Kitchen waste oil from Chongqing and Sichuan is making headlines. On November 26, the opening day of the second China International Supply Chain Expo (CISCE), the Sichuan-Chongqing Hot Pot Industry Supply Chain exhibition—the sole thematic exhibition zone in the event—took the main stage at the Expo. With over 70 hot pot brands and more than 30 suppliers from across the supply chain, the exhibition provided a comprehensive view of the hot pot industry's integrated ecosystem in the two places.

The hot pot retains its familiar flavors, yet the exhibition has seen the emergence of numerous new participants, ranging from small and medium-sized tech firms specializing in the recycling and reuse of kitchen waste oil to pioneers in the downstream sectors converting waste oil into biodiesel and bio-jet fuel.

The traditional hot pot industry chain is expanding beyond the realm of serving dishes; it now also includes rapidly emerging sectors that are contributing to the industry's growth.

Consumer Enthusiasm Fuels Hot Pot Industry Chain Expansion

How is hot pot faring on the global stage?

Zhang Xiu, the Executive Vice Chairman of the Supply Chain Committee of the China Hospitality Association, outlined a rough sketch with data: the international hot pot market was valued at 28.9 billion U.S. dollars in 2021 and is projected to surpass 46.5 billion U.S. dollars by 2026, indicating a compound annual growth rate of 10 percent.

One piece of evidence illustrates this point. To date, just a single Sichuan-based hot pot restaurant chain, Shoo Loong Kan Holdings Group, boasts an impressive 3,500 outlets worldwide across its various brands.

In the global landscape of Chinese cuisine, Sichuan dishes are the stars, and within them, hot pot shines brightly. The Sichuan-Chongqing style of hot pot, in particular, wields an unparalleled market influence. The 2024 China Hot Pot Industry Development White Paper reveals that the market size of China's hot pot industry surpassed 500 billion yuan in 2023, with Sichuan-Chongqing hot pot commanding a significant 66 percent market share. By the first half of this year, the Sichuan-Chongqing hot pot industry had grown to approximately 206,000 stores, firmly maintaining its position as the leading player in the sector across the country.

The thriving hot pot consumption has nurtured a holistic hot pot industry chain, which also encompasses the transformation of waste oil. Formerly labeled as "dirty oil", used cooking oil is now swiftly transitioning from traditional recycling and conversion to the innovative realm of bio-jet fuel for aviation. Moreover, this shift is marked by explosive growth from the moment it commences.

Many enterprises in the bio-jet fuel industry are firsthand witnesses to the sheer scale of the surging waves.

Sichuan Recyclone Environmental Technology Co., Ltd., a company specializing in the recycling and disposal of kitchen waste oil, is prominently featured at the Sichuan-Chongqing Hot Pot Industry Supply Chain exhibition. Inside the booth, the company showcased its latest production applications: utilizing its independently developed innovative microbial strain, "pollution-eating yeast", to transform kitchen waste into high-value products such as industrial alcohol, feed additives, and industrial crude oil.

Yu Runtao, Marketing Department Manager at Recyclone, explained that since launching its first hundred-ton-level kitchen waste treatment line in Chengdu's Xindu District in 2018, the company has reached an average daily processing capacity of 100 tons of kitchen waste, yielding approximately 10 tons of industrial crude oil per day. The feedstock for Recyclone's industrial oils is sourced from two-thirds of the catering establishments in Xindu District. Yu Runtao emphasized that the company's current output is lagging behind the demand for orders. "Our participation in this exhibition is aimed at seeking more cooperation opportunities," he stated.

Yu Runtao noted that the company has experienced a substantial rise in order inquiries since the start of the year, with calls from approximately thirty to forty downstream businesses interested in cooperation. Upon analyzing the calls, he discovered that while not all companies inquiring about purchasing industrial crude oil are involved in the production of bio-jet fuel, this particular sector is seeing the most significant surge in demand.

Yu Runtao revealed, "This is also the reason why our company decided to invest and establish a factory from Guangdong to Sichuan. In the Sichuan and Chongqing area, the kitchen waste oil, including those from hot pot restaurants, represents a vast market." He added that to rapidly increase production, the company is actively accelerating the construction of another production line with a capacity of 500 tons, aiming for it to be operational in the first half of the coming year.

The high demand and short supply of kitchen waste oil are concurrently involving the upstream catering industry. Sichuan Haidilao Catering Co., Ltd., also featured in the exhibition zone, has sustained rapid growth in business over the past two years. A relevant person in charge of the company noted that Haidilao now operates over 1,300 stores nationwide, with more than 50 of these located in the Sichuan-Chongqing area. In 2022, the total kitchen waste oil generated by all Haidilao stores reached 34,000 tons, which rose to 49,000 tons in 2023.

A recycling professional with extensive experience in kitchen waste oil collection in the Sichuan-Chongqing area observed that the waste oil from local hot pot restaurants is increasingly being acquired by downstream bio-jet fuel companies.

