FLI_Q2_2022

Quarter Two 2022 | Volume 28 Issue 2 MAGAZINE After 20 years, single technology matrix proves its usefulness Lubricant supply chain: The domino effect Technology innovation critical for offshore wind growth Sooner or later all crypto miners will use immersion cooling Scan this QR code to subscribe to the digital edition. F+L Magazine Quarter Two 2022 1

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26 Contents QUARTER TWO 2022 | VOLUME 28 ISSUE 2 22 Photo courtesy of GM 6 Greater regionalization of battery supply chains seen 10 The path to lower transport emissions in Vietnam 14 Low-carbon fuel crediting system could ease supply chain woes 18 Electrolytic hydrogen essential to decarbonize steel industry F+L Magazine Quarter Two 2022 3

40 Vicky Villena-Denton Photo courtesy of GE Publisher & Editor-in-Chief Chief Executive Officer 22 40 Aaron Stone After 20 years, single Technology innovation technology matrix proves its critical for offshore wind Assistant Editor usefulness growth Ionut Oproiu 26 32 Magazine Design Lubricant supply chain: The Glenn Victor Denton domino effect Service Delivery Manager 32 Eric N. Marquillero Sooner or later all crypto miners will use immersion Sales and Marketing Assistant cooling Venus Ricardo 38 Executive Assistant U.S. fuel economy Mary Grace Estacio standards: From “SAFER” to Accounting Assistant better w w w.fuel sandlubes.com ISSN 0117 9470 Copyright © 2022 F&L Asia Ltd. w w w.linkedin.com /company/f-l-asia Advertisers’ Index twitter.com/fuelsandlubes w w w.facebook.com /fuel sandlubes 36, 37 BASF SE 13 S-Oil Corporation w w w.youtube.com /user/fuel sandlubesasia 21 BRB International B.V. 43 STLE 29 ExxonMobil 7 The Bahrain Petroleum F&L ASIA LTD. 2, 44 F&L Asia Limited 22/F, 3 Lockhart Road 25 IPAC, Inc. Company B.S.C. (Closed) Wanchai, Hong Kong 31 Mol-Lub Ltd. 17 Vanderbilt Chemicals, LLC Phone: +852 3183 4143 Fax: +852 3753 5122 Email: [email protected] Annual Subscription Rates: PDF: single user US$100/year; unlimited users US$550/year Digital/on-line: Free F+L Magazine, formerly Fuels & Lubes International, is a quarterly publication that chronicles the latest global trends, issues and developments in the fuels, lubricants and additives industries, with special focus on Asia-Pacific. Its contents are protected by international copyright laws. It is available in both print and digital versions. Unauthorized re- production or distribution by print, electronic or other media is strictly prohibited. F+L Magazine and F&L Asia Ltd., its officers and management, cannot be held liable for any mis- information inadvertently obtained. The opinions expressed by the writers do not reflect the opinion of the management. 4 F+L Magazine Quarter Two 2022

Vicky Villena-Denton EDITORIAL Editor-in-Chief & CEO Sustainability and supply chains Steel manufacturing is one of the most energy-demanding industries in the world. On page 18, we explore the decarbonisation pathways of the iron and steel industry and their implications on energy consumption and CO2 emissions. We examine four key steelmaking regions—China, Japan, South Korea and OECD Europe—and assess the vital role of electrolytic hydrogen powered by renewable energy. When President Donald Trump rolled back the Obama-era U.S. Corporate Average Fuel Economy standards (CAFE) in 2020, he virtually erased one of the U.S. government's greatest efforts to combat climate change. Under the Biden-Harris administration, the CAFE standards are now back on track. On April 1, the Department of Transportation’s National Highway Traffic Safety Administration announced the introduction of a new industry-wide fleet average of 49 miles per gallon for passenger cars and light trucks in model year 2024-2026. We review the new fuel efficiency standards on page 38. Two-wheelers are, by far, the most dominant form of transportation in Vietnam. They also account for a substantial portion of Vietnam’s carbon emissions. On page 10, we identify the issues that are impeding widespread adoption of electric two-wheelers (e2Ws) and discuss recommendations to both accelerate the uptake of e2Ws and reduce emissions from internal combustion engine two-wheelers. Sustainability is, arguably, the most important long-term global issue. In the immediate term, the reliability of supply chains is equally significant. If there is one thing that the Covid-19 pandemic has taught us, it is the risk of overreliance on one country or supplier. The lubricant supply chain has faced the perfect storm of shortages and delays and the interconnectedness of global supply chains has created a domino effect around the globe. While lubricant manufacturers seem to be weathering the storm through price rises, the big question is when will supply chains return to “normal”? We take a deep drive into the lubricant supply chain on page 26. There are significant benefits to be achieved by regionalising supply chains: a reduction in shipping costs, shorter lead times, cost reductions, local job creation and minimisation of political risk. On page 6, we look at greater regionalisation of battery supply chains and assess who is the clear winner in this all-important market. On page 14, we examine how the introduction of a low-carbon fuel crediting system could ease supply chain woes in the fuel industry and question why, despite strong stakeholder support, the concept has failed to garner support from the European Commission. The American Petroleum Institute (API) has recently published the 21st edition of API 1509, which describes the API Engine Oil Licensing and Certification System (EOLCS). The most significant change in the latest edition is Annex P, which describes the use of a single technology matrix (STM)—a statistical method used to predict the performance of a specific additive technology in a single base oil. On page 22, we investigate opportunities to extend STM usage beyond the existing Sequence III engine tests. Sooner or later all crypto miners will use immersion cooling. Hardware power densities in data centers are reaching the point where there is little option but to revert to liquid cooling. On page 32, we delve into the head scratching world of crypto currency and review opportunities for improvements in energy efficiency and performance. F+L Magazine Quarter Two 2022 5

Greater regionalisation of battery supply chains seen Photo courtesy of CATL When it comes to bat- capacity in 2020. Europe cost to becoming involved greater localisation of tery manufacturing, Asia and the United States in battery manufacturing, battery manufacturing is the global kingpin and contributed a paltry 6% meaning most automak- supply chains. does not look like being and 9% respectively. ers remain reliant on dethroned any time soon. This probably comes as established manufactur- There are significant In 2020, Asia accounted no surprise, China is the ers. This means reliant benefits to be achieved for 85% of global lithi- largest market for elec- on China. by regionalising supply um-ion battery manufac- tric vehicles in the world chains: a reduction in turing capacity, according and has mandated that its If there is one thing shipping costs—which to a report by Statista, a car manufacturers use that the Covid-19 pan- have skyrocketed during leading provider of mar- locally-built batteries in demic has taught us, it the pandemic, shorter ket and consumer data. electric cars. is the risk of overreli- lead times, cost reduc- Japan and South Korea ance on one country or tions, local job creation are prominent battery Very few automak- supplier. The Covid-19- and minimisation of polit- manufacturing countries. ers have ventured into induced semiconductor ical risk. Construction of In fact, according to an manufacturing their own chip shortage halted battery ‘gigafactories’ in analysis by VC Elements, batteries for electric ve- assembly lines around the West are a key com- the top 10 battery man- hicles, with most racing the world with some ponent of regionalisation ufacturers in the world to establish lithium-ion estimates suggesting it plans. consist of only Asian supply deals. China’s will cost the global auto- companies. BYD is one OEM that is motive industry USD210 Europe and the Unit- prospering in battery billion in revenue in ed States have been If you peek beneath manufacturing, with an 2021. Supply bottlenecks criticised in the past for the covers, it’s really all estimated 7% share of and risk mitigation have doing little to prioritise about China. China pro- the battery market. How- prompted Europe and the investment in the sector. duced 77% of lithium-ion ever, there is a significant United States to consider Europe, in particular, has upped its game in 6 F+L Magazine Quarter Two 2022

recent years as it looks to supply of sustainable raw thermal energy storage Photo courtesy of CATL reduce reliance on other materials. and a strategic initiative regions for battery cell of the Basque Govern- supply chains. imports—not only for an Statista’s figures sug- ment, indicates that General Motors has the electric vehicle future but gest that Europe is mak- interest is awakening also for the stabilisation ing progress. The com- among large automobile most extensive portfolio of power grids. Germa- pany forecasts that the OEMs in the U.S., the of planned projects with ny is leading the way in European share of global engine room of the North plans to develop four fac- Europe. In March 2021, lithium-ion battery man- American market. The tories in a joint venture Volkswagen announced ufacturing capacity will company detailed several with South Korea’s LG plans to build six electric reach 25% by 2025, the moves aimed at strength- Energy Solutions. The battery and electric vehi- second-largest producer ening and regionalising Lordstown plant in Ohio cle component factories of lithium-ion batteries will have a capacity of in Europe before the end by some margin. Mean- 35 GWh with production of the decade. Esti- while, China’s share falls scheduled to commence mates from Transport & to 65%. Asia, excluding Environment, Europe's China, drops from 8% to leading clean transport 3% in the five years. The campaign group, indicate outlook is equally poor that at least 38 gigafac- for the United States with tories are planned or its share expected to under construction in the decline from 9% in 2020 European Union and the to 6% in 2025. United Kingdom. There have also been positive However, recent anal- developments in the ysis by CIC energiGUNE, the research centre of electrochemical and F+L Magazine Quarter Two 2022 7

Photo courtesy of CATL Investment in battery manufacturing in Europe in August 2022. A Spring controls the processing world’s cobalt capacity. is higher than in China Hill, Tennessee, plant of most of the critical raw For Europe, raw material at present. However, operation with equiva- materials such as lithi- supply and refining is a new projects continue lent capacity will start um, cobalt and graphite. weak spot. to pop up in the world’s production at the end of most populous nation as 2023. Ford Motor Compa- Many of the Europe- While Europe, and to it extends its arsenal of ny is collaborating with an investments do not a lesser extent Ameri- battery manufacturers. another South Korean cover the entire battery ca, are looking to re- It is difficult to see China company, SK Innova- chain, just the battery gionalise their battery being overtaken in the tion, on three major cell manufacturing and supply chains, the same short- to medium-term, projects to be launched there have been calls for cannot necessarily be particularly after the between 2025 and 2026 greater investment in the said for Asia. With an leg up local companies in Kentucky, including mining of raw materials expectation that most have been afforded by two gigafactories with a and the cathode, anode electric vehicles will be generous government production capacity of 43 and precursor stages. built near where they are subsidies over the past GWh each. used, Asian firms are few years. Some analysts The reality is that some beginning an assault on have compared battery While the gap between geographies are more Europe. Many leading manufacturing to the Europe and China may abundant in raw mate- Asian battery manufac- solar PV industry. Solar be narrowing, efforts to rials. Chile, Australia, turers are expanding PV production started overcome China’s dom- Argentina and China production capacity in in Europe off the back of inance could in the end boast the world’s highest Europe to maintain their strong subsidies, only to be fruitless. A May 2020 lithium reserves. Despite supremacy. Europe is be dominated by China review by Benchmark being ranked only fourth increasing local battery owing to a faster ramp Mineral Intelligence sug- in terms of reserves, manufacturing capacity, up and the dramatically gested that 101 of the 136 China controls the but whether manufactur- larger scale of PV plants lithium-ion battery plants lion’s share thanks to its ing plants will be owned constructed in the region. in the pipeline to 2029 are investments in Austra- by European or Asian Now eight out of 10 solar based in China. Equal- lia and South America. companies is a bigger panels are made outside ly importantly, China Chinese companies also unknown. of Europe. control around 80% of the China's Contemporary Amperex Technology Co, (CATL) broke ground on its first battery produc- tion site in Europe in Germany in October 2019 and, according to the company website, the development is making steady progress in 2021. Reports earlier this year indicated that BYD is also preparing its first battery factory in Europe and is currently recruiting engi- neers. In November 2020, China’s SVOLT announced plans to invest EUR2 billion (USD2.4 billion) in its first factory in Europe, in Germany. The company expects production at the Saarlouis site to com- 8 F+L Magazine Quarter Two 2022

