00:02The empty barrels are unloaded, then taken to the back of the restaurant.
00:09Nizam Ng is doing the daily rounds to collect used cooking oil from kitchens across Singapore.
00:15He inspects the filled barrels for excess impurities before swapping them for the empty ones.
00:26Nizam then takes the oil back to the lorry.
00:32And pumps it into a plastic vat, ready for delivery.
00:36The used cooking oil, or UCO as it's known in the industry, will be converted into biodiesel.
00:43It's a renewable energy source produced from vegetable oils, animal fats or recycled grease.
00:49A sharp rise in global crude oil prices, driven by the crisis in the Middle East, is increasing global demand
00:56for biodiesel.
00:57This Middle East war has propelled the bio fuel industry forward by three to four years.
01:05I would assume that within the next year, most of these companies and users will be very, very aggressive in
01:13trying to secure and competing within themselves for feedstock security.
01:19Biodiesel trades at a premium to crude oil, but a narrowing price spread is making it more competitive as an
01:25alternative.
01:26It's not the only reason why demand is shifting.
01:29There are two main benefits to biodiesel, one being the emission reductions and the other one being the energy security
01:36aspect.
01:38And the recent developments in the Middle East really highlight the importance of this energy security aspect, which is now
01:46converging as the most important driver of biodiesel.
01:51At the production facility, the oil is filtered before it's chemically treated to become biodiesel.
01:58Most of the biodiesel that's produced globally is shipped to Europe, where demand is fuelled by strict government targets to
02:04cut emissions.
02:05But the Strait of Hormuz's closure has piled supply pressure on Asian economies.
02:11Several, including Malaysia and Indonesia, are raising and accelerating bio fuel mandates and are providing subsidies to support it.
02:19But if the price gap widens once more, such policies could unwind.
02:24There is definitely a risk for that. I think governments will aim to the extent they can to maintain these
02:32spending mandates because the energy security aspect of it is really important.
02:36However, the current support schemes that we see are dependent on this price spread between biodiesel and conventional diesel.
02:44And if that price spread is set to increase again, then some governments will likely face challenges by financing all
02:55these subsidies, which might force them to review their policies.
03:00For now, higher oil prices and geopolitical uncertainty are giving biodiesel a boost.
03:06How long that momentum lasts may depend not just on markets, but on how much governments are willing to pay
03:13for energy security.
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