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Your frying pan is an untapped well of biodiesel potential
Despite the advice of local governments, chances are that you throw your frying oil down the drain. I do too, because there’s nowhere to recycle it. But increasingly, U.S. restaurants are selling or giving frying oil (the technical term is ‘yellow grease’) to collectors for use in biodiesel production and livestock feed. When we last published on yellow grease collection, it looked like collection had stagnated from 2003-2010. But more recently, data has unequivocally shown that since 2015 yellow grease production has increased – by a lot. What’s driving this growth in yellow grease collection?
The easiest explanation for the increase is biodiesel production, which has ramped up over the same time period. But there are other possibilities too: increased production of yellow grease, growing demand in livestock feed, increased exports, or simply more collection programs stemming from rising environmental awareness.
Between 2003 and 2010, it certainly appears that increased yellow grease production was driving increased collection. The rise and fall of yellow grease production somewhat mirrors that of consumption of cooking oils and fats (categorized as ‘baking and frying fats’ in the U.S. Department of Agriculture’s Oil Crops Yearbook). But after 2010, the relationship disappears. Cooking oils and fats consumption takes a dive, leveling out at around half its 2005 peak by 2015. In 2012, the USDA added a new classification of ‘shortening and cooking oils,’ and in 2014 stopped reporting the older category (‘baking and frying fats’). By the two overlapping years (2012-2013), we can tell that this new classification covered a smaller subset of cooking oils than the previous one. Using this information, it is possible to scale the 2014-2018 data to the older classification, which is shown in the graph below. Both datasets demonstrate a clear decrease in cooking oil use from 2007 to 2016. Exports have also fallen from a peak in 2011, so that can’t be behind the growth in yellow grease collection either.
What about livestock feed? This, as well as exports, used to be the main use of yellow grease before the biodiesel industry ramped-up production. Unfortunately, there is no data on the amount of yellow grease mixed into livestock feed, but we can assume it’s declined as it’s been diverted to biodiesel production. So, the fact that the yellow grease market has shifted away from livestock feed strongly suggests feed is not a driver in that market.
It turns out the easy answer is probably right after all: biodiesel is driving growth in yellow grease collection. But why does this matter?
Let’s get back to that point about livestock feed. As biodiesel production has diverted yellow grease away from livestock, well, the cows still have to eat something. In my previous post on a similar issue – distillers corn oil diverted from livestock feed – I found that the most likely replacement is more corn grain. Corn is, after all, the largest component of most livestock feed. So, the shift in yellow grease from feed to fuel has likely resulted in more corn being grown, which in turn causes land use change and has other greenhouse gas (GHG) emissions associated with it.
If biodiesel demand is driving the increased collection of yellow grease as well as a diversion from livestock feed, that dilutes the overall environmental impact. There are very little GHG emissions from increasing yellow grease collection.
This also means yellow grease is a special kind of waste. With other kinds of waste, residue, or by-product, there is little potential for increased production if we use more of that waste in biofuel. For example, few farmers are going to raise more cattle because of an increase in the price of tallow – which accounts for only 3% of the value of the whole cattle. But with yellow grease, there’s a disconnect between production and collection, and that’s where the opportunity for environmental arbitrage lays.
Looking forward, how much more can yellow grease collection grow? There are two ways to answer this. One way is to assume the past will repeat itself. Using a multiple regression analysis, I estimate that a one-ton increase in yellow grease used in biodiesel drives a 0.6-ton increase in yellow grease collection, using total cooking oil production as a covariate. That’s a pretty strong effect! I’d be quite cautious though, in interpreting that result. The data quality is not stellar, and there’s very little of it. My analysis does not tease apart cause and effect, which probably isn’t possible with the amount of data available.
The other way to answer the question is to look upwards at the ceiling. As of 2011, about half of U.S. restaurants collected yellow grease, according to a report by Informa Economics. That must have increased to around 80% today if the amount collected from each restaurant and the number of restaurants has remained the same. And as the total consumption of virgin cooking oil has continued to decline since 2011, it’s possible yellow grease production per restaurant has decreased as well, which would mean more than 80% are currently donating or selling their yellow grease. Once we run out of restaurants to collect yellow grease from, any further increase in collection will have to come from households, which is a much heavier lift.
But hey, maybe someday someone will take my used frying oil.