mence at the end of 2023. atively small market, es- hydrogen. Pure-play fuel of US 1.1 billion in two While the Asian timated at approximately cell companies are also new hydrogen fuel cell 13,000 units in 2020, and taking several steps to plants in South Korea to expansion might be are projected to reach grow. However, Europe's “accelerate the hydrogen nerve-wracking for some 932,000 units by 2028 fuel cell market remains economy and to secure European companies, not at a compound annual fragmented at this stage. broader global market everyone is intertwining growth rate of 69.7%. dominance.” Hyundai EV success with control Hyundai and Toyota Mobis, Hyundai's parts of the battery market. In July 2021, Europe accounted for more than and service subsidiary, Regionalisation is im- unveiled plans to become 90% of FCEV sales in the already has the largest portant to ease logistical the world’s hydrogen first half of 2021. In Octo- fuel cell production ca- and transportation con- leader with a significant ber 2021, Hyundai Mobis pacity in the world. cerns, but some analysts push to green hydrogen. announced an investment believe performance, In a speech at the Euro- price and availability are pean Hydrogen Week on Photo courtesy of Volkswagen more important than November 29, 2021, Frans whether the factory Timmermans, executive has national heritage. vice-president of the The choice of multiple European Commission, specialist suppliers may confirmed he wanted the enable success in the EV EU to take a clear lead in game. establishing a framework for a global hydrogen Asia seems to be the economy. The region in- clear winner in battery vested in new generation manufacturing. On the electrolysers before the other hand, there have rest of the world and is been suggestions that the global leader in pat- Europe and North Amer- ents and publications on ica could hold an advan- this technology. Europe- tage when it comes to an countries are looking fuel cell manufacturing. to expand the use of Fuel cells are a compar- Photo courtesy of CATL F+L Magazine Quarter Two 2022 9

The path to lower transport emissions in Vietnam Two-wheelers are one national standards, with a two-wheelers are synon- Ministry of Natural Re- of the most common modest 38 cars per 1,000 ymous with Vietnam, they sources and Environment sights in Vietnam and, by inhabitants, according are also a leading cause of (MONRE). far, the most dominant to the Vietnam Register, environmental problems form of transportation. as of December 22, 2021. in the Southeast Asian Vietnam has committed They account for 93.3% of Two-wheeler ownership, country. The large fleet of to reducing GHG emis- all national motorised ve- on the other hand, is two-wheelers accounts for sions and air pollution. hicles and there are more approximately 615 vehicles more than 90% of carbon In September 2020, it than 58 million motorcy- per 1,000 people. monoxide and volatile updated its Nationally cles and mopeds regis- organic carbon emissions, Determined Contribu- tered in the country. Car Transport is responsible and 60% of suspend- tion (NDC) with a goal of ownership is extremely for 18% of Vietnam’s total ed particle emissions, reducing GHG emissions low in Vietnam by inter- national greenhouse gas according to Vietnam’s by 9%, compared to (GHG) emissions. While 2014—a pledge that could 10 F+L Magazine Quarter Two 2022

be raised to 27% with authors emphasised the relating to e2W vehicle maximum sulphur content international support. On need to develop compre- disposal and recycling of of 50 parts-per-million January 18, 2021, Viet- hensive regulations and spent batteries/accumu- (ppm), for greater emis- nam's Prime Minister also technical standards for lators to mitigate negative sions reductions. Lower issued the Directive on re- e2Ws concerning charging environmental impacts. sulphur fuel enables the inforcement of controlling infrastructure, battery adoption of advanced air pollution (Directive 03/ swapping systems, vehicle ICCT emphasised the emission control tech- CT-TTg). disposal and recycling of need for more stringent nologies in new vehicles spent batteries. emission standards for and improvements in Electrification of its ICE motorcycles to im- the efficiency of vehicles two-wheeled fleet is a key The report recommend- prove air quality along- currently on the road. component of addressing ed the development of a side the growth of e2Ws ICCT also stressed the Vietnam’s environmental new national technical and recommended the need for strong penalties challenge. While the num- regulation specifically for development of a roadmap for non-compliant fuel ber of electric two-wheel- e2Ws. Currently, e2Ws ad- towards Euro VI-equiva- suppliers to stem the ers (e2Ws) in the country here to the same technical lent standards. Currently, flow of counterfeit fuels. is increasing, from 4.9% regulation on safety and new vehicles from July 1, Modern fuel standards of sales in 2019 to 8.3% in environmental protection 2007 to 2016, only need to would provide confidence 2020, internal combustion as ICE two-wheelers. comply with Euro 2 emis- to manufacturers looking engine (ICE) two-wheel- Technical standards are sion standards. Vehicles to transition to a more ers accounted for 91% of also critical to the safe use registered from January 1, efficient fleet. sales in 2020, according to and operation of e2Ws. 2017, must adhere to Euro The International Council ICCT called for compre- 3 emission standards. This Fuel consumption labels on Clean Transportation hensive regulations and contrasts with India which were mandated on new (ICCT), a U.S.-based inde- standards related to has already adopted the ICE motorcycles from Jan- pendent nonprofit organ- the safety of e2W users Euro VI emission standard uary 1, 2022. However, ve- isation (NGO). E-mopeds and other road users. equivalent, Bharat Stage hicle energy labelling does reported the largest Technical standards that VI, in 2020. The report not apply to electric vehi- growth in electrified currently relate to e2Ws acknowledges that the cles. The report suggests two-wheelers, increasing are not mandatory. technical standard for mo- there is an opportunity to from 3.8% market share torcycle emission level 4 extend the use of energy in 2019 to 7.1% in 2020, The establishment of (equivalent to Euro 4) was labels to e2Ws to assist whereas electric motorcy- harmonised technical issued in 2020. However, customers in selecting the cles contributed only 1.2%. regulations and technical it is not mandatory and most efficient vehicles. standards on charging Euro 3 is still applied to Labelling could display A report published infrastructure and battery new motorcycles in the the energy consumption by ICCT in March 2022, swapping systems would country. of e2Ws in kWh/Km and Using policy and regula- allow users seamless detailed driving ranges. tion to pave the way for access to charging Vietnam should also The report highlights the two-wheeler electrifica- facilities regardless of develop mandatory na- need for the development tion in Vietnam, identifies their vehicle models. It tional standards on fuel of an adequate test cycle the issues that are imped- also enables different consumption, fuel econ- to measure the energy ing widespread adoption of e2W manufacturers to omy and carbon dioxide efficiency of e2Ws. e2Ws. The report reviews cooperate in providing emissions for two-wheel- existing policies, regula- and operating infrastruc- ers, says ICCT. While the In many markets there tions and standards and ture and services. ICCT Ministry of Science and has been a positive cor- provides recommenda- also recommended the Technology (MOST) is relation between fiscal tions to both accelerate development of a clear set developing technical regu- incentives and electric the uptake of e2Ws and of regulations/standards lations on gasoline, diesel vehicle adoption. ICCT reduce emissions from that specify definitions, fuel and biofuels in line highlighted the opportu- the ICE fleet. terminologies, and vo- with the Euro 5 emission nity to incentivise buyers cabularies related to e2W standards, this regulation of e2Ws, who currently ICCT highlighted signif- charging infrastructure is still not available, ac- pay the same taxes and icant gaps in Vietnam’s and swapping systems to cording to the ICCT report. fees as owners of ICE technical regulations ensure uniformity. The two-wheelers. Current and technical standards, report called for technical ICCT called for the early taxes include a registra- throughout the entirety of regulations and standards adoption of low-sulphur tion fee, value-added tax the lifecycle of e2Ws. The fuel, which requires a F+L Magazine Quarter Two 2022 11

(VAT), special consump- Periodic inspection and vehicle development in roadmap for e2W adoption tion tax (SCT), vehicle maintenance of in-use the early stages. Despite and a clear vision and tar- licence plate fee and the two-wheelers would assist a significant opportunity get for e2W advancement mandatory civil liability in reducing emissions and to improve air quality in to encourage manufac- insurance, paid annually. noise pollution. Vietnam, specific policies turers to shift production High prices are one of supporting e2W develop- from ICE two-wheelers the top three reasons for Pilot programs, such ment are largely unavail- to e2Ws. Targets could not purchasing electric as confiscating old and able, says ICCT. include mandates on e2W vehicles in Vietnam. The polluting vehicles, are production and the phase- introduction of vehicle underway in the South- The paper recommends out of ICE two-wheelers. purchase subsidies, tax east Asian nation. Some the development of a exemption or tax reduc- cities have also announced Vietnam requires tion and lower electricity plans to limit the oper- Photo courtesy of Diego Delso policies to support the prices were all offered as ation of two-wheelers. e2W industry, its supply potential options to boost Hanoi, a city of five million chains, providers and e2W adoption. motorbikes, is pursu- operators of charging ing a complete ban on infrastructure, and battery Vietnam’s Ministry of two-wheelers by 2030 to swapping services. The Transport (MOT) is cur- reduce soaring levels of report highlighted po- rently developing an action pollution and unclog city tential incentive policies plan to reduce emissions streets. A specific action including direct subsidies of in-use two-wheelers. plan is currently unavail- to manufacturers of e2Ws The ICCT report empha- able, and it is unclear if and e2W parts, reducing sised that currently only the ban includes e2Ws. import tariffs on parts and newly manufactured, raw materials for man- assembled and imported ICCT’s report empha- ufacturing and assem- two-wheelers are subject sised the importance of bling e2Ws, and reducing to vehicle inspections. strong government sup- the registration fee for port to promote electric locally manufactured and assembled vehicles. Authors Huong Le and Zifei Yang also called for policies that make owning and operating e2Ws more attractive to consumers including making e2Ws more cost-competitive and conducting public cam- paigns to raise awareness of the technology. 12 F+L Magazine Quarter Two 2022

F+L Magazine Quarter Two 2022 13 F+L Magazine Quarter Three 2021 13

Photo courtesy of Porsche Low-carbon fuel crediting system could ease supply chain woes The European Commis- tributions were made responsibilities between circumstances while sion held a public consul- during the process, which fuel suppliers and vehi- providing consumers tation on the revision of demonstrated support cle manufacturers. An the option to choose the vehicle fleet emission tar- across all stakehold- LCF-crediting concept most suitable low carbon gets between November er categories. 78% of allows OEMs to voluntari- technology. 13, 2020, and February 5, “industry respondents” ly purchase credits from 2021. During the consul- endorsed the initiative. fuel suppliers whose pro- The eFuel Alliance, a tation, the concept of a When asked about the duction exceeds their fuel political platform that low-carbon fuels credit- impact of LCF-crediting, supplier obligation and fosters the market devel- ing system (LCF-credit- three-quarters suggested count the correspond- opment of synthetic fuels, ing) that accounted for the the measure would in- ing emissions reduc- strongly advocates for the contribution of renewable crease renewable and low tions against their fleet introduction of LCF-cred- and low carbon fuels in carbon fuel availability in emissions. Proponents iting. The association con- fleet targets was pro- road transport. of LCF-crediting sug- sists of over 170 compa- posed and received strong gest this allows climate nies along the entire fuels stakeholder support. The European Union targets to be achieved value chain, including (EU) legal framework even under “suboptimal” a growing membership A total of 1,057 con- divides environmental base outside of Europe. 14 F+L Magazine Quarter Two 2022

