The global bio-based lubricants market, valued at USD 3.34 billion in 2021, is expected to cross USD 4.53 billion by 2027 growing with a CAGR of 5.21% during 2022-2027. The rising awareness supports the growth of the bio-based lubricants market among consumers regarding its benefit to the environment. Bio-based lubricants are natural organic chemicals formulated with organic materials such as vegetable oil, animal fats, natural esters, and special additives. In addition, the increasing price of petrochemicals and the depletion of crude oil reserves worldwide stimulate the demand in the bio-based lubricants market.
The bio-based lubricants market was adversely impacted by COVID-19. The momentum for new orders and expansion of industrial capabilities in production dropped globally. However, during the Covid-19 pandemic, few end-user industries of bio-based lubricants, such as the food & processing industry, construction (infrastructure segment), and power sector, were less impacted, thus showing high resilience during difficult times. The bio-based lubricants market also offers performance benefits such as prolonging the equipment life and reducing maintenance costs, friction, and energy consumption. These products 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 harm aquatic life and human health.
- The increasing trend to preserve the depletion of crude oil reserves and aquatic life and the increasing government regulation to limit the level of CO2 in the environment; are some of the prime factors advancing the bio-based lubricants market. This has resulted in increased launches of products.
- 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 in the bio-based lubricants market.
- “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 used in the past”, says Dr. Larry Beaver, Vice President, Research & Development for RSC Bio Solutions.
KEY MARKET TRENDS
Stringent Government Regulation Driving The Bio-based Lubricants Market
The increasing concern for environmental protection, carbon footprint, and sustainable development has contributed to the strict regulations in the bio-based lubricants market. The U.S. Environmental Protection Agency (EPA), EU Ecolabel, and IMO are the regulatory bodies that monitor and implement stringent rules 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 lubricants products they are using must comply with the rules. Hence, helping in boosting the global 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 creates a demand for products primarily used in mining equipment. The equipment ranges from large wheel loaders, mining trucks, wheel tractor scrapers, large dozers, underground mining loaders, rock drills, and mining shovels used above and below ground. Lubricants play a vital role in the smooth functioning of these types of equipment, continuous operation, and protection from dust, water, and breakdown. In addition, these lubricants also reduce the health risk for employees and are also gentle on the environment by protecting the aquatic life in case of spilled lubricants.
Availability at High Cost & Lack of Lubricating Properties
The major challenge faced in the global bio-based lubricants market is its availability at a high cost, especially in the emerging economies countries like India, where people are price sensitive. The high cost of bio-based lubricants is attributed to their production process. These are 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 bio-based lubricants market. These 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 lubricant 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 in the bio-based lubricants market offering products based on synthetic esters.
INSIGHTS BY APPLICATION
By application, hydraulic fluid is the largest segment amongst others in the market. Based on application, the global bio-based lubricants market is divided into five segments: hydraulic oil, chain oil, gear oil, metalworking fluid, and others. Hydraulic oil holds the industry's highest share and is expected to continue the trends during the forecast period. Primarily due to the rising demand for bio-based hydraulic fluid in agriculture & forest equipment and the mining industry.
INSIGHTS BY END-USER
The bio-based lubricants market based on end-user is primarily segmented into marine, mining, construction equipment, automotive, wind power, agriculture, and forestry industries. The marine industry held the highest share in the market in 2021; however, the automotive industry is expected to lead the industry during the forecast period. Over the years, lubricant demand in the marine industry has increased. This is due to the rising regulation and to mitigate the issues caused by the oil spill. 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.
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 these products across all the regions. Europe accounted for the highest contribution to the global bio-based lubricants market, followed by North America.
The market 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 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. APAC was the third largest and fastest growing market for bio-based lubricants. 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.
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 lubricants 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), Metalube (UK), Repsol (Spain), and Kluber Lubrication (Germany), among others. These companies continually compete for the leading position in the industry, with ongoing 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 mutual agreement would benefit Exxon Mobil not only in terms of enhancing its sustainability aspect but would also be assisted in terms of technology.