Biofuel in Mexico: Uphill battle against bureaucracy, organized crime –

  • Biofuels based on pressed plant oils, and made especially from used cooking oil, could help Mexico’s public transport sector transition to a cleaner and climate-friendly energy era, according to researchers and industry entrepreneurs.
  • But there is a lack of government regulatory support, while the nation’s new president is betting on fossil fuels and neglecting biodiesel options and nature-based climate solutions.
  • As a result, small biodiesel producers have to operate in a legal gray zone, while industry entrepreneurs are held back in the development of the technology and the market.
  • Mexico isn’t alone: Many nations large and small are struggling with hurdles imposed by fossil fuel-friendly governments and a lack of supportive regulations to create a level playing field for the rapid development and deployment of biodiesel and other climate-friendly alternative energy solutions.

PUEBLA, Mexico — Twice a week, Moisés Flores sends his pickup trucks on a tour of big fast-food and chain restaurants to collect what would otherwise end up as garbage: used frying oil. Puebla, his hometown in central Mexico, is a gastronomic hotspot, boasting many eateries, hotels and cooking academies, which use a lot of oil that can be converted into biodiesel for the transportation sector.

And Flores’s town is not alone. Mexico consumes 1.28 billion liters (338 million gallons) of cooking oil annually. Half is used in the food and gastronomy industries, and the rest in households. A decade ago, that residual oil ended up in the trash or going down the sink — a problem for sewage treatment plants that ended up with clogged pipes and systems.

Then recycling came along, and today used cooking oil is a sought-after raw material for which restaurants get paid — a paradigm shift organized by green entrepreneurs who are the pioneers of Mexico’s biodiesel movement. People like Moisés Flores.

Moises Flores with a test tube sample of his biodiesel
Biodiesel entrepreneur and engineer Moises Flores with a test tube sample of his biodiesel made from residual cooking oil in his Amro factory office in Puebla, Mexico. Image by Sandra Weiss.

Recycling cooking oil for the climate

“I’m solving two environmental problems,” Flores declares. “I’m taking waste out of circulation and turning it into clean and climate-friendly fuel.” The 32-year-old, speaking from his factory in western Puebla, recalls how he came up with the idea a decade ago. Mexico was just then starting to take climate action more seriously and instituting its first energy reforms, after hosting the COP16 global climate summit in Cancún in 2010. That commitment would grow even bigger just five years later when Mexico made its voluntary carbon cut pledges under the Paris climate agreement.

“A window opened for biodiesel,” remembers Carlos Campos, president of the National Biodiesel Council, which brings together about two dozen industry entrepreneurs plus other stakeholder groups.

But “Change has been frustratingly slow,” Campos adds. That’s largely because “Mexico has never legislated a minimum quota of biodiesel blending like Europe or many U.S. states.”

The European Union, he explains, regulated and strongly supported the creation of a biodiesel blend, facilitating a new biodiesel market, though instead of utilizing used pressed vegetable oil, it backed rapeseed methyl ester instead, which is more compatible with sensitive automotive engines, especially in diesel passenger cars.

No such quotas, rules or blends were ever instituted by the Mexican government. Without supportive regulations, entrepreneurs had to largely do it alone, and there was never a biodiesel boom in Mexico comparable to the one in the EU.

Nevertheless, ecologically minded businesspeople like Campos and Flores ventured boldly into the new sector, creating a collecting network for residual cooking oil, developing the technology to process it, and building a market for green biodiesel.

Amro employees
Amro employees regularly collect used cooking oil from local restaurants and deliver it to the Amro factory where it is converted into biodiesel. Image by Sandra Weiss.

Flores’s father dealt with scrap iron, so the idea of recycling was in his son’s genes. The young man’s engineering studies at Puebla’s state university — a cradle of Mexico’s car industry — brought him into contact with engines. Pressed oil, he learned, was a much more efficient fuel to produce than, for example, rapeseed methyl ester or ethanol, which is sometimes used as an additive in gasoline engines.

And unlike the electric car, which is still in development, cooking oil reuse did not require building an entirely new engine, with heavy batteries, or for which rare earth metals had to be mined.

Pressed vegetable oils are ideal for use in the Elsbett engine, invented in the late 1970s, but can also be used as an admixture in older, common diesel engines. Most of Puebla’s bus and cargo fleet runs on diesel, so it was a ready market. Academics also believed that biodiesel could be an alternative, climate-friendly fuel in emerging countries like Mexico. That convinced Flores.

A good transition fuel for developing countries

“Emerging countries will not be able to introduce electric [cars] overnight,” says scientist Georgina Coral Sandoval. “Our [national] vehicle fleet needs 30 years to be renewed,” she said. Sandoval heads the second-generation biodiesel cluster at the Research Centre for Sustainable Science and Technology (CIATEJ) in Guadalajara. “We therefore need transitional technologies that allow us to reduce emissions in conventional engines as well.”