Most car markets have which the EU rebuffed the ment of an LCF-crediting transition to electrifi- implemented a tank- idea of LCF-crediting. system. cation and emphasised to-wheel approach for the importance of trans- carbon dioxide (CO2) One of the goals of the Established in 1999, formation pathways and emissions, measured at Fit-for-55 package is to Frontier Economics is one cumulative greenhouse the tailpipe. Tobias Block, reduce greenhouse gas of the largest economic gas emissions—not just head of content and strat- emissions from vehicles. consultancies in Europe. “photo years” as anal- egy at the eFuel Alliance, Block is critical of the The company has previ- ysed in the EC’s Impact highlighted concerns to 2021 proposals in that ously developed a pro- Assessment. LCF-credit- F+L Magazine that this they unreasonably dictate posal for an LCF-crediting ing can assist in achieving approach does not con- the technology mix. Road system for renewable short-term gaps to target sider the entire lifecycle transport is diverse. For fuels for the German caused by bottlenecks in footprint. An electric vehi- different use cases we Ministry of Economics and electricity infrastructure cle is always zero grams need different solutions, Energy. and a resultant under- of CO2 per kilometre—ir- he says. The current achievement in electric respective of the electric- tank-to-wheel approach Frontier Economics vehicle sales, according to ity source, he says. Block will render the sale of published their report, Frontier Economics. called for a more holistic non-hydrocarbon fu- Crediting System for long-term approach for elled vehicles—primarily Low-Carbon Fuels, on The study quells claims the industry. With an electric vehicles—the only November 9, 2021. The by the EC that LCF-credit- LCF-crediting system, way to achieve emissions research follows a joint ing would blur the obliga- auto manufacturers can reductions by 2035. We letter to the EC by 223 as- tions of fuel suppliers and sell an internal combus- cannot afford to rely on a sociations requesting the OEMs. Frontier Econom- tion engine (ICE) so long single technology ap- inclusion of a voluntary ics believes that a simple as they demonstrate that proach, he says. crediting system for sus- and pragmatic system the CO2 footprint over the tainable renewable fuels could be established with entire lifetime is compen- In their Impact Assess- in vehicle carbon dioxide a clear demarcation of sated for by renewable ment, the EC claimed regulations in May 2021. responsibilities by linking fuels. that the introduction of to an existing monitoring an LCF-crediting system Frontier Economics’ process. The current RED Despite support for would blur the responsi- report declares that II framework dictates LCF-crediting and the bilities of fuel suppliers LCF-crediting offers “a sustainability require- apparent opportunity to and OEMs, increase the step towards a more ments and certification increase the availability of administrative burden and holistic, resilient and schemes and already low carbon fuels, the Eu- cost of compliance—in effective climate policy enables renewable fuels ropean Commission (EC) turn, the cost of vehicle that is technology-neu- to be traced throughout has rejected the introduc- ownership for consumers, tral, takes consumers’ the fuel chain. tion of an LCF-crediting and undermine the effec- preferences into account system, declaring that tiveness of the region’s and considers emissions Frontier Economics there are no benefits for climate efforts. beyond the tailpipe.” rejects that LCF-credit- consumers and manufac- The report suggests a ing would undermine the turers. The eFuel Alliance, crediting system could effectiveness of climate along with a coalition of complement the industry EC published the “Fit- European associations for-55” package on July representing the auto- Photo courtesy of Porsche 14, 2021. Fit-for-55 con- motive, fuel and energy tains legislative proposals industries including The to revise the entire EU Natural & bio Gas Vehi- 2030 climate and energy cle Association (NGVA framework and align it Europe), European with the targets in the Association of Automotive European Climate Law. Suppliers (CLEPA) and The proposals include the Mechanical Engineer- a review of CO2 emis- ing Industry Association sion standards for new (VDMA), commissioned a passenger cars and light research study with Fron- commercial vehicles, in tier Economics to review the EC Impact Assess- F+L Magazine Quarter Two 2022 15

efforts. The report drive towards electrifi- environmental benefits rately reflect the value of emphasises that the cation, citing concerns of LCF-crediting. The LCF-crediting. crediting system is based around electricity pricing Impact Assessment on strict additionality and dependency on bat- treats climate change The EC Impact Assess- (no double counting) and tery materials. as a future issue—with ment does not consider requires proof of substi- LCF-crediting only as- the possibility of target tution of fossil fuels with On the assertion of sessed for 2030 and 2035. failure and associated im- renewable fuels. The additional complexity and Block believes a fuel pacts on the climate re- study compares the ben- administrative burden, crediting system could sponse—in the absence of efits to the murky world Frontier Economics be established quickly, as a crediting system. OEMs of electrification where suggests there is limited early as 2024, following missed 2020 emission electric vehicles are administrative cost asso- a favourable political de- standards, despite tempo- considered zero-emission ciated with the implemen- cision, giving customers rary provisions that eased irrespective of the source tation of a crediting sys- back a choice—an electric target achievement, and of electricity they are tem. A new compliance vehicle or an internal the targets were far less operating on. The com- system is unnecessary as combustion engine with stringent than the 2030 pany stresses that it is it builds on pre-existing renewable fuels. This requirements. Currently, inappropriate to exclude monitoring and reporting would offer positive emis- OEMs are expected to specific technologies and processes for the RED II sions impacts in advance reduce average car emis- that LCF-crediting pro- fuel supplier obligation. of a 2030 timeframe, and sions by 37.5% compared vides support for climate Compliance checks are the ability to use existing to 2020, though these protection throughout the straightforward, with infrastructure to trans- numbers are set to be- entire value chain while minimal additional ef- port synthetic fuels. come more extreme with avoiding putting “all the forts, they say. a further tightening to eggs in one basket.” Block Questions remain over 55% proposed in the Fit- believes there are still a The report criticised the the capacity of renewable for-55 package. Four out lot of risk factors in the approach of the EC Impact fuels providers to produce of 11 manufacturers are Assessment which, they above-quota volumes set to miss 2021 targets, say, underestimates the for crediting in the short according to the report. term. Block acknowl- LCF-crediting would play edges that in 2024 there a vital role in filling a would only be small target gap and effectively volumes available. How- reducing emissions, says ever, he emphasises the Frontier Economics. importance of generating demand to drive greater Frontier Economics was investment in renewable also critical of EC claims fuels. of higher costs associ- ated with LCF-crediting. In addition to reject- The authors suggest the ing the EC’s rationale EC uses oversimplified for exclusion of an analysis based on a single LCF-crediting system, average car of unspecified the Frontier Economics size and battery volume. report was also critical To ensure the research of the methodology of was robust enough to the Impact Assessment, make informed policy indicating it deviates decisions, they should from the EC’s own impact have differentiated be- assessment guidelines. tween vehicle types and The report suggests the considered the afford- EC research uses the ability of different vehicle wrong benchmark, is segments for a variety oversimplified, fails to of consumer groups. No capture basic properties socioeconomic analysis of the vehicle market and is included in the Impact therefore does not accu- Assessment and the EC 16 F+L Magazine Quarter Two 2022

does not conduct a proper legislative proposals an need to stop the crediting only solution. However, cost-benefit analysis, as- about-turn on LCF-cred- system, says Block. Block raised concerns serts Frontier Economics. iting appears unlikely. about the leading nature Block believes there is With the current supply of the questionnaire and A claim by the EC strong support in the chain challenges, in fears this may follow the that the key new vehi- European Parliament, particular, the shortage same pre-determined cle market drivers can however, in the European of computer chips for path as for light-duty be predicted with high Council where the mem- electric vehicles, and the vehicles. precision is disputed in ber states are in it looks Russian-Ukraine war the report. Future vehicle challenging. Germany further complicating the Decisions around costs are highly uncer- recently announced it was political and economic LCF-crediting are very tain and depend on the supporting the commis- landscape, a Plan B such important for the entire prevailing technology and sion’s proposal to reject as the LCF-crediting industry. Why should the cost of raw materials. the crediting system. system, may be a more fuel producers invest in The report emphasises Spain is in the same boat pragmatic approach to the renewable fuels, even if that input costs that were and France remains neu- energy transition. there are binding quotas, expected to decline have tral as it holds the presi- if all the vehicles on the recently reversed. Fron- dency. Several stakehold- Block is hopeful of a road will become electric? tier Economics suggests ers are fighting against more favourable political A crediting system will that LCF-crediting offers LCF-crediting—such as decision when it comes to keep a window open for a “valuable insurance op- NGOs and environmental heavy-duty transport. The the fuel industry, outside tion to achieve transport groups. If they want to ban consultation period for the much smaller aviation sector emission targets.” the internal combustion heavy-duty trucks is un- and shipping markets, engine, they know they derway, a segment where and trigger greater in- As politicians continue it is more obvious that vestment. to debate the Fit-for-55 electric mobility is not the Branching Makes It Better with MOLYVAN® 3000 Friction Reducer MOLYVAN® 3000 Friction Reducer is an exceptional oil soluble MoDTC friction modifier containing 10% molybdenum with antiwear and antioxidant properties. Its unique molecular branching provides superior fluid compatibility/stability at low temperature and enhanced robustness for improved retention of friction reduction in aged oil. 30 Winfield Street, PO Box 5150, Norwalk, CT 06856-5150 • (203) 853-1400 • F: (203) 853-1452 17 DQS Inc. [email protected] • www.vandeFrb+ilLtchMemaigcaalzs.icnoem Quarter Two 2022 VANDERBILT CHEMICALS, LLC CERTIFIED TO ISO 9001:2015 Registered and pending trademarks appearing in these materials are those of R.T. Vanderbilt Holding Company, Inc. or its respective wholly owned subsidiaries. For complete listings, please visit this location for trademarks, www.rtvanderbiltholding.com. 10002461

Electrolytic hydrogen essential to decarbonise steel industry 18 F+L Magazine Quarter Two 2022

