Lubricants sustainability: De-fossilisation or decarbonisation?

Much of global sustainability efforts are focused on decarbonisation, with a growing number of companies and nations confirming their intention to decarbonise in the coming decades. However, Inga Hermann, head of the lubricant department at Verband Schmierstoff-Industrie e.V. (VSI), the German Lubricant Manufacturers Association, says the “game-changer” in the climate fight is de-fossilisation, not decarbonisation. 

We need to switch to renewable energies that avoid carbon dioxide emissions, but we also need to keep carbon in circulation as many of the raw materials are based on carbon, says Hermann. The challenge is to obtain the carbon needed for processes from alternative sources to create a true carbon cycle.

Hermann made her comments during the 1st Joint ALIA/SEAS Virtual Roundtable on Accelerating Sustainability for the Lubricants Industry: Opportunities and Challenges, which was held on February 22. The roundtable, which was co-organized by the Asian Lubricants Industry Association (ALIA) and the Sustainable Energy Association of Singapore (SEAS) was designed to advance the sustainability agenda for the lubricants industry by initiating conversations on the opportunities afforded by sustainability. The session was one of a series of ALIA events focused on promoting sustainability across the Asian lubricants industry. The ALIA Annual Meeting, which will be held from April 25-27, 2022, in Bangkok, Thailand, aims to further progress these conversations.

The key focus of the roundtable was on the benefits of sustainability for the future of our industry, providing ideas on how to “step into” sustainability, and the opportunities and challenges faced by sustainability pioneers. Panellists included Hermann, who is leading the establishment of a European sustainability standard for lubricants in cooperation with other lubricant industry associations; Vinod Kesava, council member at SEAS and chair of the SEAS Carbon Working Group; and Gavin Warner, general manager, Sustainability – Global Commercial, at Shell based in London, UK. The session was moderated by Charlotte Kehoe, chair of the ALIA Sustainability Subcommittee. Kehoe is the technology manager for bp in the Asia Pacific region.

During the discussion, the panellists emphasised the importance of metrics. While the United Nations (UN) Sustainable Development Goals, adopted by all UN member states in 2015, guide long-term sustainability strategy, the speakers noted that performance metrics and standards were critical to determining how to achieve these overarching goals. 

A range of different sustainability standards exist, most of which are too generic. The lubricants industry requires a system that is specific to our industry, says Hermann. Equally, it is critical we act as a frontrunner in evaluating and establishing an industry standard, she says. If we are not the frontrunner – we risk standards being forced upon the industry. 

Hermann noted that pressure is already coming from the market and OEMs and the industry needs to be prepared and aligned. For this reason, we have started the development of a product carbon footprint calculation system in Europe, says Hermann. The methodology is being evaluated and the standard needs to be aligned across all stakeholders in the value chain. Already, carbon footprint is a very relevant factor in the tendering process, she says. 

The panellists stated the importance of creating industry standards in a “precompetitive, non-profit system” that allows consistency in benchmarking, common understanding and interpretation. 

Individual companies are already developing their own metrics. Hermann emphasised the need for a harmonised system. If everyone has their own calculation, we risk the benefits being lost. Hermann called for associations across the value chain to work together to develop a coordinated system.

The setup of our industry has traditionally been linear, says Warner. The Shell representative emphasised that sustainability is not only about reducing carbon emissions, stressing the significance of a circular economy. Design decisions determine how much waste we create. There is a significant opportunity in the lubricants industry to utilise materials for longer and eliminate waste through decisions made during the design phase, he says. However, this will require systemic changes to the value chain to ensure better utilisation of waste or resources. This opportunity is not possible unless we collaborate, he told participants.

Warner also noted the importance of driving behavioural change. Sustainability is about transformation and behaviour change of individuals, he says. Leaders need to set the strategic direction and inspire people to get behind sustainability initiatives. It is important to demonstrate proof points quickly. People respond well to examples, he says.

The roundtable included discussion on rising interest in the use of sustainable base oils, such as bio-based or re-refined base oils. From a carbon impact perspective, it is important to consider all aspects of sustainability to make informed decisions, says Warner. Each initiative must be assessed on a full lifecycle impact to determine if it is a good or bad opportunity. There is no right or wrong, he says. What could be right in one location, may not be the right time in another.

During the session, Kesava highlighted recent changes to carbon taxation. The Singapore Parliament has announced that its carbon tax will be increased from the current SGD5 (USD3.7)/metric ton (mt) of carbon dioxide equivalent to SGD25 (USD18.5)/mt in 2024, SGD45 (USD33.4)/mt in 2026 and up to SGD80 (USD59.40/mt before the end of 2030. This is a very important signal to the economy of Singapore that it will have to change dramatically, says Kesava.  The SEAS representative also indicated that he sees opportunities under the carbon tax for oil and gas companies to generate additional revenues from things like carbon credits, while reducing emissions.