The global bio-based lubricant market is expected to grow at a compound annual growth rate (CAGR) of 5.21% during the period of 2022-2027.
Bio-based lubricants are natural organic chemicals formulated with organic materials such as vegetable oil (sunflower oil, rapeseed oil, castor oil, and palm oil), animal fats, natural esters, and special additives. These components are environment-friendly, thus release no harmful chemicals on the environment, and are capable of meeting stringent government standards, specifically related to carbon emission, while maintaining high performance.
Bio-based lubricants also offer performance benefits such as prolonging the equipment life and reducing maintenance costs, friction, and energy consumption. Bio-based lubricants are highly preferred in sensitive environments such as forest, mining, marine, wind power, and construction equipment where there is a high chance of oil spill and oil mist which can potentially harm aquatic life and human health.
KEY INDUSTRY INSIGHTS
• The increasing price of petrochemicals, the depletion of crude oil reserves, and the rising awareness among consumers towards protecting the environment from greenhouse gas emissions are stimulating the demand for the bio-based lubricants market.
• The stringent regulatory standards of the EU Ecolabel, VGP, IMO, and other regulations (such as Blue Angel and Swedish Standard) to limit the CO2 and other harmful emissions are shaping the demand in the global bio-based lubricants market.
• Under VGP regulation, the U.S. Environmental Protection Agency mandates the regulation regarding oil discharge during the usual operation of commercial vessels in the U.S. territorial waters and the Great Lakes.
• The regulatory landscape is a significant hindrance for small and medium enterprises scaling up operations. But at the same time, it is driving the industry because these standards and regulations ensure the product’s safety, quality, and low toxicity.
• “The greatest impact in accelerating the growth of biodegradable lubricants has been the development of high-performance synthetic hydrocarbon base oils. This technology is both readily biodegradable and more oxidatively and hydrolytically stable than the ester technology that was used in the past”, says Dr. Larry Beaver, Vice President, Research & Development for RSC Bio Solutions.
Stringent Government Regulation Driving Demand for Bio-based Lubricants
The increasing concern for environmental protection, carbon footprint, and sustainable development has contributed to the strict regulations to use bio-based lubricants. The U.S. Environmental Protection Agency (EPA), EU Ecolabel, and IMO are the regulatory bodies that monitor and implement stringent regulations regarding the discharge of oil spills in the ocean by the marine industry or provide a certified label that ensures the customer that the product is environment friendly.
Therefore, with the rising focus of the government to reduce carbon footprint worldwide, companies across the industries (such as mining, construction, marine, wind power, and automotive) need to ensure that the lubricant products they are using must comply with the regulations set by the regulatory body and meet the performance standard, thereby augmenting the demand of the bio-based lubricants market.
Accelerating Demand from Mining Industry
The increasing automotive production, infrastructure development, and power industry is driving the bio-based lubricants market growth worldwide. This growth is creating a demand for bio-based lubricant products as these lubricants are primarily used in mining equipment ranging from large wheel loaders, mining trucks, wheel tractor scrapers, large dozers, underground mining loaders and mining, rock drills, and mining shovels which are used across above and below ground. Lubricants play a vital role in the smooth functioning of this equipment, continuous operation, and protection from dust, water, and breakdown.
In addition, bio-based lubricants also reduce the health risk for employees and are gentle on the environment using protecting the aquatic life in case of spilled lubricants.
Availability at High Cost & Lack of Lubricating Properties
The major challenge faced in the bio-based lubricant market is its availability at a high cost, especially in the emerging economies of India, where people are price sensitive. The high cost of bio-based lubricants is attributed to their production process. It is produced using several chemical modification processes, including transesterification, epoxidation, and esterification reactions which increases the overall cost of the product.
Similarly, the lack of lubricating properties is also a hurdle to the growth of the global bio-based lubricants market. Bio-based lubricants fail to provide crucial physical properties such as thermal stability, oxidative stability, and viscosity range. Also, it does not perform well in cold processing facilities, giving an edge to petroleum-based lubricants over vegetable oil-based ones. These properties play a vital role in ensuring the smooth functioning of the vehicle while protecting the machine from friction and corrosion and ensuring the machine functions at high temperatures without any damage.