Iron and steel man- Steel-Sector Decarbonisa- sarily associated with low- powered by renewable ufacturing is an energy tion Pathways highlights er carbon emissions. The energy will be essential and carbon-intensive the critical importance of DRI-EAF process usually to decarbonising the steel process. It was estimat- electrolytic hydrogen in uses natural gas or coal industry,” says the EIA. ed to account for 7% of decarbonising the steel to heat the iron ore and global carbon dioxide (CO2) manufacturing sector. synthesis gas (syngas)—a Despite a potential shift emissions in 2020, making mixture of hydrogen (H2) to the more environmen- it one of the most ener- The manufacture of and carbon monoxide (CO), tally friendly EAF process, gy-demanding industries crude steel is a two-step to reduce the iron ore into the rate of emissions in the world. The reduc- process with two possible iron. reduction will not be uni- tion of iron ore in blast pathways. Two-thirds of form. The report indicates furnaces using a concen- crude steel is produced To produce low-car- that both the magnitude trated form of coal (coke) by a traditional method bon, high-quality steel, of increase in EAF and the is the major source of CO2 whereby blast furnaces the EIA outlines two power generation profile emissions. (BF) use coal to produce key components—the of individual regions will “pig iron”—or crude iron use of electrolytic H2 influence carbon reduc- In some industries, the in the form of oblong as a reducing agent in tions and there will be path to decarbonisation blocks. The iron is then the direct reduced iron economic challenges is (fairly) straightforward. converted to virgin crude process, and powering until renewable-based In transportation, for steel using basic oxygen electric arc furnaces with electrolytic H2 production example, the fossil-fuel furnaces (BOF) in a steel renewable power derived achieves cost parity with hungry internal combus- mill. from solar, wind, biomass, natural gas-based H2. tion engine is slowly being waste, or geothermal displaced by partially or The remaining third electricity. Hydrogen has Four key steelmaking fully electrified vehicles. of steel production uses been demonstrated as the regions are examined Decarbonising steel a less energy-intensive sole reductant in the DRI in the EIA report: China, manufacturing is perhaps method employing electric process on a small scale, Japan, South Korea and not as clear-cut. Steel arc furnaces (EAF). EAFs says the EIA. OECD Europe. The size is a critical product that primarily make use of and composition of the plays a central role in the scrap steel and produce Hydrogen by itself is not respective steel industries transition to carbon-free recycled steel products. necessarily the solution to and existing decarboni- energy. It is used heavi- However, they can use the environmental woes of sation plans were cited ly in the construction of direct reduced iron (DRI) the steel industry. In 2018, as the rationale for the utility-scale solar farms; to produce virgin steel. 99% of hydrogen produc- regional focus. China, nuclear, hydroelectric, The EIA report calls for tion was generated using for instance, currently and wind power genera- greater recycling to con- fossil fuels, with a meagre accounts for half of global tion; and electrical power tinue to reduce the carbon 1% through electrolytic steel production. transmission and dis- intensity of steelmaking, processes. “In the years tribution infrastructure. though, it underlines ahead, electrolytic H2 Two scenarios were However, when it comes concerns around the avail- modelled—an early adop- to decarbonisation, every ability of scrap metal in industry needs to play its some regions and issues part. with purity after repeated recycling. A report, published by the U.S. Energy Informa- The report examines tion Administration (EIA) the energy consumption in February 2022, explores and CO2 implications of a the decarbonisation reduction in BF-BOF steel pathways of the iron and manufacturing and great- steel industry and their er adoption of electric arc implications on energy furnaces. An increase in consumption and CO2 the DRI percentage of EAF emissions, in four specific manufacturing is neces- regions. IEO2021 Issues sary to compensate for in Focus: Energy Implica- lower BF-BOF virgin steel tions of Potential Iron- and production. Though, a shift to DRI-EAF is not neces- F+L Magazine Quarter Two 2022 19

tion case (EAC) and a de- steel production. The EAC EIA says are dominated by in energy intensity in the layed adoption case (DAC). scenario trends slight- coal for BF production. A EIA report, many of these The gross output of the ly lower in natural gas smaller, 12% increase in facilities would need to steel industry remains the consumption and slightly EAF production in China be retired ahead of their same in both iterations. higher in renewable power dictates a lower relative typical end of life. Japan Share of steelmaking consumption. decrease in CO2 emissions (76%) and South Korea using BOF-produced steel compared to the other (68%) also rely heavily falls approximately 30% to By 2050, DRI produced regions. on BF-BOF production 2050 in all regions, except by electrolytic H2 and of crude steel. However, China, and it is assumed powered by renewable South Korea’s increase Japan has committed to that DRI will account for energy reaches 48% in in EAF production (34%) is shifting its energy mix to 40% of metallic input to the EAC scenario and the greater than OECD Europe rely on renewable-based electric furnaces, to com- share of electric furnaces (23%), however, declines hydrogen and fossil-fuel pensate for lower BF-BOF powered by renewable in steelmaking emissions H2 with carbon capture production of virgin steel, energy is the same. DAC are substantially higher in and storage (CCS). in both scenarios. reaches only 31% in the Europe (28% for DAC and same timeframe. 31% for EAC) compared to OECD Europe (51%) The key difference South Korea (19% and 22% is well-positioned to between the two scenarios A decline in coal use for DAC and EAC, respec- transition to low-carbon is the timing for cost parity and a rise in electric tively). The authors credit steelmaking, with the between electrolytic H2 power is predicted in the influence of the power EIA report highlighting and fossil fuel-based H2. all regions under both generation profile of the the availability of exist- EAC assumes cost parity scenarios, as well as a fall individual regions, with ing natural gas pipelines in 2030, whereas DAC is in steel industry carbon Europe boasting a much to transport H2, high delayed a further 10 years. emissions. The report higher renewable gener- volumes of scrap metal The delay impacts the indicates that “generally ation share in the power availability and stringent balance of natural gas and speaking” there will be sector. CO2 policies. Natural gas renewable power used to little difference in CO2 availability in Europe could make hydrogen. In both emission between EAC China continues to change however with the cases, natural gas con- and DAC in individual re- rely heavily on coal-fired recent Russia-Ukraine sumption increases (ver- gions— primarily because technologies. 90% of war. Russia accounted sus a reference case) due the difference between the production is via BF-BOFs, for about 45% of the EU's to the need for supple- early and delayed adop- many of which are rela- natural gas imports and mental DRI to compensate tion cases is relatively tively new, with a useful 40% of its entire natural for lower BF-BOF virgin small compared to overall lifespan of over 40 years. gas consumption. The EU industry emissions—which To achieve the reductions has announced a strategy to reduce its reliance on natural gas from Russia by two-thirds by the end of 2022. Additional renewable electricity generation of 385 billion kilowatt-hours (BkWh) is required for Chi- na in 2050 to achieve the EAC scenario, an 8.7% in- crease over the reference case level, or a lesser 314 BkWh generation for DAC. The research anticipates that additional renewable power would be achieved through the combination of growth in solar and battery storage. Japan needs a 10% 20 F+L Magazine Quarter Two 2022

increase in power genera- BkWh renewable power lights several key chal- and the truth that there tion, versus the reference generation by midway lenges and uncertainties are multiple emerging case, 424 BkWh in EAC, through the century, a concerning the decarboni- technologies for creating which experts suggest 4.5% increase. For the sation of the steel indus- hydrogen from renew- would be satisfied through DAC, additional demand try including economic able resources, such as growth in solid waste and reaches 98 BkWh. The challenges associated biomass gasification. The wind, supplemented by authors expect growth in with replacing current authors also noted the coal-fired and natural gas- wind generation to be the BF-BOF capital stock, de- competition between fos- fired generation to ensure predominant source of carbonisation of upstream sil-fuel methane reform- grid reliability. South Ko- renewable-powered elec- processes—such as the ing and electrolytic H2 rea requires additional re- tricity in the region. mining of iron ore—and production methods. newable power generation downstream processes, of 58 BkWh in 2050 in EAC, The EIA report high- a sizable 27% increase on the reference. After 2030, a shortage in the availability of high-quality solar resources means wind resources start to become more economi- cally favourable for South Korea. OECD Europe will require an additional 135 F+L Magazine Quarter Two 2022 21

Photo courtesy of GM After 20 years, single technology matrix proves its usefulness The American Petroleum single technology matrix use of a single technology Phil Scinto1,2 and later Institute (API) recently or STM. STM is a detailed matrix in the 16th edition with Margaret Lemmon3 published the 21st edition virtual testing process of API 1509 in April 2007 as demonstrated through of API 1509, which de- and protocol utilising test Annex R, which still exists theory, simulation and scribes the API Engine Oil data, characteristics and today as Annex O, for the case study analysis that Licensing and Certifica- features of base oils and IIIF, IIIF-HD, IIIG and IIIGA the statistical modelling tion System (EOLCS) and blends, and statistical Sequence tests. of historical test data may explains to marketers how methods and analysis to improve the efficiency and different API marks are predict the performance of STM and virtual testing accuracy of future oil capa- licensed and displayed for a specific additive tech- are concepts and pro- bility assessment. Scinto is the consumer. nology in a specific base cesses first introduced by a senior fellow at Lubrizol oil. Currently only the Lubrizol in 2001-2002 as and Lemmon has since The most significant Sequence IIIH engine test an enhancement to API retired from Lubrizol. change in the latest can use STM. API first pub- base oil interchange (BOI) edition is Annex P, which lished its guidelines for the and viscosity grade read But STM was a com- describes the use of a across (VGRA) guidelines. plex process which was 22 F+L Magazine Quarter Two 2022

not generally understood different base stocks may range of base oil inter- R from the ground up for except by statisticians opt to use a single technol- change. current/future engine analysing large blocks of ogy matrix once they have tests to make it more data. The acceptance of acquired sufficient data to The Sequence III is prescriptive and ensure STM into API 1509 made it allow them to determine currently the only engine everyone was following the easier and less expensive the outcome of new base test using STM. STMs same process. This is the for additive companies oils through predictive have been used within the new Annex P. The original to approve their additive modelling. This usually industry for about 20 years Annex R was preserved as packages. Initially, Lubrizol comprises at least six and with the Sequence III and Annex O.  was the only one who prac- sometimes seven different the industry views them as tised STM because they base oils. STM gives a pre- a valuable tool, says the Loop, who has been with understood the method. scription of what needs to Afton Chemical Engine Oil Lubrizol for over 20 years, Over time, the other addi- be done and how it needs STM Team. Afton Chemi- is a strong advocate for the tive companies, including to be reported. cal chaired the STM Work use of STM. The Sequence Afton Chemical, Chevron Group that brought Annex III usually costs between Oronite and Infineum, While STM is a statisti- P forward to the API Lubri- USD60,000 and 70,000 per started practising STM for cally sound way to estab- cants Standards Group. engine test and using STM their additive packages. As lish BOI for a specific tech- could save up to a quarter organizations developed nology, it is not a BOI per Annex R, the original of a million dollars, Loop experience with STM and se. API’s BOI 'read-across' STM guideline, was written says. Though, he notes it is encountered scenarios not guidelines for base stocks nearly 20 years ago and not run for all technologies clearly defined by Annex R, were developed to ensure single technology matri- as not all are approved for it was evident that updated that the performance of ces have been approved six to seven base stocks. and enhanced guidelines engine oil products is not for the Sequences IIIF STM can be beneficial for would be necessary for adversely affected when and IIIG engine tests. In a technology designed for future engine tests.  These different base oils are used April 2018, the STM Work broad application but may enhancements led API to interchangeably by engine Group’s attention turned to not be helpful for technol- develop Annex P. oil blenders. BOI guidelines the Sequence IIIH test as ogy with limited base oil are available to anyone to ILSAC GF-6 development coverage or for custom- STM is useful for use, even if the formulator became a priority. Nearly er-specific technology. approving an additive was not part of the original all API members wanted package across a range of data source for that proof to see the STM approach The Afton Chemical base oils. It simplifies the of performance. This extended to the Sequence Engine Oil STM Team requirements of additive enables quick and efficient IIIH test, according to the emphasises that there was companies by reducing the product development. Con- Afton Chemical Engine Oil broad industry support number of tests required versely, STM only works STM Team. throughout the industry when qualifying a new for the company that does for extending the STM additive technology. For the engine tests because API’s BOI/VGRA Task guidelines to include lubricants marketers, STM they are creating the data Force decided to undertake Sequence IIIH. Annex P offers certified engine oil to use with a single tech- a thorough review of Annex was developed for the formulations across a va- nology. R, including its history and Sequence IIIH test with the riety of base stocks, giving interpretation, current final ballot being approved the oil marketer flexibility In the development of practice, base oil properties in November 2021. While to formulate their engine engine oil there is one test of interest, the minimum additive companies are oil offering. This is espe- which must be repeated, number of tests, statistical generally the STM develop- cially important during the Sequence III test. The examples and clarifying ers, there are benefits for these times when supply Sequence III high-tem- language. There were dif- stakeholders throughout chain issues have become perature oxidation engine fering interpretations of An- the lubricant industry and a huge challenge for every- test measures lubricant nex R and confusion around consumers, says Afton. Oil one in the industry. thickening and piston how STM was supposed marketers can gain base deposits under high-tem- to be run, says John Loop, stock flexibility, especially STM is not easy to de- perature conditions. The technology manager for important with the current velop, however. It still re- test was run on every Lubrizol, who represented supply chain issues. Con- quires a significant amount additive package and most Lubrizol in the meetings on sumers also benefit from of testing and robust tech- base stocks and viscosity the Sequence IIIH. high-quality and cost-ef- nology. Larger oil market- grade read across because fective lubricants. ers who require several it does not have a wide Ultimately, the STM Working Group decided to Annex P was written to completely rewrite Annex F+L Magazine Quarter Two 2022 23

