Kline defines bio-lubricants by three characteristics: biodegradability, toxicity and renewability. These lubricants must biodegrade by at least 60 percent within 28 days, meeting the U.S. Environmental Protection Agencys definition of readily biodegradable. They must be non-toxic to the environment when measured by tests devised by the 35-country-member Organization for Economic Cooperation and Development, as well as ASTM International.

Under the consultancys definition, renewable lubricants contain more than 25 percent biobased carbon, in line with the European Committee for Standardization (CEN) 16227, as measured by ASTM D6866 (Standard Test Methods for Determining the Biobased Content of Solid, Liquid and Gaseous Samples Using Radiocarbon Analysis). The latter test was developed in the United States at the request of the U.S. Department of Agriculture, in response to legislation requiring federal agencies to give preference in procurement to manufacturers using the greatest amount of biomass in their products.

Biobased Evolution

Luzuriaga noted that in the past, demand for biobased lubricants was largely driven by regulations and mandates. Certainly the key criteria was sustainability-it was environmental compatibility, for example. Bio-lubricants in their initial stages were used in environmentally sensitive areas. This consisted mostly of low-severity applications where vegetable oils, such as canola and sunflower, were typically used, he reported. These oils met or exceeded the required criteria of biodegradability, along with that of toxicity and bioaccumulation, to ensure sustainability.

But these characteristics brought certain drawbacks, with performance the most important challenge for biobased lubricant products. They were also at a disadvantage because of their higher pricing compared to other products in the marketplace. All in all, they have contributed to limited use of bio-lubricants in a few niche market spaces-more or less commodity-type applications within the forestry and agricultural areas, Luzuriaga noted.

This left the market looking for a new environmentally acceptable lubricant solution with performance factored into the equation. With the emergence of oleochemical chemistries, most noticeably synthetic esters, the performance concern was overcome, he said. Synthetic esters contributed to improved performance, which certainly met and exceeded [requirements] in high-severity applications.

They were used in long-life hydraulic oils, gear oils-which have a very high demand for performance-and greases, Luzuriaga added.

Cost remains a key concern in the biobased lubricants market. Synthetic esters remained very expensive base stocks, he acknowledged. So going forward, the cost consideration came into the arena. Weve witnessed over the past year an increasing supply of high performance, more cost-competitive synthetic base stock technologies. He observed that the market is now narrowing the gap between sustainability and performance, and in the course, opening a wider array of potential applications for biobased lubricants.

Demand Growth by Region

Kline found that North America accounted for about half of the global biobased lubricant market in 2016. Europe made up about a quarter, followed by Asia-Pacific and South America. Due to tight environmental protection policies that are in place, [North America and Europe] are very well known for being the most stringent in these considerations, Luzuriaga explained.

North America and Asia-Pacific are projected to exhibit compound annual growth rates for biobased lubricants demand above the global average to 2021, while Europe and South America will experience growth below 5 percent over that time. Luzuriaga indicated that Asian policymakers are gradually tightening the environmental regulatory framework in the region.

Growth in North America will be driven by the Vessel General Permit. The U.S. Environmental Protection Agencys 2013 mandate regulates oil discharges during the normal operation of commercial vessels in U.S. territorial waters and the Great Lakes. The VGP includes specific nontoxicity and biodegradability requirements for products used to lubricate stern tubes and other equipment that may be immersed in or in contact with seawater, referred to as oil-to-water or oil-to-sea interfaces.

In addition to the VGP, Luzuriaga cited a variety of other drivers for the growth in North American demand. The level of ownership that each state is taking in regards to environmental protection-not only California, but other states in the Great Lakes area, New York for example, is an important driver, he said. Also, North America is home for key players in the production of premium biobased base stocks.

The research firm ranked the United States as the largest biobased lubricants market in 2016, with Germany well behind, followed by South Korea, Brazil, Canada and the Nordic countries (Sweden, Norway, Finland, Iceland, Denmark). These top six leading markets accounted for about 85 percent of total consumption of biobased lubricants in 2016, or about 213,000 to 255,000 tons.

Globally, hydraulic fluids lead in terms of product application, accounting for nearly half of biobased lubricant demand. Its followed by metalworking fluids, chainsaw oils, transformer oils, automotive engine oils, industrial gear oil, greases and two-stroke and four-stroke engine oils.

Competitive Landscape

Original equipment manufacturers are playing an increasingly important role in biobased lubricants, as strong relationships with automotive and industrial OEMs provide blenders a foundation for expansion. Kline found that OEMs are also starting to get more involved in both the approval of biobased lubricants and the establishment of related lubricant specifications.

Market players such as Fuchs Petrolub and Panolin offer excellent biobased lubricant technology along with respected technical services, Luzuriaga stated. They have also cultivated strong OEM relationships and global expansion through acquisitions.

He also noted that the combined Houghton International and Quaker Chemical Co. would be the worlds largest metalworking fluids supplier, and that Quaker is also active in other biobased lubricant product segments through acquisition activities. Quaker announced in April that it would acquire Houghton for $172.5 million.

Another group in the competitive landscape consists of manufacturers fully devoted to the development and marketing of specialized biobased lubricants. (Examples in the U.S. include RSC Bio Solutions of North Carolina, Bioblend in Illinois and Environmental Lubricants Manufacturing in Iowa.)

Luzuriaga pointed out that synthetic esters are the most common base stock used in formulating biobased lubricants, accounting for almost two-thirds of total demand in 2016.

The supply of synthetic esters is fairly concentrated, he said, with four global players-BASF, Croda, Chemtura (now part of Lanxess) and ExxonMobil-accounting for about half of the market. Prominent specialized suppliers such as Oleon, Calumet Specialty Products Partners, Cargill, Emery Oleochemicals, Nyco and Oxea, among others, account for the balance of supply.

In the emerging field of novel biosynthetic base stock technologies, North American companies lead the field, with the presence of manufacturers such as Novvi, Advonex, Elevance and Biosynthetic Technologies.

Leading manufacturers of polyalphaolefins (some of which can be biodegradable) include Ineos Oligomers, ExxonMobil, Chevron and Lanxess/Chemtura. Polyalkylene glycol is supplied globally by Dow Chemical, BASF, Clariant, Pan Asia and Huntsman, among others.

Supply Push vs. Market Pull

Luzuriaga explained that intensifying supply and demand forces and market dynamics are shaping global demand for biobased lubricants. The supply factors include increasing availability of high quality biobased base stocks, while demand is boosted by favorable public opinion and regulations.

The effect of supply push and market pull is leading to a situation where the scope of bio-lubricants is expanding into more prospective applications, not only in these niche segments, but also in bigger, more lucrative applications-lets say gear oils, wind turbine [lubricants] or engine oils for example, he said, noting that public entities and authorities are increasingly looking to find more effective collaborations with the private sector related to use of biobased lubricants.

He noted that demand for biobased lubricants is ruled by a complex relationship between key stakeholders: suppliers, end users and authorities. Authorities focus on adoption of voluntary and mandatory platforms promoting the use of biobased products and practices that contribute to environmental protection, either directly as a result of their inherent properties or indirectly by improving an existing benefit, reducing pollution and emission levels, and thereby reducing the carbon footprint.

Among end users, biobased lubricants are in demand in environmentally sensitive areas where their use is mandated and where there is a governmental incentive in place. In all other uses, Luzuriaga said, green claims are considered secondary, although they are gaining relevance as a key purchasing determinant.

Among lubricant suppliers, a variety of manufacturers are devoting substantial research and development efforts to develop biobased lubricants with a quality that justifies premium prices.