For that reason and others, conditions are good in Mexico for the use of biodiesel from pressed vegetable oil. The climate, mostly warm but not too humid, also helps: Cold thickens biodiesel, and at temperatures around freezing, the cooking oil coagulates and clogs auto filters and vehicles no longer run. Too much moisture causes problems with fungus and mold and spoils the fuel quickly.

Carlos Campos and Georgina Coral Sandoval
Carlos Campos, president of the National Biodiesel Council, and researcher Georgina Coral Sandoval from the Research Centre for Sustainable Science and Technology (CIATEJ) in Guadalajara, Mexico. Image by Sandra Weiss.

Doing research in his father’s warehouse and at the university lab, Flores acquired the right filters and used magnetic cavitation successfully to clean the oil of residues in an energy-saving way. He introduced quality control, because impure oil with too little lubricity can quickly cause destructive friction and render a diesel engine inoperable — something that happened in the early days of biodiesel in Mexico, alienating customers.

Flores tested his prototype fuel in his own diesel vehicle. “I run 100% on biodiesel,” he says proudly. Although this fuel requires more frequent engine maintenance, he hasn’t experienced problems, he says. It helps, though, that even the normal mineral diesel fuel in Mexico, with which Flores’s biodiesel competes, is of very poor quality and has a high sulfur content. Most of his customers, however, only mix in 5-20% biofuels at present.

magnetic cavitation cylinders
Biodiesel entrepreneur and engineer Moises Flores in front of his magnetic cavitation cylinders in Puebla, Mexico. Image by Sandra Weiss.

Many customers, but a tax setback

Flores contacted potential consumers (mainly bus and truck entrepreneurs), and tapped into possible residual oil suppliers (mostly fast-food chains). And the business took off, primarily, Flores says, for economic reasons: his biodiesel is 10% cheaper than conventional diesel at the gas pump and has almost the same range.

Flores currently pays just under 7 pesos (35 U.S. cents) for each liter of used cooking oil, while a liter of biodiesel sells at 12 pesos (60 cents). That’s theoretically a strong profit margin, but the state pockets 4 pesos (20 cents) of this in taxes, so only 1 peso (5 cents) of profit would typically remain with the entrepreneur. This is due to a 2013 tax reform that gave sustainable biodiesel no advantage, but instead taxed it at the same rate as conventional fossil fuels.

“That was a serious setback. Many of us had our [economic] necks broken by this tax,” Campos says. The entrepreneurs now survive financially by operating in a legal gray area and classify their vegetable oil-based biodiesel as a “fuel additive,” with its sale exempt from the mineral oil tax. But this has its problems: companies operating in this gray zone utilize neither promotional signs nor have an internet presence to advertise their use of residual oil biodiesel. Amro, Flores’s company, officially advertises its product as a “fuel additive” mainly on social media platforms.

There’s another prudent reason for being so cautious: A violent petrol organized crime organization in Mexico not only taps into pipelines and hijacks tankers, but it also robs biodiesel producers or blackmails them to eliminate competition.

Employees pumping used and filtered cooking oil into larger tanks. Image by Sandra Weiss.

State regulation lags

The main problem, however, remains the Mexican government, which hasn‘t yet established a coherent set of regulations for a fossil fuel energy transition.

There are historical roots to this problem. In 1938, then-president Lázaro Cárdenas nationalized the oil industry, at the time in the hands of U.S corporations. State-owned company Pemex was founded and became a driving factor in the country’s modernization and industrialization, especially after the discovery of Gulf of Mexico offshore oil. Pemex also became an important supplier of foreign currency and budget revenues. In the 1990s, however, Pemex lost its competitiveness due to corruption, politicization and a bloated bureaucratic apparatus.

The 2013 energy reform loosened the state oil monopoly and allowed more competition in the energy sector, under the supervision of an autonomous regulatory authority. At first, renewable energies, supported by the private sector, experienced a boom. But this changed abruptly in 2018, when Andres Manuel López Obrador came to power. Critics say he wants to take Pemex back to the days of the state oil monopoly and his energy policy relies heavily on fossil fuels.

“Biodiesel has been a taboo subject ever since,” Campos says. Even though some officials are interested in environmentally friendly technologies, others want more taxes in state coffers, or are simply afraid of making mistakes and prefer not do anything, he explains. “So we are trapped,” Campos concludes.

Employees filtering newly collected used cooking oil through biodiesel fabric. Image by Sandra Weiss.
Piled canisters of used cooking oil in the Amro factory. Restaurant closures during the pandemic caused a shortage of residual cooking oil, curbing biodiesel production. Image by Sandra Weiss.

Environmental NGOs, such as Salva la Selva, have pointed out multiple contradictions in biodiesel sector government policies. It critiqued a fatally flawed program of the Mexican Ministry of Agriculture, which encouraged peasants to plant the oil-bearing jatropha plant in the state of Chiapas. The government set up a biodiesel factory there in 2012 and convinced farmers to cultivate 14,000 hectares (roughly 34,600 acres) of jatropha.

“As before in Tanzania and India, the experiment ended in disaster,” due to a lack of prior studies on the cultivation and profitability of these wild plants, Salva la Selva  wrote in a report. “The seeds germinated badly, pests attacked the plantations, only 10% of the plants survived,” the document stated. Disgruntled farmers planted food crops the following year, and the biodiesel factory rots in the rainforest.