be clear about the gen- properly and it has accu- Photo courtesy of Volvo The highest and lowest eral STM approach and rate data. This requires a saturates, sulphur and VI the engine test specific leap of faith from OEMs developed test for the API values from the testing will requirements, says Laura who are conditioned to CK and FA-4 heavy-duty then be used to establish a Birnbaumer, automo- running engine tests as the engine oil categories. The base oil interchange range tive engine oil, product absolute determinant if an test aims to mimic and for those parameters. adaptation and qualifica- oil passes or fails. prevent oil oxidation and tion program manager at viscosity increase. While the Sequence III Chevron Oronite Com- However, during the final tests can cost between pany LLC. Some of the Annex P ballot, many OEMs The Lubrizol repre- USD60,000 and 70,000 key changes include the expressed support for sentative believes there per run, the Volvo T-13 is addition of numerous new statistical methodologies, may be an opportunity to a much longer and more definitions to enhance such as STM, says Afton extend STM to the Volvo expensive test. It employs clarity. For example, the Chemical, noting that there T-13 engine test. There a 2010 Volvo D13 or Mack testing period date range are instances where OEMs is potential to save time MP8 engine platform was introduced to en- have adopted a similar and money if they decide and runs for 360 hours at compass all data of the practice for their internal to bring the Volvo T-13 an elevated sump tem- single technology within specifications. engine test into the Annex perature of 130 degrees this period for the pur- P STM, he says. Celsius. The cost of the poses of data analysis and Loop suggests it can be test is around USD170,000. prediction model building. a balancing act between The Mack EOS-4.5 Loop suggests potential Additional ways to check running and not running and Volvo VDS-4.5 HDEO cost savings could be more spread requirements on engine tests. But of STM, specifications do not follow than half a million dollars. the base oil properties of he says, “It works. It was API’s base oil interchange interest were also intro- a smart idea and can save rules for the Volvo T-13 Following the updates to duced. The STM model time and money.” The oxidation test. While API Annex P, we are in a better data set now includes challenge is to get every- allows full Group II base place than we were before, the listing of failing data one on the same page. In oil interchange in the says Loop, as some of the which will be available to an industry where the time Volvo T-13 oxidation test, uncertainty in the process oil marketers. Finally, the taken to develop engine meaning any Group II base was fixed on the rewrite. prediction model cannot testing can be a severe oil can be used with an ad- be used to predict a pass handbrake, and with broad ditive technology that has 1 Scinto, P.R., “The Virtual when an actual engine test support and significant demonstrated passing re- Engine Test,” SAE paper No. fails within the defined cost savings, the obvious sults in the test, Mack and 2001-01-1905, May 2001. range of the model data question is whether there Volvo, which owns Mack, set. are opportunities to extend instituted a new rule ef- 2 Scinto, P.R., “Use of Virtual this statistical approach to fective in 2019 that permits Tests in Establishing BOI/ A reduction in the vol- other engine tests. Group II interchange if the VGRA,” SAE paper No. 2002-01- ume of engine tests, lower base oil saturates, sulphur 2675, October 2002. costs, and the ability to No discussions are and viscosity index of an oil expedite approvals of oils currently underway on fall within an established 3 Scinto, P.R., and Lemmon, seem like worthy reasons extending the concept of range. In order to estab- M.A., “The Single Technology for the continuing devel- STM, says Afton Chemical. lish a range, a minimum Matrix Process for Base Oil opment of STMs. However, However, there may be of four passing Volvo T-13 Interchange,” SAE paper No. despite the consensus on opportunities to extend its tests must be achieved in a including Sequence IIIH, application to other test given additive technology. 2002-01-2676, October 2002. not everyone is convinced types, the additive compa- of the merits of STM. ny says. OEMs historically have Volvo Group has previ- not been supportive of ously requested additive STM. OEMs want to see companies run additional engine test data and proof Volvo T-13 oxidation tests of performance and range, to provide more confidence says Loop. STM requires in different base stocks. trust that another party While not specifically an has developed the model STM, it was “STM-like,” Loop says. The Volvo T-13 engine test was a newly 24 F+L Magazine Quarter Two 2022

With IPAC, Despite the challenges of the past RELIABILITY few years, IPAC has been a steadfast presence and a consistent, reliable is never partner for our customers. We keep in short the lines of communication open, supply. so we’re always within reach. And we’re here to provide the personal service and technical expertise that help you keep your business moving. International Petroleum Products and Additives Company, Inc. 925 556 5530 ipac-inc.com F+L Magazine Quarter Two 2022 25

Lubricant supply chain: It has been a little over The domino effect two years since the start of the Covid-19 pandemic. 26 F+L Magazine Quarter Two 2022 As a business owner, it might feel like it has been much longer. Covid-19 has stretched global lubricant supply chains to breaking point, and many business- es are facing extreme supply challenges in their day-to-day operations. How did we get our- selves into this predica- ment? Demand for oil, and indeed finished lubricant products, fell off a cliff in the early stages of 2020. Oil companies, concerned about their survival, quick- ly cut production, reduced product lines, closed or divested poor performing locations and adjusted profit margins. At the time, it was dif- ficult to foresee demand rebounding so quickly. But it did. And now we are left in the precarious position of playing catch up—while navigating ongoing Covid-19 impacts. Supply chains are waver- ing under the weight of demand, creating extraor- dinarily challenging times for many in the lubricants sector. Supply chain issues prompted an unprec- edented increase in lubricant prices in 2021. Trade journal Jobber- sWorld highlighted no less than six price increases in North America with an average rise of 14%. This ratcheted up the price of lubricants a scarcely believable 116%. For refer- ence, the previous highest annual increase was 27% in 2011. Finished lubricant

pricing is determined by a some analysts have been U.S. is short of more than 8% average price increase variety of inputs. Base oils quick to point out that sup- 80,000 truckers—pushing on February 1, 2022. A fur- and additives are par- ply chain issues existed up wages and costs. ther increase of up to 20% ticularly influential, and well before Covid-19. was announced on March then there are packaging, Pushback is inevitable 3, effective April 3, 2022. freight, manufacturing A logistics report from when prices increase. Chevron hiked prices up to and labour costs. Price The Wall Street Journal However, a constrained 25%, effective March 28, increase notifications from on February 10 claimed supply of finished lubri- 2022, due to the “increas- lubricant manufacturers that container ships are cants has left certain ing costs of raw materials emphasised the difficulty waiting an average of grades and types in and supply chain-related of obtaining raw mate- 18 days to unload at the extraordinarily short costs.” Shell Oil Products rials—reduced additive busy Port of Los Angeles supply—such as passen- US (SOPUS) implemented supply and higher base in California, U.S.A., the ger car motor oil (PCMO), an increase of up to 25% oil prices, a tight trans- main port where goods heavy duty engine oil on the list prices of Shell, portation market, higher from China are unloaded. (HDEO), and gear oil— Pennzoil and Quaker packaging costs and other Before the pandemic, it leaving lubricant mar- State-branded packages inputs. was unusual for ships to keters little choice when and bulk lubricants, greas- wait at all. Although, the faced with higher prices. es, and specialty products Early this year, force report did note signs of Many businesses have effective March 1, 2022. majeure from a major ad- improving throughput at faced strict allocations or ditive supplier’s key supply the marine cargo terminal been forced to transition In a letter to customers, base in the United States operator Yusen Terminals to alternative formulations sighted by F+L Maga- was felt even in Asia. A LLC facility. Slow port or suppliers for affected zine, ExxonMobil advised force majeure clause is logistics are not the only types and grades. customers that market a clause in a contract or logistical headache. Even conditions have resulted in supply agreement that when containers eventu- Prices will continue to further increases in costs allows relief to certain ally make it to shore it is be a moving target in 2022 for raw materials, trans- parties if events outside difficult to secure deliv- with several companies portation and manufactur- of the parties’ control ery. An estimate from already announcing fur- ing. A finished lubricant prevent one or both of the American Trucking ther price increases. Ac- price increase of up to 15% the parties from fulfilling Association indicates the cording to JobbersWorld, is effective March 16, 2022. their obligations under the Valvoline implemented an contract. There have been rumours of force majeure clauses being implement- ed. Thavattchai Tantikovit, a consultant with Thai- land’s SFC Excellence Company Limited, re- sponsible for the sourcing and procurement of raw materials for lubricants manufacturing, told F+L Magazine they are aware of force majeure clauses being employed, but did not elaborate on the spe- cific parties involved. The pandemic and eco- nomic rebound have cre- ated the perfect storm of shortages and delays and the interconnectedness of global supply chains has created a domino effect around the globe. Though, F+L Magazine Quarter Two 2022 27

