Reducing production costs is the major driver for biolubes market growth, with legislation that mandates biolube usage a close second, two industry consultants agreed.
Speaking at the ICIS World Base Oils & Lubricants Conference in London in February, Geeta Agashe, senior vice president for consultancy Kline & Co.s energy practice, described biobased lubricants as products made up of biological products or renewable agricultural materials in whole or in significant part. However, she noted that a lubricant can contain as little as 25 percent of biobased content and still be marketed as a biolube.
Jens-Christian Blad, senior chemical industry expert for specialty chemicals at McKinsey & Co., said his consultancy surveyed consumers and business executives and found that cost competitiveness was the main factor cited by people it surveyed constraining widespread use of biolubes. The survey did show that biolubes could command a 5 to 10 percent premium in certain application areas.
The first thing people ask is how big this market is, Agashe said. Depending who you talk to, this technology represents only one or two percent of the 39 million metric tons of finished lubricants sold globally. She added that about 70 percent of the biobased lubricants are consumed in North America.
Historically, production costs for biolubes have been much higher than for conventional lubricants. As a result, applications have typically focused on certain niche areas where recovery is not feasible, Agashe stated, such as bar and chain oils, hydraulic oils for machinery operating near water, transformer oils and some cutting oils.
She then described game changers for greater acceptance and use of biobased lubricants. The first is increasing environmental concern among national, state and local governments. Also, many people, especially from the younger generations, are more closely attuned to the environmental impact of the products they use, Agashe said.
Second, a lot of research has aimed to improve the performance of biobased lubricants. And more and more participants are joining this pool, she noted, adding to the critical mass of suppliers. Improvements in performance are dispelling the old perceptions about poor quality.
The other thing were watching very closely is California Senate Bill 916 that was introduced in January. It mandates that a state agency and anyone contracting with a state agency after Jan. 1, 2016, must purchase only biosynthetic lubricant, which the bill defines as a lubricating oil that contains a biobased product. The bill stipulates the amount of biobased content within the lubricating oil is not less than 25 percent and that the biobased content is biodegradable. Agashe said, If the bill passes, it would create an overnight market for biobased lubricants of about 25 million gallons in California alone.
All in all, the outlook for biobased lubricants is very optimistic, Agashe concluded. The market is expected to grow by six to eight percent in the next few years. However, McKinseys Blad cautioned that history shows it often takes decades after a new product is introduced before it becomes a commodity, so market growth will be slow.