Competition with food crops for land remains a big biodiesel stumbling block in Mexico. “We need more research to find other and better [biodiesel] raw materials,” admits Sandoval, who is currently experimenting with yeasts and unicellular organisms. Colleagues of hers are focusing on algae. But cellulose or waste from tequila factories or tanneries could also work. “Without sufficient raw materials, it is impossible to build up a biodiesel industry,” she admits.

A climate-friendly solution for polluted cities?

Biodiesel producers have another hope: that their product can offer some relief from a nightmarish urban problem. Mexico’s cities are suffocating in exhaust fumes. In Mexico City (CDMX), air pollution is dangerous and health-threatening, even though the capital city has expanded bike paths and has for decades forced all vehicles to take one rest day per week.

Despite those steps, the city’s vehicle fleet is growing. Five million cars are now registered in the metro area of 20 million inhabitants. According to Sandoval, 80% of transportation pollutants come from diesel engines.

CDMX Mayor Claudia Sheinbaum, who represented Mexico on an expert panel of the U.N. Intergovernmental Panel on Climate Change, wants to drastically curb those emissions. She has announced a plan to reduce transportation emissions by 30% by the end of her term in 2024. Other cities, including Guadalajara and Puebla, have similar plans.

“I would already be satisfied if the 5,000 diesel buses of CDMX’s municipal services had to run on a percentage of biodiesel,” says Campos. A shift to biodiesel in the cities could offer a vital lifeline to the alternative energy industry, which continues to struggle.

COVID-19 took a toll on the business, with restaurants closing or operating at minimal levels, reducing supplies of residual cooking oil. Amro sold up to 200,000 liters (52,800 gallons) a week before the pandemic. That’s now down to 50,000 liters (13,200 gallons) due to a collapse in residual frying oil supplies.

To what extent city air may improve with biodiesel, however, is still unclear. Hartmut Schneider, an engine specialist and lecturer at the Universidad de las Americas in Puebla (UDLAP), points out that although biodiesel blending lowers CO2 emissions, it doesn’t reduce other toxic pollutants produced during diesel engine combustion, such as carbon monoxide, smog-producing nitrogen oxides, and carcinogenic hydrocarbons.

Moises Flores and Hartmut Schneider
Amro company head Moises Flores and engineer/lecturer Hartmut Schneider discussing the magnetic cavitation process to purify used cooking oil and make it into quality biodiesel. Image by Sandra Weiss.

Could new blends offer a solution?

The recycling of waste, and the creation of a circular economy, as well as the common sense of transforming that waste into renewable raw materials, continue to be strong arguments in favor of biodiesel.

But in Mexico there is not only less cooking oil in the market right now — likely a temporary problem — but also an emerging fierce battle for the available supply. Biodiesel has a strong competitor: the nation’s animal feed producers.

Used cooking oil has a high caloric content, so is popular in animal fattening. Because animal feed companies have larger profit margins, they can pay more for raw materials than can biodiesel makers — even though dioxin-contaminated cooking oil has entered into the human food chain via processed food for cows, pigs and chickens.

Another policy is exacerbating the raw material shortage. “Some biodiesel producers have therefore imported old cooking oil from the U.S.A., Canada or Asia,” says Campos. “But under the new [Mexican] government, import licenses have not been renewed. Only a handful of companies are now allowed to import fuels into Mexico.”

Sandoval proposes blending oils as a solution. “Brazilian producers have had good experiences with a mixture of 60% vegetable oil, 5% old cooking oil and 35% animal fats … This mixture would allow us to greatly expand the supply of biodiesel.”

Of course, production capacities would have to be expanded first. According to Campos, capacity countrywide now stands at 2 million liters (roughly 528,300 gallons) of biodiesel per month. If the government would introduce a 5% quota for biodiesel, 2 million liters would be needed on a daily basis.

An employee empties a canister containing used cooking oil onto biodiesel fabric, the mechanical portion of the purification process. Image by Sandra Weiss.

“Biodiesel is only successful in countries where the state sends clear signals, like in Colombia or the EU,” Campos says, adding that there is some urgency in the matter. “If we don’t achieve a breakthrough by 2024, we are dead” as an industry. That’s because there are already new technologies on the market, such as HVO, hydrogenated vegetable oil, invented by Neste, a Finnish company.

This technology injects hydrogen into vegetable oils, so can process heavily polluted or low-quality oil. “Mexico doesn’t have this technology,” notes Campos. “It is very expensive and energy-intensive and requires refineries operated by specialists.” If HVO takes hold internationally before Mexico can strengthen its native-born biodiesel industry, then the country’s entrepreneurs, people like Campos and Flores, could end up going out of business and a major sustainability opportunity could be lost.

Banner image: Street food in Mexico City. Mexico consumes 1.28 billion liters (338 million gallons) of cooking oil annually in the food and gastronomy industries and in households. Image via Photostockeditor (Public Domain).

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