Shell Promotes Carbon-neutral Lubes

“We know our customers are looking for ways to reduce their net carbon footprint, and as the world’s leading lubricants supplier we have an important role to play,” Executive Vice President for Global Commercial Carlos Maurer said in a Feb. 23 news release.

Sustainability proponents say such initiatives will become more common in many industries.

“Offering low-carbon products will continue to grow in popularity,” said Kyle Harrison, an analyst in Bloomberg New Energy Finance’s sustainability research team, “and we expect these products to continue commanding a premium so long as there is continued demand from customers setting net-zero targets of their own.”

Shell said the carbon neutrality claim will apply to the following products in the following geographic areas:

* Helix Ultra 0W light-duty engine oils in Europe, Asia-Pacific and the Middle East;

* Helix Ultra 5W in Asia-Pacific;

* Pennzoil Platinum 0W, Pennzoil Platinum High Mileage 0W, and Pennzoil Ultra Platinum 0W passenger car engine oils in the United States and Canada;

* Rimula R6 and Ultra heavy-duty diesel engine oils in Asia-Pacific and Europe;

* Rotella T5 and T6 heavy-duty diesel engine oils in the United States and Canada;

* a “wide range” of premium business-to-business products, including lubricants and greases used in the wind sector and Naturelle-branded eco-Label products.

Annual sales of these products exceed 200 million liters, Shell said, compared to approximately 5 billion liters for all of the company’s lubricants. The company said it has been reducing the carbon footprint for all of its lubes through a variety of measures. Since 2016, it reduced CO₂ generation by its manufacturing processes by 30%. Half of the energy used by its blending plants now comes from renewable sources. It has increased its use of recycled materials in lubricant packaging.

After taking these measures, the company calculated that the products it wanted to promote as carbon neutral were still net positive for CO₂ generation, so it offset those emissions with credits from projects estimated to compensate for 700,000 metric tons per year of CO₂ emissions.

The press packet for the carbon neutrality announcement identified 10 projects, mostly reforestation and afforestation initiatives in in Asia, South America and Africa. For example, a project in Xinjiang, China, is planting trees to reforest 6,698 hectares of dessert. Developed by Shell and Climate Bridge, it is estimated that the trees will soak up 90,393 tons of CO2 per year, while also creating jobs and protecting five endangered species. In accordance with recognized carbon credit accounting practices, Shell claims a one-time 90,393 credit for the project.

Shell has a larger portfolio of such projects that it invests in, and some of these 10 predated the carbon-neutral lubricant campaign but were allocated to it. A few of the 10 projects are in early stages and have not yet generated credits.

According to spokesman, Shell intends to continue promoting products as carbon neutral beyond this year, so it will continue to undertake new projects to obtain the necessary credits. The offsets claimed this year exceed the footprint of the lubricants in question by a comfortable margin so that the neutrality claim should remain valid even if sales volumes increase, he added.

Shell is not the first company in the lubricants industry to make a carbon neutrality claim. For example, Fuchs Petrolub SE, the industry’s largest independent supplier, claimed that its entire business had become carbon neutral by the start of 2020. Like Shell, the German company said it achieved the distinction through a combination of reducing CO2 emissions related to its operations and by investing in projects that provided carbon credits. Shell has set a goal of making its entire energy business carbon neutral by 2050.

Bloomberg NEF’s Harrison said the analysis used by Shell is valid and common.

“For companies setting a net-zero [CO2 emissions] target or equivalent, there is usually going to be a component of a company’s footprint that cannot be directly reduced or removed,” he told Sustainability InSite. “In the oil and gas sector, this is especially difficult for Scope 1 emissions – which are direct emissions from operations – and Scope 3 – which take into account the use of products by customers.

“Many companies in this sector are investing in carbon offsets to neutralize the remaining emissions they can sequester or remove. What’s important is that they invest in high quality carbon offsets, from projects that focus on removal or sequestration. These are typically forest carbon projects, where investments from Shell and other companies are used to plant new trees or prevent trees from being cut down.”

Beyond satisfying investors and customers with interest in sustainability, Harrison said carbon neutral products can generate financial returns. “In some cases, these products command a premium – a partially because customers can in turn reduce their own emissions by purchasing these products,” he said. “It’s an effective way for companies to uncover new revenue streams while simultaneously decarbonizing.”