INSIGHTS BY TYPE
Biodegradable synthetic is expected to dominate the industry during the forecast period. Since the 1950s, synthetic esters have been used to produce lubricants. Presently, manufacturers prefer synthetic esters over vegetable oil to produce bio-based lubricants because it offers enhanced benefits compared to vegetable oil and is abundantly available in nature as compared to vegetable oil. Synthetic esters are primarily preferred for those applications that require frequent lubricant changes, such as hydraulic fluid, engine oil, and stern tube-thruster fluid. TotalEnergies, Fuchs, and Condat are some companies offering lubricants based on synthetic esters.
INSIGHTS BY APPLICATION
Hydraulic fluid is the largest segment amongst others in the bio-based lubricant market. The segment is expected to witness growth due to the rising demand for bio-based hydraulic fluid in agriculture & forest equipment and the mining industry.
INSIGHTS BY END-USER
The marine industry held the highest share in the bio-based lubricants market in 2021; however, the automotive industry is expected to lead the bio-based lubricants market during the forecast period. Over the years, the demand for bio-based lubricants in the marine industry has increased due to the rising regulation and to mitigate the issues caused by the oil spill. A regulatory landscape highly characterizes the marine industry. The Vessel Grant Permit and IMO 2020 are the major regulations that promote biodegradable lubricants in marine vessels to reduce carbon emissions while protecting the equipment.
Segmentation by Product Type
• Biodegradable Synthetic
Segmentation by Application
• Hydraulic Fluid
• Gear Oil
• Chain Oil
• Metalworking Fluid
Segmentation by End-Users
• Agriculture & Forestry
The rising economic development, increasing sustainability to reduce carbon footprint, and growing automotive, mining, and industrial sectors are boosting the global bio-based lubricants market. The government’s stringent regulation towards eco-friendly and environment-friendly products is also driving the industry for bio-based lubricants products across all the regions. Europe accounted for the highest contribution to the global bio-based lubricants market, followed by North America.
The bio-based lubricant industry in North America has grown dramatically in recent years. The U.S. is a crucial country in the region with the world’s largest economy in terms of GDP. Because of rigorous emission standards and robust transportation infrastructure, the United States is one of the primary centers for bio-based lubricant manufacture, attracting global players to set up their facilities in the U.S.
Asia-Pacific is projected to be the fastest-growing bio-based lubricants market during the forecast period. Indonesia, Malaysia, and China lead the region. These regions are witnessing a surge in demand from the automotive & transportation sectors, increasing mining activities, and the manufacturing & machinery sector driven by the increasing regulation to reduce carbon emissions.
In APAC countries Indonesia and Malaysia are rich in palm oil, whereas India is the third largest producer of rapeseed oil and the world’s largest producer of castor oil. Thus, lubricant manufacturers are emphasizing increasing their production base in Asia due to the easy availability of raw materials and low labor costs. The consumption base is also highly driven by foreign investments, a booming manufacturing sector due to the friendly policy, a growing middle-class population, and increasing living standards across the APAC.
Segmentation by Geography
o Rest of APAC
• North America
o Rest of Europe
• Latin America
o Rest of Latin America
• Middle East & Africa
o Saudi Arabia
o Rest of MEA
The competitive scenario in the global bio-based lubricants market is currently intensifying. The rapidly changing technological environment, the trend to reduce carbon footprint, and sustainability scenario can adversely affect vendors as customers expect continual innovations and upgrades. The market is moderately fragmented, with players providing bio-based lubricant products that are readily biodegradable, environmentally friendly, and highly functional.
The major companies operating in the global bio-based lubricants market are Castrol (UK), Fuchs (Germany), Cortec Corporation (US), Renewable Lubricants (US), and Metalube (UK), Repsol (Spain), and Kluber Lubrication (Germany), among others. These companies continually compete for the leading position in the industry, with steady competition from local vendors and international players.
• In 2019, Metalube launched biodegradable lubricants for lubricating and protecting umbilical cables and steel wire ropes operating in marine environments. The lubricant product is formulated from biodegradable resources and high-performance additives that are non-toxic to aquatic organisms.
• In March 2020, Abu Dhabi National Oil Company (ADNOC) launched biodegradable lubricants for engine oil formulated with 100% plant oil in the UAE market.
• In 2021, BioAccelergy entered into a joint agreement with Exxon Mobil to develop bio-based lubricants formulated from vegetable and seed oil. This joint agreement would benefit Exxon Mobil not only in terms of enhancing its sustainability aspect but would also be assisted in terms of technology. (*)