Second, there is no one solution to sustainability, especially if profitability is also on the radar. The European green hydrogen plan will be difficult to replicate in North America or even be made into a dominant solution for achieving net zero. Population centres are more dispersed, so developing a hydrogen distribution infrastructure will be more expensive. North America has a large fracking industry, thus, a wholesale movement to green hydrogen will not be politically possible. Instead, other solutions including carbon capture, use, and storage (CCUS) projects could become the dominant means of balancing the books.
Third, as every forecaster will quip, it is difficult to make predictions, especially about the future. The variety of strategies laid out by different energy companies reflects a divergence of views on what the world will look like in 20 or 30 years. At least for now, Europe appears to be on a path to reducing carbon emissions using green hydrogen and other technologies. If the plan continues to have political backing, adequate financing, and consumer support – none of which is certain in the short to mid-term – it will mean big changes in fuel and lubricant demand. The inevitability of global warming if we were to do nothing implies that in the long-term view, sustainability focus will have to drive business decisions, though the path is not clear.
A possible future scenario where Europe makes a significant push to renewables and North America continues to make incremental changes to reduce carbon emissions will pose different challenges and opportunities for lubricant companies.
What does this mean for the lubricants industry? Firstly, the discussion on peak oil is a distraction as far as the lubricants industry is concerned. The lubricants industry is already at its peak demand moment. Automotive and industrial technology improvements and the growing prevalence of synthetic long-life lubricants and better maintenance practices have offset any volume growth that may result from growing economic activity. While some regions continue to grow, this growth is offset by the demand decline in developed regions of the world. Global lubricant marketers must prepare their business for an industry that is getting segmented based on each region’s sustainability objectives and proposed solutions, as well as its growth outlook.
Secondly, the lubricants industry has always been focused on energy conservation because that is literally one of the reasons for its existence along with equipment protection and other considerations like cooling of engine components.
The contribution that lubricants make to sustainability can be thought of in two categories: - Enabling (or increasing) sustainability through lubrication, and
- Making lubricants and lubrication more sustainable.
Low viscosity engine oils and synthetic lubricants long promoted based on improving fuel economy are examples of the first category.
Re-refined lubricants, bio-sourced lubricants, and in general, extended life lubricants reduce resource consumption and help improve the sustainability of the lubricant itself. They are an example of the second category.
In the new scenario, the focus on these lubricant attributes will be dialled up to a significant degree. There will be competitive pressure to expand oil drain intervals to reduce expense for consumers and to reduce carbon footprint. Both automotive OEMs and lube marketers will join this race. Major lube marketers may seek to migrate conventional lubricant products to synthetic products where it is feasible to extend oil drain intervals. In the same vein, some lubricant categories will be made fill-for-life with significant implications for the service fill market. For automotive OEMs, this will be a way of promoting low servicing cost and reduced carbon footprint.
In the industrial segment, something similar is happening and will gain momentum. Equipment monitoring, oil analysis, AI powered maintenance practices, and use of re-refined and bio-sourced basestocks will help reduce resource consumption and carbon footprint of operations. All of this seems like incremental change, and to a large degree, it is. It is a result of the fact that the lubricant industry has long been focused on energy efficiency before it became fashionable.
This is not to say that there are no step changes coming for the lubricants industry. Electrification and the use of fuel cells eliminate the need for engine
Continued on page 34 LUBE MAGAZINE NO.161 FEBRUARY 2021 33
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