A by-product can be useful and marketable or it can be considered waste: for example, bran, which is a byproduct of the milling of wheat into refined flour, is sometimes composted or burned for disposal, but in other cases, it can be used as a nutritious ingredient in human food or animal feed. Gasoline was once a byproduct of oil refining that later became a desirable commodity as motor fuel. In March 2020 the Covid-19 pandemic caused a sharp reduction in demand for transport fuels and gasoline regained its by-product status. The plastic used in plastic shopping bags also started as a by-product of oil refining.
In the context of production, a by-product is the "output from a joint production process that is minor in quantity and/or net realizable value (NRV) when compared with the main products". Because they are deemed to have no influence on reported financial results, by-products do not receive allocations of joint costs. By-products also, by convention, are not inventoried, but the NRV from by-products is typically recognized as "other income", or as a reduction of joint production processing costs when the by-product is produced.
The International Energy Agency (IEA) defines by-product in the context of life-cycle assessment by defining four different product types: "main products, co-products (which involve similar revenues to the main product), by-products (which result in smaller revenues), and waste products (which provide little or no revenue)."
While some chemists treat "by-product" and "side-product" as synonyms in the above sense of a generic secondary (untargeted) product, others find it useful to distinguish between the two. When the two terms are distinguished, "by-product" is used to refer to a product that is not desired but inevitably results from molecular fragments of starting materials and/or reagents that are not incorporated into the desired product, as a consequence of conservation of mass; in contrast, "side-product" is used to refer to a product that is formed from a competitive process that could, in principle, be suppressed by an optimization of reaction conditions.
Muthu, Subramanian Senthilkannan; Li, Yi (2013). "Manufacturing Processes of Grocery Shopping Bags". Assessment of Environmental Impact by Grocery Shopping Bags: An Eco-Functional Approach. Environmental Issues in Logistics and Manufacturing. Singapore: Springer Science & Business Media. p. 7. ISBN 9789814560207. Retrieved 27 July 2019.
Plastic is obtained as a by-product from the oil refining process [...]
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- World Trade Organization (2004): United States - Final dumping determination on softwood lumber from Canada, WT/DS264/AB/R, 11 August 2004.
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