A further price increase of up to 20% on certain barrage of base oil price top-line growth, both has also been announced branded passenger car, increases in 2021 contrib- year-over-year and versus for April 15, 2022. commercial and synthetic uted to the glut of price the pre-pandemic peri- finished lubricants. Again, rises throughout the year. od two years ago,” says Similar announce- the changes are attributed Speaking to Bloomberg Mary Meixelsperger, chief ments have been flagged to raw materials, pack- in early January 2022, financial officer, Valvoline. by other U.S. lubricant aging and transportation on the overheated crude companies. Phillips 66 issues. The supply chain is oil market, Oman’s Oil Valvoline CEO Sam Lubricants’ prices rose broken, it seems. Minister Mohammed Al Mitchell acknowledged 15% from March 7, 2022 Rumhi said “we don’t want cost pressures from raw despite its “best efforts” to Base oils, which rep- to see USD100 a barrel. materials and disrup- limit impacts on product resent 70 to 80% of an The world is not ready for tions in the supply chain, manufacturing. From April engine oil formulation, are that.” While many im- however, he noted that 1, 2022, Castrol and bp are a strong driver of lubri- pacted companies have raw material costs had effecting a price increase cant price increases. A been hoping that supply become more stable in re- and demand will begin to cent months. He also ob- balance out, the advent of served that the company war in Ukraine sent crude had made good progress oil prices skyrocketing to in passing through cost a 13-year high of USD130 increases and expects to per barrel in early March. continue efforts to recover Supply uncertainty may be costs moving forward. A here for some time yet. large volume of Valvo- line’s U.S. customers are Early in 2021, lubri- on quarterly or long-term cant manufacturers and contracts with pricing blenders navigated supply adjusted every quarter— chain issues by absorbing which mitigates price cost compressed margins. lag effects. Mitchell also However, many are now outlined that supply chain reporting strong growth— challenges had led to meaning tight supply is higher logistics costs and not necessarily hitting lower levels of inventory them in the pocket. than they typically carry, resulting in manufacturing Valvoline released re- inefficiencies. sults for the first quarter, ending December 31, 2021, Quaker Houghton, a in a webcast on February global leader in indus- 8, 2022. The U.S.-based trial process fluids, also manufacturer and mar- reported a bumper year, keter of Valvoline-brand despite supply chain lubricants unveiled strong constrictions, with record headline growth of 31% in full-year net sales of total sales, with its retail USD1,761.2 million for services business achiev- 2021. Fourth-quarter net ing 36% sales growth sales of USD447 million and global product sales increased 16% compared increasing 28%. The com- to the fourth quarter of pany achieved 5% growth 2020. The company out- in adjusted EBITDA (earn- lined increases in selling ings before interest, taxes, price and additional net depreciation, and amor- sales from acquisitions of tisation) and 12% growth 4%, which were “slightly in adjusted EPS (earnings offset” by a decrease in per share). Valvoline con- sales volumes. tinues to see “exceptional The results attributed 28 F+L Magazine Quarter Two 2022

SPONSORED CONTENT ExxonMobil Expanding Electric Vehicle Product Offerings Now and into the Future In the ever-changing automotive landscape, the vehicle mix will continue to evolve. The ExxonMobil 2021 Outlook for Energy predicts that by 2050, plug- in hybrids, battery electric and fuel cell vehicles will grow to ~40% of the global vehicle fleet and more than 50% of new cars sold. This evolution will be driven by a combination of factors including decreased battery costs as well as ever more stringent regulations for reductions in tailpipe emissions and improvements in fuel economy. As electric vehicle requirements mature, ExxonMobil is committed to delivering solutions to help extend vehicle range and promote safe, efficient vehicle performance. Innovative approaches to engineering are critical to meet the electric vehicle needs of tomorrow, which is why ExxonMobil is expanding the Mobil EV™ offer leveraging the new SpectraSyn™ MaX PAO platform. Technology leadership ExxonMobil has a rich 135-year heritage of leadership in both energy technology and product innovation and is committed to lead in mobility solutions across energy types. We work closely with Original Equipment manufacturers (OEMs) around the world, providing unique insights into the evolving EV application requirement and fluids needs. Mobil EV™ fluid technology, coupled with expertise in engineering solutions can help vehicle and component manufacturers develop and produce electric vehicles that advance their mobility ambitions and surpass consumer expectations. Mobil EV™ value proposition: The Mobil EV™ product offer features a full suite of fluids and greases designed to meet the new powertrain requirements of battery electric vehicles. The suite of Mobil EV™ products helps provide further, longer and safer performance today and in the future to help consumers optimize range as well as help- ing businesses improve performance and efficiency across their fleets. Evolving Mobil EV™ product line Mobil EV™ products are formulated with molecules carefully selected to help electric vehicles travel further between charges, extend component life, and operate more safely, and as OEMs look to further optimize range, new fluid technologies are needed. This is where ExxonMobil’s SpectraSyn™ MaX PAO technology can play an important role. ExxonMobil is developing new Mobil EV™ formulations featuring SpectraSyn™ MaX PAO as a key ingredient to help improve energy efficiency, which in turn can help extend vehicle range. Additionally, SpectraSyn™ MaX PAO can also help improve thermal management of e-motor and electronics which can be a challenge for next generation EVs. Covering the full range of battery electric vehicle applications, the Mobil EV™ product range includes: • Mobil EV™ Therm series of thermal management fluids formulated to help efficiently remove heat and increase equipment life in applications such as batteries, electric motors, and power electronics. • Mobil EV™ Drive series of lubricants for electric vehicle reduction gearboxes, designed to protect gears and bearings from wear for a longer service life. • Mobil EV™ Cool Drive series of fluids for electric vehicle reduction gearboxes with integrated electric motors, designed to lubricate gears and bearings while providing the necessary cooling for electric motors and power electronics. • Mobil EV™ Grease products ensuring protection, performance and reliability for electric vehicle applications including e-motors, bearings and constant velocity joints across a wide range of driving conditions. As we head deeper into the third decade of the 21st century, know that ExxonMobil is continually investing in R&D with key OEMs to bring this leading technology to the market, to advancing our customers ambitions for efficient performance. ExxonMobil first launched the Mobil EV™ brand at the 2019 World New Energy Vehicle Congress in Boao, China, and was later rolled out globally, in con- junction with the Frankfurt Auto Show. For more information on Mobil EV™, visit mobilev.com.

a 2% decline in sales vol- has managed to navigate risen off the back of the Society of Tribologists and umes due to constrained the supply chain upheaval Russia-Ukraine conflict. Lubrication Engineers demand from the automo- relatively unscathed, says (STLE) paints a bleaker tive sector—which is fac- Thavattchai. While lubricant man- picture. He told Plant ing its own severe supply ufacturers seem to be Engineering he expects constraints—and delayed Thavattchai highlighted weathering the storm manufacturers to be shipments impacting major base oil Group II through price rises, the dealing with supply chain new business wins in the supply issues in 2021 and big question is when will issues for the balance of quarter. Fourth quarter the impacts of freight the supply chain return the decade—until more adjusted EBITDA declined rates and availability, to “normal”? There are regional supply chains are 7% to USD60.7 million due especially the dry con- many differing perspec- established and reliable to lower gross margins— tainers, in delays to raw tives. A recent view- sourcing of raw materials attributed to increased material arrival. He em- point from Argus Media is achieved. raw material and other phasised the importance suggested the base oil costs, supply chain and of an advanced plan on market will continue to The reality is, we don’t logistics cost pressures procuring raw materials face increased tightness know exactly when the as well as a changing and watching price trends for the first half of 2022. pressure on supply chains product mix. closely to choose the best However, this prediction will ease. However, com- buying/selling strategies. was made before the panies and governments SFC Excellence, which Thavattchai foresees Russian invasion of its are increasingly realising was established in 1975, further price rises and neighbour, Ukraine. that supply chains need to is among the leading raw material shortages be reimagined and recon- lubricant toll blenders in moving forward, noting Neil Canter, president figured to better adapt to Thailand. The company that prices have already of Chemical Solutions and ongoing uncertainty. technical advisor to the 30 F+L Magazine Quarter Two 2022

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Sooner or later all crypto miners will use immersion cooling 32 F+L Magazine Quarter Two 2022

To many, cryptocurren- The process of mining Enerdata. Although, the continues to dominate cies are a head-scratch- is where users compete 3rd Global Crypto Asset the sector, a 2021 paper ing investment. According to register the latest Benchmarking Study published by the Uptime to the business data transactions to the cryp- released by the Univer- Institute indicated that platform Statista, the tocurrency blockchain by sity of Cambridge Judge few stakeholders think overall cryptocurrency solving complex mathe- Business School suggests air cooling will remain market capitalisation matical equations. that 39% of Bitcoin mining dominant in 10 years. 29% was USD1,785 billion on is powered by renewable of respondents believe February 3, 2022. Tomor- A decade or so ago, energy. full immersion cooling is row, the value could be mining could be under- currently a viable cooling significantly higher… or taken from the comfort of While cryptocurrency option, though they sug- considerably lower. These your living room. Nowa- “mining” is metaphori- gest limited choices for virtual currencies are days, fierce competition cal, the environmental Liquid Cooled IT Systems subject to ferocious price has resulted in the devel- impacts are very real. and a lack of standard- swings and the staggering opment of huge data cen- The more power the rig isation are barriers to value attributed to some ters, or rig “farms”, with farms use, the hotter they adoption. of these digital assets specialised machines that become. In turn, they continues to baffle the attempt to out-compete require more power for In general, there are layman. other miners to register cooling to stop the hard- two main liquid catego- transactions to receive a ware from overheating. ries, hydrocarbons (i.e. While these volatile block reward. mineral, synthetic or bio currencies are too un- Immersion cooling oils) and fluorocarbons nerving for many inves- However, with the world is an energy-efficient (i.e. fully engineered tors, a growing populace becoming more environ- method of cooling where liquids). Dielectric liquids is convinced that the mentally conscious, cryp- computing hardware is are divided into single- alternative to convention- tocurrency mining has submerged directly into and two-phase applica- al currency will upend the been called into question. tanks containing syn- tions. Single-phase uses traditional market where These huge mining opera- thetic dielectric coolants. a circulation method central banks guide indi- tions consume an aston- Around the world, data for the dielectric liquid vidual economies. ishing amount of energy. centers are starting to across hot electronic In mid-2021, Elon Musk consider immersion cool- components and to a heat It is the unregulated backtracked on an earlier ing for heat dissipation exchanging approach. nature of cryptocurren- commitment that Tesla and improved perfor- Two-phase immersion cies that are attractive to would accept Bitcoin mance. While air cooling proponents as the digital when purchasing its ve- Photo courtesy of GRC assets are managed by hicles. Musk highlighted their users. Investors ar- concerns over the rapidly gue the currencies deliver increasing use of fossil greater control over fi- fuels for Bitcoin mining nances, minimise human and transactions. reactions—making them free from biases, remove Bitcoin is the world's intermediaries such as largest cryptocurren- banks and offer much cy. According to a 2021 lower fees. However, it calculation by the Bitcoin is a lack of regulation of Electricity Consumption virtual currencies that Index, developed by the is also one of the main Cambridge Centre for Al- criticisms. ternative Finance, Bitcoin mining consumes 133.68 “Mining” is the process terawatt-hours (TWh) a by which many cryptocur- year of electricity. By way rencies are both created of comparison, the entire and accounted for. I am nation of Sweden con- not talking about workers sumed 123.5 TWh of elec- with pickaxes and hard tricity in 2020, according hats entering a dark un- to energy intelligence derground environment. and consulting company, F+L Magazine Quarter Two 2022 33