Domestic and Foreign Firms Vie for Sichuan's Used Cooking Oil

According to Wen Ming, an advisory in the expert pool of the Civil Aviation Administration of China (CAAC), the surge in demand for kitchen waste oil, previously shunned and disliked, is a necessary outcome of the aviation industry's accelerated efforts to reduce carbon emissions.

"Using kitchen waste oil as a feedstock for bio-jet fuel can reduce carbon emissions by up to 80 percent," Wen Ming said. In order to meet the International Air Transport Association's goal of achieving net-zero carbon emissions by 2050, it is expected that between 50 and 70 percent of this target will depend on the use of bio-jet fuel, Wen added.

Progress on the short and medium-term goals is also moving swiftly. On one side, Europe has mandated that all aircraft operators departing from EU airports must refuel with a blend of bio-jet fuel starting January 1, 2025, and by January 1, 2027, this mandate will extend to all flights arriving in the EU. Non-compliance with these regulations will lead to the imposition of carbon taxes or the implementation of trade barriers. On the other hand, CAAC has initiated a pilot program for the application of bio-jet fuel at four airports—Beijing Daxing, Chengdu Shuangliu, Zhengzhou Xinzheng, and Ningbo Lishe, effective from September 19. Air China has been regularly refueling with domestically produced bio-jet fuel on its round-trip flights at these four locations.

"Although the current domestic bio-jet fuel production capacity stands at over 2.2 million tons, the actual output is only around 300,000 tons, revealing a substantial shortfall. Globally, the combined production targets set by various regions amount to several hundred million tons, indicating a potential trillion-value-level industry," Wen Ming noted.

On November 12, the Sichuan Tianzhou Xinneng Green Aviation Headquarters project was inaugurated in Chengdu, and the company also invested two billion yuan in Weiyuan County, Sichuan, to establish a bio-jet fuel production base. With the full operation of its new facility, Tianzhou Xinneng will increase its annual processing capacity for waste animal and plant oils to 500,000 tons. These bio-jet fuels will be directly supplied to Chengdu Shuangliu International Airport through the Chengdu Headquarters project. The company's decision to invest heavily in bio-jet fuel production in Sichuan demonstrates its robust confidence. Chen Yu, the company's general manager, explained that their multiple market research revealed two key advantages for developing bio-jet fuel in Sichuan and Chongqing. First, the two places generate approximately one million tons of kitchen waste oil annually, accounting for one-tenth of the national total. Second, the flight schedules in Chengdu, Chongqing, Guiyang, and Wuhan are extremely dense, with the four cities collectively consuming over four million tons of aviation fuel per year. "A comparison of these two parameters indicates that both supply and demand are strong," Chen Yu remarked.

During the CISCE, Tianzhou Xinneng actively participated in the event, aiming to seek more orders for used cooking oil. "We will initially form a production capacity of 200,000 tons as early as the first quarter of next year," a relevant person in charge of the company said.

Singapore Apeiron Jinhai Bioenergy Co., Ltd., which continues to invest in bio-jet fuel projects in Sichuan, closely followed the latest industry trends highlighted by the Sichuan and Chongqing Hot Pot Industry Supply Chain Exhibition and the Hotpot Industry International Promotion Conference, even though it did not attend the event on site.

Since entering the Chinese market in 2018, Apeiron Bioenergy, a biofuels company established in 2007, has delivered over 600 million liters of waste oil-converted products. Its primary export markets include Europe, America, and Singapore. In 2023, the company invested 20 million yuan in Guang'an to establish a biodiesel production line. This initiative primarily targets collecting kitchen waste oil from Sichuan, Chongqing, Yunnan, and Guizhou and then converting it into biodiesel. Yang Xianhua, General Manager for Greater China at the company, offered a broader perspective on the soaring demand for used cooking oil in Chongqing and Sichuan. "There is currently a significant rise in global demand for kitchen waste oil and other industrial oil feedstock. Overseas companies in Singapore, Japan, Europe, and the United States are all increasingly importing kitchen waste oil from China, and this trend is intensifying."

He also noted that from December 1, China will cancel the export tax rebate for waste oils and industrial-grade mixed oils, which currently enjoy a tax rebate rate of 13 percent. "This means that used cooking oil is transitioning from waste to a resource, catering more to the local Chinese market."

Regarding the influx of domestic and foreign companies vying to invest in bio-jet fuel projects in Sichuan, Ye Bin, General Manager of Sichuan Jinshang Environmental Technology Co., Ltd., a firm deeply involved in this sector, expressed underlying concerns. He believes that while the new arena of converting used cooking oil into valuable resources is emerging, the domestic industry critically needs top-level design and standardized management. "With more opportunities for industry growth comes a greater need for orderly and rational competition; without it, this new arena may soon face a reshuffle."