There are several myths and ambiguities distorting the perception of biolubricants. For some, biolubricants are a synonym for a natural, entirely biobased product; for others, biolubricants are equivalent to biodegradable lubricants. This association with biodegradability contributed to the creation of a poor image of biolubricants as expensive products with multiple shortcomings in performance, limiting their use to a few niche applications in forestry and agriculture, to be used only when required by law.
Biolubricant products have undergone significant technological developments, which started with the increasing supply of high-performing oleochemicals derivatives. They continue with the emergence of biobasestock technologies, which are poised to reconcile all key considerations for sustainable products from an economic, environmental and social perspective.
Regulations and biolubricants
Kline’s definition of biolubricants includes the following key criteria: biodegradability, renewability and non-toxicity (see Table 1
). However, in the absence of well-defined standards, the perception of biolubricants is largely shaped by governmental programs. They tend to focus on one key aspect of the product—for example, the U.S. Federal BioPreferred Program focuses on a biolubricant being “biosourced” and is silent on other aspects of the product. Conversely, the Vessel General Permit recommends the usage of environmentally acceptable lubricants. Here, the impetus is put on biodegradability and toxicity. Similarly, in the revised European Union (EU) Ecolabel program, the biosourced content aspect (or renewable) is not required anymore.
Table 1. Kline’s Definition of Biolubricants
Further complexity is added due to the fact that tests and limits to determine biodegradability/biosourceability/nontoxicity vary by program and country. Due to the lack of transparency, industry players are advocating for the adoption of more universal sustainability standards for the entire lubricants market, not only for certain types of products—such as hydraulic oils. In this regard, a group of European companies gathered under the Union of the European Lubricants Industry umbrella and created a Sustainability Task Force in 2018. This working group has the objective of elaborating the framework to define, develop and measure sustainability in the European lubricants industry across the entire life cycle of a lubricant product—a “cradle-to-grave” assessment.
Biolubricants are growing
With global demand under 350 kilotonnes, biolubricants constitute a small fraction—slightly less than 2%—of the finished lubricants market globally. However, the average growth rate for biolubricants is expected to be above the general trend for finished lubricants. North America and Europe are the largest biolubricants-consuming regions, given the stringent environmental protection policies in place in those regions, along with a strong market pull from a segment of environmentally conscious customers (see Figure 1
Figure 1. Global biolubricant demand by region and end-use application, 2019.
Both markets tend to adhere to regulations and have high sustainability standards. Additionally, Europe displays a higher willingness to pay a premium if the same performance is provided. This is something that market participants refer to as the “feel-good factor.” Moreover, companies in the EU and North America are increasingly engaging in Corporate Social Responsibility practices, which will only grow in the aftermath of COVID-19.
Diversity of market outlets
Biolubricants are used in a wide range of end uses, notably in industrial operations with a high risk of accidental or intentional leakage such as hydraulic fluids but also metalworking fluids, gear oils, greases and chainsaw oils. These products are in demand in an array of applications—from the manufacturing and maintenance of transportation equipment for all modes of transportation, such as road, rail, air and water, to concrete releasing agents.
There are remarkable disparities in the level of demand for biolubricants. For instance, some of the largest biolubricant markets, such as the U.S., display low penetration of biolubricants products—at around 1.5%—while biolubricants consumption in the Nordic countries (Denmark, Sweden, Finland and Norway) in Europe has already reached over 5% (see Figure 2
). Nordic countries are more proactively adopting biolubricants regardless of regulations, given the elevated collective environmental awareness in those countries. In France, institutional policies such as the Agriculture Guidance Law and the retirement and occupational health funds have been crucial in the promotion of biolubricants in the country, especially in applications with high worker exposure, like metalworking fluids. The Convention for the Protection of the Marine Environment of the North-East Atlantic and the related Harmonized Offshore Chemical Notification Format is one of the main regulations covering lubricant application in the offshore segment in the North-East Atlantic.
Figure 2. Estimated share of biolubricants within the total finished lubricant market by country, 2019.
Several governments in Europe are implementing energy transition policies toward renewable sources of energy from fossil fuels, in accordance with international commitments to adopt climate change mitigation strategies, such as the United Nation’s Sustainable Development Goals.