uses a low-temperature machines to enable more host of the leading fintech ware. The development is evaporation process to efficient performance. A and crypto podcast also expected to host around cool hot electronics and cooler machine enables suggested that “Bitcoin 46,000 mining machines. transfer the heat out greater overclocking will be 100% green by of the liquid. The gas is speeds—where miners 2024,” although some Joe Capes, CEO of im- cooled again by a heat ex- can increase clock and observers believe the mersion cooling specialist changing method to allow memory speeds to higher timeframe is unrealistic. LiquidStack, believes that return flow into the larger than their official speed hardware power densi- liquid volume. grades—which allows Immersion cooling is a ties in data centers are them to increase the long way from becoming a reaching the point where Similar to data centers, earnings per machine. mainstream option, how- there is little option but crypto mining opera- Full immersion cooling ever, some large crypto to revert to liquid cooling. tions are searching for can also reduce dust and mining companies are al- Central processing units improvements in energy maintenance times and ready making the switch. (CPUs) can reach 800W efficiency and perfor- heat can be recycled for On October 19, 2021, Riot to 1000W and graphics mance, with many poised energy. Blockchain, a Nas- processing units (GPUs) to shift to immersion daq-listed industry leader of 500W to 600W are now cooling. In an interview In October 2021, Brian in Bitcoin mining, an- commonplace. Air cooling with Bloomberg, Nis- Roemmele, co-host of the nounced it was developing above 270W per chip is hant Sharma, founder of Around the Coin podcast, 200 megawatts (MW) of very challenging, says BlocksBridge Consulting, told his 120,000 followers immersion-cooling tech- Capes. Hardware makers suggested that “sooner on Twitter that “by sub- nology at its Whinstone, are starting to tailor serv- or later, all big miners merging Bitcoin Miners Texas, U.S.A., facility. In a ers to use liquid cooling. will be doing large-scale in liquid, heat and noise press release, the compa- immersion mining.\" is reduced by 95% and we ny suggested it is the first Crypto mining compa- can recapture up to 40% industrial-scale immer- nies tend to chase cheap Immersion cooling of the heat and convert sion-cooled deployment electricity. Until 2021, Chi- allows miners to re- this to power.” The co- of Bitcoin mining hard- na was the world leader in duce the temperature of cryptocurrency and mining 34 F+L Magazine Quarter Two 2022

and at one point accounted American start-up first immersion cooling USD25 million in GRC, for around 75% of mining GRC (Green Revolution solution in 2017. Shell to accelerate SK Lu- operations. China banned Cooling) is at the forefront is listed as a trusted bricant’s liquid-based cryptocurrency in 2021 of single-phase immer- partner for developing thermal management citing concerns around sion cooling technologies. immersion cooling fluid business and execution of the impact on the environ- On January 12, 2022, the and a preferred partner its Carbon to Green ESG ment and the potential to company announced a for deployments and strategy. SK Lubricants jeopardise China’s pursuit multi-year partnership quality monitoring, on the noted that “the high-den- of carbon neutrality, as with Intel to develop and company’s website. sity data center market is well as fears the digital implement advanced expected to grow rapidly,” currencies would be used immersion cooling tech- The market for data and revealed their goal for fraud and money laun- niques in future data cen- center liquid cooling of becoming a thermal dering. ters. Intel has a similar products is expected to management solution agreement with European roughly double in the five provider. China’s crackdown may company Submer Tech- years to 2025. Traditional be the United States' gain. nologies. Founded in 2015, lubricant manufacturers In November last year, According to data from with headquarters in are increasingly be- U.S. additive manufactur- the Cambridge Centre Spain, Submer is focused coming involved in this er Lubrizol launched its for Alternative Finance, on “hyper-efficient and burgeoning market. CompuZol™ immersion the United States now eco-friendly immersion fluid solutions which accounts for the largest cooling systems for new- In January 2022, Ger- will be warrantied on share of Bitcoin mining age data centers” using man lubricant manufac- Intel Xeon® and Core™ (35.4%), followed by Ka- its proprietary dielectric turer FUCHS Lubricants microarchitectures. zakhstan and Russia. The fluid. Co. announced the launch Lubrizol indicated that question now is whether of a line of single-phase this is the “first hydro- U.S. lubricant manufac- Asperitas’ immersion immersion cooling fluids carbon collaboration for turers are also set to ben- cooling technology was that will compete with immersion technology.” efit from greater demand the first to be validated 3M and its popular Novec The partnership with for thermally conductive, for use in the Open Com- Compounds. 3M current- Intel is one of several electrically non-conduct- pute Project (OCP) do- ly recommends using similar collaborations for ing (dielectric) coolants in main. OCP is an organisa- hydrofluoroether-based the Berkshire Hathaway the region. tion that shares designs (HFE) 3M Novec Engi- company. In August 2021, of data center products neered Fluids for data Lubrizol revealed a part- LiquidStack is leading and best practices among center liquid cooling nership with Submer de- the charge when it comes companies. Asperitas applications. signed to provide tailored to immersion cooling attracted investment and bespoke solutions solutions. The company, from Shell Ventures in In March 2022, SK Lu- for “tomorrow’s evolving headquartered in the 2019 after launching its bricants, a subsidiary of computing needs.” Netherlands and with SK Innovation, announced commercial operations Photo courtesy of GRC an equity investment of in the United States, has pioneered two-phase immersion cooling and is credited with having the largest install base of liquid cooling for data centers. LiquidStack spent several years being incubated by U.S. full-ser- vice blockchain technology company Bitfury Group and has built multiple hyperscale Bitcoin mining sites using LiquidStack immersion cooling. The company has now been spun out on its own. F+L Magazine Quarter Two 2022 35

SPONSORED CONTENT Synthetic esters for e-mobility fluids for sustainable transportation in the long run. Moving SYNATIVE® sustainability Synthetic Ester Basestocks forward! Benefits Excellent thermal and oxidative stability com- bined with superior heat conductivity ensure high performance in e-vehicles Optimized dielectrical properties for safe mobility Low viscosities and volatility for improved efficiency No labelling, high biode- gradability and up to 100% renewable feedstocks for reduced environmental impact As e-mobility is evolving, So far, mostly conventional To meet those require- With our established so are different technolo- fluids developed for other ments, the selection of the expertise in lubricant so- gies for electrified power- applications have been optimal performing base lutions and deep under- trains. Each of the different used, but it is evident that oil is paramount. Ester standing of chemistry, we technologies require spe- the different electric power- basestocks as the most are committed to support cific cooling fluids and lu- train technologies require versatile type of base oil our customers and part- bricants to enable optimal specific fluid concepts. technology can be tailored ners in tackling the chal- and safe performance. to your specific needs. lenges of e-mobility by The hardware components E-Fluids can be highly With our SYNATIVE® ester addressing your individual in electric powertrains that integrated and need to basestocks, we are offer- needs – enabling smooth need fluids include the meet a wide range of per- ing a broad and diverse movement forward. electric motor, the battery, formance requirements synthetic base oil portfolio the power electronics, and targeting high thermal and with a unique combination Contribution to UN Sustainability the gearbox. The develop- oxidative stability, superior of properties required for Development Goals: ment is extremely dynamic, thermal management, future e-fluids for dielec- 3 / 7 / 11 / 12 / 13 / 15 and a dominating technol- optimized electrical con- tric immersion cooling for ogy in electric vehicle de- ductivity as well as a low batteries and e-motor as sign has not yet emerged. volatility. well as gearbox lubrication. 36 F+L Magazine Quarter Two 2022

Asking the experts Dr. Ray Song see healthy growth in the Ray: With the SYNATIVE® lity targets by addressing future through their use as ester basestocks, BASF their individual needs and Technical Marketing Manager, BASF key components for the is offering a broad and providing a platform for formulation of environ- diverse synthetic base oil their future success. JingHao Gu mentally acceptable lubri- portfolio delivering a cants (EALs). They nor- unique combination of How is BASF positioned Regional Technical Service mally exhibit high levels properties required for of biodegradability, even dielectric immersion in the ester segment and Manager, BASF for high-viscosity grades, cooling of batteries and have a very good toxicity e-motor as well as gear- wants to support the ester What are the benefits of profile and are non-bio- box lubrication. accumulative. In addition, market growth? esters versus mineral esters are available with How can esters contribute Jing Hao: BASF, as one of renewable content of up the leading global ester oils? to >90%. These features to sustainability targets? suppliers, recognizes the Ray: Esters have been differentiate esters from Ray: Ester base stocks accelerating shift from used in various lubricant any other base oil techno- have unique profiles. This mineral to synthetic oils formulations for decades logy, including mineral oils includes cleanliness, re- in Asia Pacific and the and are the preferred base or PAOs. sistance to high tempera- need to support this trend oil in many applications The use of biodegradable tures, good lubricity and by offering a broad range with severe operating con- and ecologically acceptable added solvency, but also of esters with enhanced ditions. Ester base stocks lubricants has been driven the enabling of improved performance. Therefore, boost lubricant perfor- by regulations in sensitive fuel efficiencies and re- BASF decided to invest mance in a variety of areas like agriculture, duced energy consumption into capacity expansion aspects and can be used forestry and marine appli- – translating to reduced of the local ester produc- as a base oil but are also cations. BASF‘s wide CO2 emissions and preser- tion in Jinshan, China, compatible with mineral range of SYNATIVE® ester vation of fossil resources. in order to support the oils, PAOs and PAGs. basestocks are well suited In addition, BASF‘s biomass market growth in Asia They can provide excellent for use in biolubricants and balance approach, in which Pacific. The expansion is thermal and oxidative sta- are included in the LUSC a certain amount of fossil expected to be completed bility and superior low list for the European Eco- feedstock is replaced with in the second half of 2022. temperature properties label (EEL), offering our renewable feedstocks, We are looking foward to allowing a broad operating customers an easy access significantly reduces the supplying a variety of high temperature range. Due to the EEL. carbon footprint of performance esters to our to their low coefficient of Esters are also seen as a SYNATIVE® esters. This customers with a short friction and good viscosity- promising base oil tech- ehmelpissstioonfsuratnhderprreedseurcveeCO2 lead time. temperature performance, nology for the use in lubri- fossil resources. Biomass Beyond that, our regional esters provide a high cants for e-mobility appli- balanced SYNATIVE® technical center in Shang- energy efficiency and can cations. New technologies esters provide sustainable hai, China, together with significantly extend equip- and hardware components benefits to our customers our global and regional ment and lubricant life, of electrified powertrains by supporting the transi- technical experts can especially compared to require innovative cooling tion to a carbon-neutral, provide fast and strong mineral oils. This leads to fluids and lubricants to circular (bio-)economy. support, leveraging multiple advantages during enable optimal and safe With our substantial inno- BASF‘s expertise as a the usage of the lubricant, performance. This in- vation and sustainability leading global components such as better fuel econo- cludes electric motor, resources, at BASF, we are provider to the lubricant my and fewer drain inter- battery, power electronics, committed to support our industry. vals, which provides many and gearbox. customers and partners in benefits for the end-user. meeting their sustainabi- What are major applica- tions for esters? Jing Hao: Esters are used in many applications al- ready and are expected to F+L Magazine Quarter Two 2022 37

