Demand for oleochemicals took off in the 1970s, triggered by conflicts and embargoes affecting fossil fuel markets. They have since replaced many petrochemicals, and their relatively low toxicity makes them ideal for lotions, creams, soaps and detergents. They also tick boxes for lubricant companies concerned about their carbon footprint.

Oleochemical synthetic esters’ properties make them ideal base stocks and additives for various lubricant applications. Their high viscosity index, low-temperature behavior and biodegradability are suited to environmentally acceptable lubricants, or EALs; metalworking fluids that pose a hazard to human health; and hydraulic fluids. 

“A lot of oleo chemistry has very good solubility and a very low analine point, so it’s able to solubilize all the sludge and the varnish and keep parts clean,” Mark Miller, CEO of biobased estolide company Biosynthetic Technologies, told Lubes’n’Greases. 

Obstacles

Demand for synthetic and semisynthetic base stocks accounts for about 4.4 million metric tons per year, of which roughly 8% are esters. API Group III mineral oils are by far the largest type of synthetic base stock by volume, followed by polyalphaolefins, which are petrochemicals.  

Ester base stocks can be considerably expensive compared with other base stocks. 

“Comparing us to a fully saturated synthetic ester … we’re cost competitive,” Miller said. “If you’re looking at Group III or PAOs, we’re more expensive. But we have the bio content, we have the biobased performance, the sustainability story and the negative carbon footprint, which is huge for our customer base.”

Biosynthetic Technologies produces estolides from castor and soy. Estolides are oligomeric long-chain esters based on a fatty acid with an additional functional group. 

Esters are not without their weaknesses. Miller explained that esters’ oxidative and hydrolytic stability are less than ideal. 

“Esters break down when you get them wet and warm,” Miller said. “They just fall apart. And when they break down, they form acids, they corrode seals, they create sludge and varnish. It’s really bad stuff.”

Biosynthetic Technologies fixes that shortcoming and says it can offer oxidative stability equivalent to “top-tier petroleum performance.” But at a cost. 

“Everybody is aware esters are more expensive. They’re a premium compared to anything between Group I and Group IV. But the argument we had in our industry for years and years is always balancing not cost per kilogram but cost performance. That is the key point here,” Matthias Hof of oleochemical producer Emery told Lubes’n’Greases.

Geography

Unlike their petrochemical equivalents, oleochemicals face unique market pressures. Geography plays a large role in determining the level of demand and the source of feedstock.

“Each marketplace seems to have different drivers that will mandate or require the use of more sustainable products, less petroleum-based products and more oleo-based products,” Miller said. 

Asia’s growing thirst for oleo raw materials—especially China, Japan and India—is largely fed by fatty acid production centers in Malaysia and Indonesia, where palm kernels are harvested, as well as coconut. These plant sources contain C8 and C10 hydrocarbon molecules ideal for producing lubricant esters.

In North America, and the United States in particular, large quantities of tallow, or animal fat, are produced from the vast livestock industry. Plant-based raw materials such as canola and soy are also used. 

Biosynthetic Technologies in the U.S. uses a range of raw materials, including U.S. grown soy and Indian castor. Similarly, Novvi “mines” the specific molecules that it wants to make base oils.

“Our facility is agnostic in that we can source from soya, canola, rape seed, mustard, coconut. So that puts us in the commodity plant oil business,” William Downey, Novvi’s senior vice president for business development, told Lubes’n’Greases. 

Oleochemical producers in Europe use rape seed and castor, among others. Abundant sunflowers are less useful for lubricant production, containing heavier C16 and C18 chains, Hof explained. This pushes Europeans to look to Asia for feedstock.

Policy 

Another market force is government involvement. The current administration in the U.S. is pushing for the greater use of biofuels. This puts more pressure on raw materials costs for ester base stock producers. 

“Some of the basic raw materials for the oleochemical industries are now heading toward the energy sector, being a basis for biofuels, something we have seen in Europe more and more for quite some time,” Hof said. “Here in Europe—and that has led really to an extreme price hike in tallow. Compared to a year ago, the price of tallow doubled.”

In Europe, biofuels accounted for almost two-thirds of imported palm demand last year. European Union lawmakers once championed palm as a substitute for fossil fuels but have since u-turned after it became clear that deforestation to grow the crop ran rampant. The EU said it will phase out the use of palm in biodiesel by 2030.

Elsewhere, governments are driving the uptake of biobased lubricants, such as oleo esters, through schemes such as the EU Eco Label; the U.S. Environmental Protection Agency’s Vessel General Permit, which mandates the use of environmentally acceptable oils; the U.S. Department of Agriculture’s Bio Preferred Program, which mandates affirmative purchasing for federal agencies to use bio-containing materials; and the Securities and Exchange Commission, proposing and likely mandating companies put their carbon footprint in all financial documents, Miller explained.

