As the world’s fourth-largest crude exporter, the UAE would seem an unlikely growing market for the use of biofuels - alternatives to diesel and gasoline produced from organic sources.

Conventional fuel is heavily subsidised by the country’s government, making it even harder for alternatives to compete with regular suppliers than in other regions where biofuels have taken off. But two companies have found a way of profiting from biodiesel processed from cooking oils used in Dubai’s burgeoning hospitality sector.

Cooking oil

Biodiesel can be made by reacting cooking oil and methanol using a catalyst - typically sodium/potassium hydroxide or sodium methoxide - and is generally mixed with conventional fuels before being used in vehicle engines.

Dubai-based Lootah Biofuels and Neutral Fuels both started up cooking-oil-to-biodiesel refineries in 2010, and have gradually increased production as their client bases expand. Lootah Biofuels, a subsidiary of SS Lootah Group, has a refinery in the Al-Quoz area of Dubai with the capacity to produce 10,000 litres a day of pure B100 biodiesel, or 300,000 litres a month.

This is largely blended with conventional diesel to give a capacity of about 6 million litres a month of B5 (5 per cent biodiesel) fuel.

Yousif Saeed Lootah, CEO of Lootah Biofuels, says the company does not sell B100 except to special customers, and its product is generally blended to a maximum of B20.

At the supply end, Lootah Biofuels buys used cooking oil from more than 250 restaurants, kitchen chains and industrial food manufacturers. “Before, people were not motivated to recycle in Dubai, but support from Dubai Municipality has helped change the mindset of people,” Lootah tells MEED. “In 2010, people were scared to put biodiesel in their vehicles. But now people understand how much value there is in it.”

Accepting biofuels

The company has built up a base of clients that use its fuel, including the logistics firm TNT, the local Romana Water, cash security group Transguard and fruit and vegetables supplier Barakat. Several schools also use the fuel in their buses.

Lootah Biofuels distributes the product through four filling stations it operates across Dubai and says it manages to price itself below the cost of diesel at Emirates National Oil Company (Enoc) stations.

The company has quickly expanded production in recent years. According to Lootah Biofuels chief operating officer (COO), Ghulam Ashraf, it doubled its processing volume to 501,000 litres in 2014, from 252,000 litres in 2013 and up from 84,000 litres in 2012.

“Biodiesel is a niche market… in the same way as organic food,” says Lootah. “Not everyone is going to buy it, but some people [will only buy it]. We are targeting people who are more socially responsible.

“The situation in the Middle East is now harder outside the UAE because of the low crude prices, especially in the GCC. Price is very important for customers, so most will not buy it every day if it is more expensive.”

Dubai Municipality

Neutral Fuels operates a refinery located at Dubai Investments Park. Earlier this month, the company signed an agreement with Dubai Municipality to replace the diesel used in its vehicle fleet with B100 biodiesel made from cooking oil.

Neutral Fuels’ refinery has the capacity to produce 4 million litres a year of biodiesel and the company has additional equipment ready to be installed to take capacity to 6 million litres a year.

The firm produced its first biodiesel in 2010 and reached full production in 2011. It then upgraded the plant in both 2013 and January 2015. Neutral Fuels supplies its customers either at the bio-refinery or at the customer’s own location, where it provides storage tanks and dispensers.

World first

According to Neutral Fuels, the deal with Dubai Municipality makes the city the first worldwide to formally adopt biodiesel made locally from 100 per cent waste cooking oil for use in municipal vehicles.

“In adopting biodiesel, which doesn’t even require any engine modifications on diesel vehicles, the municipality is creating a sustainability benchmark that the rest of the world should note,” says Karl Feilder, CEO of Neutral Fuels.

The company, which expects to provide Dubai Municipality with a range of fuels including B100, B5 and B20, produced just over 2 million litres in 2014.

“We essentially run a just-in-time manufacturing approach, so we produce what we need to sell and are currently upgrading to 4 million litres a year capacity as we cannot supply enough,” says Feilder. “We have no problem sourcing good-quality feedstocks.”

Franchise plans

Neutral Fuels’ eventual aim is to franchise its business model across the GCC, according to the CEO.

Both Lootah and Feilder cite the promotion of fuel efficiency and sustainable energy by the Dubai and UAE leadership as key drivers behind the growing use of biodiesel in the emirate. These targets are covered by the UAE Vision 2021 as well as the Dubai Integrated Energy Strategy initiative.

“If you look at the UAE rather than other GCC countries, we are motivated and supported by our leaders,” says Lootah. “Since before 2010, the government has supported a sustainable economy based on sustainable energy, renewable energy and green production.”

Most modern diesel cars and trucks are capable of running on 100 per cent pure biodiesel in all but the coldest winter conditions, which are never encountered in the GCC.

Fujairah project

Outside Dubai, a much larger biofuels project with a diverse product slate is being developed in Fujairah on the Gulf of Oman coast of the UAE.

The local Petrixo Group is expected to tender the engineering, procurement and construction (EPC) contract for the facility later this year, after the completion of the design.

Petrixo plans to invest $800m in the biofuels refinery and, in July, selected US-based Honeywell’s subsidiary UOP to provide the jet fuel and diesel technology. UOP’s process technology will be used to produce jet fuel and diesel from 500,000 tonnes a year (t/y) of renewable feedstocks.

Jet fuel

The company is planning to build a facility with a final capacity to produce 1 million t/y of fuel, including biodiesel, jet fuel, naphtha and liquefied petroleum gas (LPG). According to the company website, the project will also produce edible oils from soy beans, sunflowers, corn and canola.

According to UOP, the Fujairah plant will be the first commercial-scale renewable jet fuel production facility outside North America.

Honeywell Green Jet Fuel, which the plant will produce, is typically blended up to 50 per cent with petroleum-based jet fuel and requires no changes to aircraft technology. It can also reduce greenhouse gas emissions by 65-85 per cent.

Algae fuel

The UAE is also planning to become a world leader in producing biofuels from algae by 2020, in a programme headed by Abu Dhabi’s Masdar Institute. Algae is expected to become a new source of fuel for vehicles and aircraft in the coming decades if research can manage production from the aquatic plants.

Masdar Institute is looking at the possibility of using the non-habitable desert of the Gulf region to house large-scale algae growth facilities. The institute said in 2013 that it was working with industrial partners to define the upper limit of how much algae could be grown in the country.

This increased interest in alternatives to conventional hydrocarbons is set to open a new chapter in the UAE’s energy economy.