What part do governmental regulation and tax incentives play?
All countries and states have laws governing the disposal of used oil. Governments today are reviewing their current regulations and adopting stricter requirements. This trend will continue. The greatest problem government regulators face is enforcement of collection and disposal laws. Re-refining represents the ultimate in environmental stewardship and some governments provide incentives for organizations that invest resources for re-refineries. Incentive structures vary from country to county and include taxes on finished lubricants, which are rebated back to the re-refiner, or granting sales tax breaks on their recycled lubricants under the theory that the original oil has already been taxed. These incentives are vital to the economies of a refinery such as in Australia where the government will rebate up to one dollar per liter to produce re-refined base oil. In cases like Australia these incentive do become the main economic justification to operate a re-refinery.
