Tagaddod: Addressing Environmental Concerns through Sustainable Biofuel Solutions
Updated 11/28/2023 8:00:00 AM
Arab Finance: Climate change is urging a global shift towards sustainability. With a tendency towards replacing fossil fuels with alternative energy sources, used cooked oil (UCO) is gaining recognition as a valuable alternative that paves the way for new business opportunities.
That is why Arab Finance interviewed Nour El-Assal, CEO of Tagaddod, a leading global renewable feedstock collector for renewable fuel production and collected raw materials such as UCO. He discussed the company's mission to address environmental concerns and the solutions it offers. He shared the company’s expansion plans and the opportunities this field unlocks.
1-What inspired you to start Tagaddod? And what are the biggest challenges you have faced while building the company?
Tagaddod was founded in 2013 in Egypt by me (Nour El-Assal) and Mariam Afifi, the company’s Chief Operating Officer (COO). Currently, we operate in seven countries, work with over 200 partners, and serve 250,000 households and businesses.
Tagaddod is a leading global renewable feedstock collector for renewable fuel production, collecting raw materials, such as UCO. The inspiration behind starting the company was our commitment to addressing environmental concerns, which we do by reducing global dependence on fossil fuels and contributing to sustainable energy solutions.
We have faced and overcome several challenges during our journey, including logistics hurdles, the need to develop cutting-edge technology, and, of course, competition in a dynamic market.
2-How has your experience working with companies like Shell, BP, and Microsoft influenced your approach to running Tagaddod?
Working with prominent corporations and renowned industry leaders has enabled me to acquire valuable knowledge and expertise, covering diverse areas such as worldwide energy markets, technological advancements, and strategic business approaches.
This immensely advantageous knowledge was a key component of my inspiration for establishing Tagaddod.
3-How does Tagaddod's technology platform enable biofuel manufacturers and global refining companies to overcome production bottlenecks?
Our technology platform plays a critical role in helping biofuel manufacturers and global refining companies overcome production bottlenecks. The current supply of UCO for biofuels is insufficient to meet the projected future demand. UCO-based biofuels currently account for approximately 50% of global biofuel production, reaching 160 billion liters in 2021. However, this volume represents only around 3% of the total fuel used in road transport worldwide. The demand for UCO is expected to rise significantly, with a projected increase of 56% between 2022 and 2027, exacerbating the ongoing issue of supply shortages, according to the International Energy Agency (IEA).
Alternative sources are limited due to food security and biodiversity concerns, so it is vital to optimize UCO collection. Tagaddod’s revolutionary, data-driven collection infrastructure provides financial incentives and efficiency for collectors while ensuring accurate traceability to our global partner network, guaranteeing ethical and sustainable sourcing of UCO.
4-What are the key benefits of using UCO as a raw material for biofuels? And how does Tagaddod ensure that UCO is sourced ethically and sustainably?
The benefits of UCO as a raw material for biofuels are significant. UCO, often referred to as the "new liquid gold," is a sustainable solution for repurposing waste that otherwise would end up in landfills or contaminate water sources.
It is a crucial feedstock for biodiesel and sustainable aviation fuel, contributing to a more environmentally friendly energy landscape. Tagaddod ensures ethical and sustainable sourcing by partnering with certified suppliers and adhering to environmental regulations.
5-Can you share with us the company's numbers, shedding light on last year’s revenues?
UCO has been dubbed the new liquid gold for good reason. Environmental concerns and new regulations have catalyzed demand for it, with the market expected to hit $10 billion by 2028.
Since deploying our first-ever waste producers’ app for households and businesses in August 2021, we have seen a huge spike in registered households and businesses, reflected in our growth and profitability. In 2022, we grew by 162% in households (versus an average of 50%) and 635% in businesses (versus an average of 150%).
Our five-year aim is to become a global market leader in renewable feedstock collection, and there is scope for us to turn over several hundred million dollars in revenue by 2027.
This potential is also recognized by our investors. For example, HSBC provided $1.2 million in pre- and post-shipment financing against export contracts.
6-How does Tagaddod's data-driven collection ensure traceability and accuracy in the collection of UCO?
Tagaddod's data-driven collection system ensures traceability and accuracy in UCO collection. Our platform processes tens of thousands of UCO pickup requests daily and offers rewards to users, including new, full bottles of cooking oil. This happens by empowering our stakeholders to use our technology from the waste producer (the point of origin) all the way until it is received and processed for biofuel production.
After refining and processing the collected UCO, Tagaddod transports it to Europe, where it is used as feedstock for biofuel production, significantly reducing greenhouse gas emissions. Biodiesel, for example, produces 50–90% less greenhouse gas emissions than petroleum diesel. Biodiesel is blended into regular diesel across the EU, where regulators are mandating its increased use in transport as part of the bloc’s 2030 transition targets.
The data-driven approach guarantees the ethical and sustainable sourcing of UCO via financial incentives for collectors and maintaining accurate traceability to global partners.
7-How has Tagaddod been impacted by global regulations mandating increased biofuel usage to meet climate goals?
Around the world, governments have committed to the COP21 Paris Agreement to limit global warming to well below 2°C (ideally 1.5°C), and companies are pushing their transition agendas to reach net zero carbon emissions by 2050.
The biofuels sector benefits from government policies and incentives to promote renewable fuel use. This includes specific percentages of transport fuels to be sourced from renewable sources, such as in the US and Europe.
Europe’s current UCO collection only satisfies 30% of the demand for biofuel production. This will lead to sizable growth in the biofuels market, which experts expect will double by 2030 to $111 billion.
UCO will make half of the biofuel produced globally, which will create a great opportunity for feedstock collectors such as Tagaddod.
8-What are the biggest opportunities for growth in the biofuels industry? And how is Tagaddod positioning itself to take advantage of them?
The biofuel industry has great growth opportunities: expansion into new markets, enhanced production efficiency, and developing innovative biofuel products.
Sustainable aviation fuel is no exception; it is projected to make up to 5-7% of the over $600 billion jet fuel market by 2030, up from 1-2% of the current $200 billion jet fuel market. Over the long term, it will reach 50–70% of the jet fuel market by 2050.
Tagaddod is well positioned to take advantage by addressing the UCO supply gap and providing innovative methods and business models for UCO collection, both in emerging markets and regions with growing demand for biofuels.
With current collection methods, there will be a 65% (20 million tons/year) supply gap in 2030, worth over $20 billion. To address this shortfall, the market needs UCO collectors with innovation and robust business models. This is where Tagaddod comes in.
Tagaddod prevents thousands of tons of emissions from entering the atmosphere. We also help conserve scarce water resources, as every liter of discarded used cooking oil has the potential to contaminate one million liters of fresh water.
9-What are Tagaddod's plans for expansion? And which markets are you targeting next?
As urbanization and changing diets drive higher demand for edible oils and more sustainable waste management, we plan to expand our collecting platform throughout the Middle East, North Africa, and other nations and places where our value is needed. This will make sustainable biofuels more accessible and contribute to a positive social impact.
Growth opportunities are expected in Egypt too, as demand and manufacturing capabilities increase, potentially reducing the country's greenhouse gas emissions.
If Tagaddod's blueprint is replicated in other fast-growing emerging markets worldwide, it can have a substantial impact on the supply of UCO and access to sustainable biofuels.
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