in the region you don’t have that much bio-waste.”
Besland also points out in regions such as Western Europe where biofuels have been developed more aggressively, the growth of biofuel feedstock has comes at the loss of arable farm land for food production.
Such considerations have not stopped companies like S.S.Lootah Group from bucking the trend. Under the guidance of executive director Yousif Saeed Lootah, the Emirati-founded, Dubai-based company has forged ahead and is now turning the UAE into the GCC’s leading green fuels market.
“What we are seeing worldwide is that biofuels are growing a lot and there is a lot of potential in the product,” says Lootah.
“People don’t want to depend on oil as much, especially countries that don’t have oil as a main resource of the country.” While the United Arab Emirates which produces almost 3.5 million barrels of crude per day is far from short on oil, there are many, including Yousif Lootah, who are looking much further ahead.
Creating a market for biofuels in the GCC is, as one would reasonably expect, a very daunting task. First, the products must be competitive.
While the environment and human health have become increasingly popular topics, catching the attention of concerned citizens across the world, ‘healthier’ alternatives are often priced much higher than their traditional counterparts.
“If you go to the Dubai Mall and you see organic food, it’s always much more expensive than normal food, this will deter customers,” says Lootah. Ensuring that Lootah’s bio-diesel, which is a blend of bio-fuel and regular diesel, is cheaper or at least comparable to the price of regular diesel is crucial.
But Lootah explains that currently Petrol stations in Dubai price diesel at around 3.7 dirhams (approximately $1US) per litre whereas his bio-diesel is about 30 fils, or $0.10 less. A competitively priced alternative fuel in the world’s most oil-rich region would naturally raise a few eyebrows. When asked how he managed to accomplish this, Lootah offered a very simple solution: used cooking oil.
“There is a lot of waste in the UAE when it comes to used cooking oil, some people throw it in the sink, some people sell it and it gets reused in the oil market, this is bad but we’re working with the municipality and government agencies to control this,” he explains.
With the support of the Dubai municipality, the company has created a system where used cooking oil can be collected in a centralised location, processed and reused as transportation fuel.
“Some restaurants were even cooking with the oil and then reusing it, but the government is cracking down. By collecting the oil and then processing it, we ensure that the coo king oil doesn’t go back into the food chain or get poured down the sink.” With so many of Dubai’s restaurants and catering facilities located in concentrated areas (such as Dubai Mall), collection of waste oil is considerably less laborious and environmentally unfriendly than in many other countries.
Lootah’s move to offer bio-diesel to the UAE’s transportation market comes at a time when the country is looking to increase its environmental presence by lowering its greenhouse gas emissions.
In late July of 2014, the Emirates National Oil Company actually announced that all service stations in the Enoc/Eppco network would begin providing the ultra-low sulphur ‘Green Diesel.’
The decision came on the heels of a UAE Federal Cabinet decree aimed at raising the country’s standards of diesel fuel from 500ppm to 10ppm, so that commercial diesel vehicles and equipment motorists would use ultra-low-sulphur diesel that matches Euro 5 standards.
Factbox:
– 3.7 dhs/litre UAE price of regular diesel at the pump
– 3.4 dhs/litre Price of Lootah Biofuels’ bio-diesel