Economics

The pressures on the market from geography and government policy are complicated by the effects of the wider economy. With a global recession looming, the outlook for tallow is uncertain, for example. 

When times are hard, people cut back on expensive foodstuffs such as meat. Europeans tend to eat less meat than Americans anyway, and that may see tallow supply from waste streams dwindling. 

Hof explained that situations such as the BSE cattle crisis in the U.K. in the 1990s, as well as religious dietary sensibilities toward animal products have chipped away at the market for tallow-based materials. Even though tallow is still important in Europe, producers and consumers are less and less interested.

“The oleochemical industry has made a really important move broadly to things that are more plant derived. Why? Because it’s scalable,” Downey said.

Scalability is key. Before switching to its current capability to choose whatever plant-based material, Novvi was fermenting sugar, which had less scope for ramping up. 

That said, supplies of locally sourced triglycerides from plant-based raw materials from Europe, such as rapeseed and sunflower, are currently under threat, too. Ukraine and Russia were the main exporters of both plants. 

“I see big problems right now,” Hof said. “Nobody is able to tell what is going to happen in the future.”

Sustainability 

The growing appetite for sustainable, low-carbon raw materials and reducing the industry’s reliance on fossil fuels could drive further growth. 

“If you look back two years, there would have been two or three ester manufacturers at a conference. Now it’s four, five, six,” Hof said. 

Does an oleochemical ester have a smaller carbon footprint than its petrochemical equivalent? Both are collected, transported and processed, often a considerable distance from the source. Both are distributed to buyers, have a use phase and then are disposed of or regenerated. The fact that plant-based esters are from renewable sources doesn’t make them sustainable, per se. 

“From that perspective, sustainability is not simply saying it’s renewable,” Hof said. “Everybody knows about the problems with palm plantations. How the rainforest is being eroded just to plant more palm trees, and then you have to transport this stuff to Europe, further increasing the carbon footprint of these materials.”

Hof posed the question: Is a fatty acid imported by ship into Europe from Indonesia more sustainable than a fatty acid produced in Europe from local crops? 

“Now, more and more this question will come into play,” he said. 

This may also tip the balance toward paying the premium for local production if there are back-end benefits to securing sales based on sustainability performance.

Biosynthetic Technologies uses castor from India, and Miller would argue that supporting the castor farmers and helping communities out of poverty is a fair trade.

“This is the groundswell of sustainability,” Miller said. “It’s all coming together at this moment in time.”

To compound buyers’ concerns over carbon footprint is supply chain stability. “Especially for manufacturing companies, of high importance is security of supply,” Hof said.

We are still living through the economic slump of the COVID-19 pandemic. China, the world’s largest consumer of chemicals, was effectively closed for business, while cargoes of raw materials couldn’t reach Europe. It’s also easy to forget the chaos caused by the blockage of the Suez Canal. The aftermath was felt well into 2022, Hof said.

He added: “If you are controlling a bigger part of the value chain, or the supply chain, it gives you a benefit and might even give you an edge in the market in the long run.”

E-mobility

E-mobility’s effects on the lubricants industry are becoming more noticeable. Foremost, electric vehicles don’t need engine oil because they don’t have engines. What motors they do have also require less machining and therefore less metalworking fluid—one of the mainstays for oleochemical esters.

This double whammy could be devastating for biobased ester lubricant companies.

“It will be very difficult, but I’m not a lube manufacturer. I’m just the raw material supplier,” Hof said. “We’re going to see the full impact of electrification in maybe two or three years. Unless, of course, the whole process is even more sped up than before.”

As an ester supplier, Emery is also feeling the push toward e-mobility from its customers. And there are opportunities for ester-based thermal management fluid producers. 

“What type of technology they’re going to use in these fluids, which are going to be developed specifically for electric vehicles? Nobody knows yet,” Hof said. “You can see a lot of esters manufacturers are entering that market and promoting their technology for electric vehicle fluids.”

While oleochemical manufacturers are indeed tossing their hats into the lubricants ring, Downey explained that the lubricants industry still requires relatively little from oleochemical suppliers. “If you cut the pie of lubricant base oil, you find that the lubricant business is the big piece, and then there’s a whole bunch of other smaller pieces. The oleochemical business is a bit different. There have always been oleochemicals that have fed the lube business, but lubricants are such a small piece of the chemical pie,” he said.  

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Simon Johns is an editor with Lubes’n’Greases. Contact him at Simon@LubesnGreases.com.