The devil is in the detailComing back to the post on SH from yesterday and referring again to the PR from Shell on their offering of carbon neutral lubricants, I want to put this PR in the right perspective and draw your attention to what is not mentioned in this release. And why that is important.
First I want to put this PR in the right perspective.
As Shell states “ they want to offset the annual emissions of more than 200 million liters of advanced synthetic lubricants … “.
While further down the same release they mention “ … biggest supplier of lubricants in the world , selling approximately 5 billion liters of finished lubricants annually … “
As a standalone release , this is rather insignificative , so we can only assume this is the first news item in a series of announcements.
Shell is a recognised brand , they take their marketing very seriously and on a standalone basis this release is meaningless, certainly in the global framework of their net zero carbon emissions objective and announced recent strategy update.
Second, under the Shell Lubricants section, they provided the list of the specific lubricants in the specific regions, to be considered carbon neutral as of today.
The devil is in the detail , certainly for specific PCMO ( passanger car motor oil formulations ) in specific regions ( US, Canada and Europe ) that are not ( yet ) in that list.
Knowing in addition that they represent the bulk of the sales in their lubricants division.
So what about the 5W30 formulation ?
What about the 5W20 formulation ?
What about the 10W30 formulation ?
Representing the bulk of their sales, Shell cannot afford to not bring them in the list of carbon neutral lubricants in the ( near ) future.
By combining multiple measures including, the reduction of the carbon footprint during manufacturing, increased use of renewable energy , waste recycling/reduction together with nature-based solutions , they achieved 700000 ton of CO2eq , the equivalent of taking 340K cars of the road for one year , and this on 200 million liters of advanced synthetic lubricants.
On this topic , referring to the NR of GIII from January 7 from this year :
“ According to a used motor oils life-cycle assessment study conducted on behalf of the BC Used Oil Management Association, re-refining used lubricating oils reduces CO2e emissions by 2.47 kgs/litre, versus burning or disposal. Based on this formula, Gen III’s 2,800 bpd Alberta and 5,600 bpd US Gulf Coast projects represent a combined CO2e emissions reduction of over 1 million tonnes per annum. This is the equivalent of removing 233,000 cars from the road each year, according to the EPA. Furthermore, “…the carbon footprint of re-refined base oils is 81% lower than virgin-stock derived base oils that are not re-refined,” according to a 2013 sustainable chemicals report published by The American Chemical Society.
To advance our collective goals of reducing greenhouse gas (“GHG”) emissions and maximizing the green attributes of our projects, the SM is also helping Gen III identify blue and green hydrogen sources in the US Gulf Coast, while Gen III has begun discussions with two sources of blue and green hydrogen and carbon sequestration in Alberta. Sourcing cleaner hydrogen will further reduce Gen III’s GHG footprint. “
Coming to my conclusion :
1. This is not a standalone release from Shell on a limited number of carbon neutral lubricants
2. Shell cannot afford not to bring the key PCMO formulations in that carbon neutral list
3. GIII has the necessary API certifications covering exactly those key PCMO formulations
4. GIII has the right , disruptive technology to fill that gap and bring those PCMO formulations in the list of carbon neutral lubricants