Compliance with regulatory mandates, performance requirements and competitive prices are three key purchasing determinants when selecting a biolubricant product; however, the key selling point will vary across countries and regions. A mix of factors, including poor implementation of environmental regulation, low market pull and elevated price sensitivity, contribute to keeping biolubricants demand in China at a low level. In China, market acceptance has been performance-driven rather than due to their environmental credentials. Furthermore, lubricant suppliers seem to not actively engage in the promotion and marketing of biolubricants. Fire resistance is a key feature sought in applications like steel mills and steam turbines. Fireresistant hydraulic fluids are a key market outlet for biolubricants in China and South Korea. Synthetic esters, notably polyol esters, are replacing phosphate esters due to environmental considerations.
Multiple tiers of suppliers
The biolubricants market is highly competitive, with major integrated oil companies competing with numerous small- and medium-sized specialized players.
About 10 suppliers are estimated to account for nearly 70% of the biolubricants market. Quaker Houghton and Fuchs are the leading suppliers of finished biolubricants worldwide, driven by their biolubricants product range and focus, global reach, OEM partnerships and acquisition activities. BP, ExxonMobil and Panolin complete the top five leading biolubricant suppliers.
Regulations can be a prelude to growth, as they help to create favorable market conditions involving the development of relevant products and customer interests. The momentum given by regulatory mandates is crucial, especially when mineral lubricants continue to have a significant cost advantage over biolubricants, and there is an abundant supply of mineral Group III/III+ basestock. However, regulation by itself, without the relevant enforcement, attractive product offerings in terms of price performance and dedication, will not drive the sector.
On the other hand, improving the technical performance of biolubricants will enhance the cost-benefit tradeoff of using these products in place of their mineral counterparts. For their inherent properties, including thermal and oxidation resistance and solvency, synthetic esters are the most common basestock used in the formulation of biolubricants, accounting for more than two-thirds of total demand in 2019. Distantly following is vegetable oils with about 20%; PAO, PAG and novel biobased synthetic hydrocarbons account for the balance. The increasing supply of high-performing and more cost-competitive synthetic biobasestock technologies would represent a major breakthrough for the next expansion trend in the biolubricants market space. Biobased synthetic hydrocarbons or green hydrocarbons are high-performance basestocks derived from renewable sources, such as vegetable and plant oils, having a performance like that of their mineral counterparts. Some of the major products available in this category in the market include NovaSpec™ by Novvi, Elevance Aria™ WTP 40 by Elevance, Entrada™-BASE by Advonex and Estolides by Biosynthetic® Technologies. However, scalability and OEM certifications pose a major challenge for some manufacturers in the road to full commercial availability in lubricant applications.
Like all other industries, a buoyant biolubricants market has been heavily impacted by the COVID-19 pandemic. The long term consequences remain to be seen, though the adverse effect of the ongoing crisis is apparent in 2020. Kline estimates the biolubricants market will suffer a contraction of nearly 20% in 2020. North America and Europe are the hardest-hit regions affected by COVID-19.
The market is expected to have high resilience, and growth is foreseen to resume in 2021, when the market is anticipated to resume growth, although the situation remains highly fluid. Overall, Kline estimates the biolubricants market will grow at a CAGR of 3.5% over the next five years, well above the average growth for the finished lubricants market, which is projected to remain flat, at best, through 2024.
Beyond the negative impact on volume demand, the adverse repercussions of COVID-19 could result in the postponement or even the prorogation of certain regulations. Some industry watchers believe that the implementation of VIDA might be delayed by six months. Meanwhile, in Europe, the automotive industry appealed the European Commission for a relaxation of CO2
reduction targets. Moreover, due to COVID-19, the level of investment influx will be most likely reduced or suspended for most of 2020. New development programs with customers were put on hold as laboratories and technological centers closed due to the lockdown.
In a world that is inevitably moving to a carbon neutral economy, biolubricants are set to play a major role in this transition for their sustainable nature and environmental credentials, as well as for their enhanced safety for workers, improved productivity and lower energy consumption. Last but not least, biobased fluids might find applications in thermal management in direct (immersion) oil cooling in electric vehicles. The eventual implementation of immersion cooling systems by European OEMs will present a major market opportunity for biobased products.
Note: This article drew insights from the newly published report, Bio-Lubricants: Market Analysis and Opportunities, which provides a comprehensive analysis of the opportunities and challenges in the biolubricants market. It also assesses key lubricant product categories where the use of biolubricants is growing and evaluates the various market forces driving growth. The effect of COVID-19 and its impact on biolubricant demand in 2020 and beyond also is examined. The report is available at https://klinegroup.com/reports/bio-lubricants
Sharbel Luzuriaga is a project manager at Kline & Co. in the Market Research division. He is based in Kline’s Prague office in the Czech Republic. You can reach him at Sharbel.Luzuriaga@klinegroup.com
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