U.S. fuel economy standards: From “SAFER” to better The United States' first At least that was the and considered by some what automakers had ever Corporate Average case until March 2020, analysts as his greatest indicated was achievable Fuel Economy (CAFE) when President Donald climate achievement, and virtually erased one standards were intro- Trump rolled back the increased fuel economy of the U.S. government's duced in 1975 by Repub- ambitious fuel efficiency to 54.5 miles-per-gal- greatest efforts to combat lican President Gerald standards effected by the lon (mpg) for cars and climate change. Ford's administration. Obama administration light-duty trucks by model The standards were in 2012. At the time, the year 2025. The standard The Trump administra- designed to curtail fuel Trump administration equated to a 5% annual tion lauded its 2020 legis- consumption by encour- claimed the move was a improvement in the fuel lation which was dubbed aging innovative solutions win for American auto- efficiency of the vehicle SAFER, literally, as a from automakers. Since makers and would “un- fleet and positioned the lifesaver for Americans, their inception, the CAFE leash the muscle of the U.S. as one of the world arguing that cutting CAFE standards have been reg- American auto industry.” leaders in fuel economy. standards would enable ularly reviewed and tight- the production of cheaper ened to continue to set a The ground-breaking Obama’s stringent CAFE cars, and the lower stick- high but consistent bar for 2012 standards, hailed by standards were supplant- er price would encourage the industry. Historically, President Barack Obama ed by a much weaker consumers to upgrade to presidents of both parties as the “single most im- fleetwide average of about newer cars with en- have been supportive of portant step we’ve ever 40 mpg by 2026. The 1.5% hanced safety features. CAFE standards. taken to reduce our de- annual increase in fuel On average, Americans pendence on foreign oil” economy was lower than are driving 12-year-old 38 F+L Magazine Quarter Two 2022

vehicles. Newer, safer and dards will provide real re- trillion pounds of carbon sures in ensuring the cleaner vehicles would lief and benefit to families dioxide that would have U.S. is less dependent on be accessible to more across America. “Today's otherwise entered the “other countries and the Americans in a move that rule means that Ameri- atmosphere under the decisions being made in Trump claimed balanced can families will be able previous standards. the boardrooms of energy the technical capability of to drive further before companies.” automakers with environ- they have to fill up, saving The announcement mental goals. hundreds of dollars will not only reduce pain While improved fuel per year,” said the U.S. at the pump for families efficiency protects against However, many analysts Transportation Secretary struggling with record shortages at fuel stations, suggested that the num- Pete Buttigieg. Buttigieg fuel prices and improve Buttigieg reiterated that bers didn’t stack up and highlighted a 33% gain in the U.S. response to the oil prices are determined consumers would lose fuel economy from model climate emergency. Butti- by global markets and more money than they year 2021 to 2026, mean- gieg also emphasised that that the U.S. remains vul- gained in the long term ing that families filling up the move would strength- nerable to wild price hikes via less fuel-efficient cars four times per month in en economic and national “until we achieve a form of with higher fuel costs. 2021, would need to make security. For many years, energy independence that And this was well before one less engine fill under analysts have warned that is based on clean energy the national average cost- the new regime. Buttigieg foreign oil dependence created here at home.” per-gallon for regular also emphasised the in- is a dangerous habit. Buttigieg stressed that gasoline hit USD4.331—as cremental benefit to rural President Biden’s ban the new CAFE standards it did on March 10, 2022— drivers who regularly on Russian oil imports are just one component of the highest price ever undertake longer driving in March, following the the Biden-Harris Ad- recorded. distances and fill up more invasion of neighbouring ministration's strategy often. Ukraine, points to the to accelerate the path to Fast forward to 2022, precariousness of foreign cleaner energy and elec- and the U.S. CAFE stan- These landmark stan- oil reliance. During the tric vehicles. The Trans- dards are now back on dards require an indus- announcement, Buttigieg portation Secretary called track. On April 1, the U.S. try-wide fleet average highlighted U.S. efforts on Congress to pass the Department of Transpor- of 49 mpg for passenger to ramp up domestic president’s plan, which tation’s National Highway cars and light trucks in energy production, and includes tax cuts to make Traffic Safety Administra- model year 2026. This the importance of these electric vehicles more tion (NHTSA) announced is part of an attempt by energy efficiency mea- affordable. new fuel economy stan- the Biden-Harris admin- dards for model years istration to drive U.S. 2024-2026. The focus is leadership on clean cars no longer on safety, with which has, arguably, been the Biden-Harris admin- floundering under the istration highlighting cost previous leadership. The as a key issue. The stan- standards demand an 8% dards, the strictest fuel annual increase in fuel economy requirements to efficiency for model years date, will make vehicles 2024-2025 and a 10% more fuel-efficient, save increase for model year consumers money at the 2026. Buttigieg thanked pump, as well as reduce U.S. automakers for their transportation emissions, hard work and innova- says the NHTSA. tion in response to the standards and for raising Transportation is the the fuel economy of their second-largest cost for fleets. American families, with estimates that middle- Buttigieg indicated that and low-income house- the new fuel economy holds spend almost 20% measures will reduce fuel of their paycheck on use by 234 billion gal- transportation. NHTSA lons by 2050 and save 5.5 believes the new stan- F+L Magazine Quarter Two 2022 39

Technology innovation critical for offshore wind growth 40 F+L Magazine Quarter Two 2022

Photo courtesy of GE Wind and solar PV are ty worldwide, which is a total of seven turbines. the heavy hitters of the dominated by onshore Falling offshore wind renewable energy world wind turbines. According prices, federal action and and the most popular to market and consumer state-level commitments alternatives to fossil fuels. data company, Statista, have seen significant While solar offers a more offshore wind energy developments in the past predictable output of reached approximately two years. renewable electricity, wind 34.4 GW in 2020. For ref- is clean, free and readily erence, one GW is enough The Offshore Wind Mar- available. Harnessing energy to power approxi- ket Report: 2021 Edition, the power of the wind is mately 750,000 homes. produced by researchers playing an increasingly at the U.S. Department important role in deliver- One drawback of of Energy (DOE) and the ing energy in a sustainable onshore wind farms is National Renewable manner. that they can be obstruct- Energy Laboratory (NREL), ed by buildings or the indicated that the U.S. off- When it comes to the landscape. Offshore wind shore wind pipeline grew lubricant industry, wind power is more challeng- by 24% in 2020-21 with 36 offers greater potential. ing and expensive than GW in various stages of Lubrication plays a vital land-based engineering, development. The indus- role in the reliability of however, the greater try has also welcomed a wind farm as massive abundance and consis- support from the Biden turbines are exposed tency of offshore wind administration who, in to harsh environments, offsets these difficulties. March 2021, set the first extreme temperatures Offshore wind turbines are national goal for offshore and exposed locations. typically exposed to stron- wind with a target of 30 High-performing lubri- ger, steadier winds and GW by 2030. Today, there cants are essential to produce higher and more is offshore wind activity on extend the lifetime of wind reliable electricity. all U.S. coasts. assets. The offshore wind in- Europe has a far more An exceptional level of dustry is booming and the advanced offshore wind wind capacity additions tailwinds that are fuelling industry with 5,400 tur- has occurred in recent its growth are not expect- bines in the water across years. The Global Wind ed to subside any time 12 countries, and an over- Report 2021, released by soon. The International all generation capacity of the Global Wind Energy Renewable Energy Agency more than 25 GW. In April, Council before the 2021 (IRENA) expects offshore TotalEnergies and KGHM, United Nations Climate wind costs will fall by 55% a major Polish state- Change Conference by 2030. GE Renewable owned group, signed a (COP26) in November 2021, Energy says offshore partnership to participate indicated that 2020 was wind is expected to make on a 50-50 basis in the the best year in history for up 15% of the total wind Polish government tender the global wind industry industry by 2025. There is to develop offshore wind with 93 Gigawatts (GW) of also increasing interest projects. The government new global wind power in using offshore wind to has launched a new auc- installations, a 53% year- produce clean hydrogen. tion scheme covering 11 on-year increase. China areas in the Polish Baltic accounted for the lion’s In the United States, Sea, representing an share (55.91%) as devel- offshore faced headwinds expected total capacity of opers rushed to commis- for more than a decade in more than 10 GW, in order sion projects before the the form of stakeholder to leverage the Baltic expiry of a local incentive opposition, regulatory Sea’s strong potential for scheme. frameworks and unfavour- wind power generation. able energy markets. As According to the report, of 2021, only two offshore Meanwhile, China there is now 743 GW wind projects were oper- activated almost 17 GW of of wind power capaci- ational in U.S. waters with offshore wind capacity in F+L Magazine Quarter Two 2022 41

2021 and now accounts for Photo courtesy of TotalEnergies almost half of the world’s installed offshore wind Assembly of Large Cast- to a feasibility study on features a 220-metre power, according to data ings.” The funding will the use of an Autonomous rotor, a 107-metre blade, from China’s National assist in the research of a Inspection Vessel (AIV). and digital capabilities. Energy Administration. robust joining process for The autonomous vessel GE suggests this makes large iron castings, the includes a multi-sensing it less sensitive to wind Wind turbines offer an key structural element system that enables the speed variations and unlimited local resource in wind turbines, and inspection and monitoring boosts predictability.  and an excellent domes- research will include a of fleets of offshore wind tic source of sustainable “multi-fidelity modelling turbines with minimal to The company is energy. However, offshore framework for splitting no operational interrup- well-positioned to wind power brings with and welding offshore wind tion. Visible-range cam- support the growth of it inherent challenges, castings.” Currently, eras can be controlled the U.S. offshore wind many of which are being only a limited number of remotely via satellite with market through technol- addressed through global foundries have expertise GE indicating that the ogy innovation. GE has research and development in the creation of offshore technology will reduce been selected to support projects. Common chal- wind castings. GE be- inspection costs, mini- multiple offshore proj- lenges include corrosion, lieves the advancement of mise turbine downtime ects including the first fatigue, erosion, lightning this specialist capability and enhance workplace utility-scale offshore strikes and biofouling. will accelerate job growth safety. wind installation in the and create a more robust U.S., Vineyard Wind—an In February 2022, GE U.S. supply chain. With over 49,000 units 800 MW offshore wind Renewable Energy and GE installed in more than farm that will power the Research were awarded Inspection of offshore 35 countries, GE Renew- equivalent of 400,000 U.S. two offshore wind grants wind turbines is essential able Energy is one of homes and businesses— by the National Offshore in maintaining operational the world's leading wind and projects in Maryland Wind Research & Devel- efficiency; however, it is a turbine suppliers. GE’s and New Jersey. These opment Consortium. The time consuming and dif- Haliade-X turbine is the installations form part of Consortium is a not- ficult undertaking. A sec- industry’s first 14 mega- GE’s global offshore wind for-profit public-private ond grant was awarded to watts (MW) offshore wind project pipeline of more partnership focused on GE Research to contribute turbine. The Haliade-X than 7.4 GW. advancing offshore wind technology in the United States. In a statement, Chris- ty Guthman, general manager of sales and commercial operations in North America, said that the awards reinforced the critical role that technol- ogy innovation will play in tapping the full potential of offshore wind in the U.S. The Consortium, funded in part by U.S. DOE and the New York State Energy Research and Development Author- ity (NYSERDA), supports research that will accel- erate the fast-growing U.S. offshore wind sector. The award presented to GE Renewable Energy was for the project “Weld 42 F+L Magazine Quarter Two 2022

Technical Education. Career Development. International Networking. 76th STLE Annual Meeting & Exhibition 2022 TECHNICAL TRACKS May 15-19, 2022 • 2D Materials + Superlubricity - Materials Tribology and Walt Disney World Swan & Dolphin Resort Nanotribology Joint Session Orlando, Florida (USA) • Biotribology Whether you work in the field or lab—in • Biotribology at the Nanoscale – industry, academia or government—STLE’s Annual Meeting has programming designed Biotribology and Nanotribology specifically for you. Please join your peers Joint Session from around the globe for five unique days • Commercial Marketing Forum of technical training and industry education (purchased time slots) that could change your career. • Condition Monitoring • Contact Mechanics May 15-19, 2022 • Electric Vehicles, Engine, Drivetrain • Environmentally Friendly Fluids Program Highlights: Register now! • Fluid Film Bearings • 400 Technical Presentations • Gears • 12 Lubrication-specific Log on to www.stle.org to • Grease register and make your room • Lubrication Fundamentals Education Courses reservation at the Walt Disney • Materials Tribology • 80-exhibitor Trade Show World Swan & Dolphin Resort. • Metalworking Fluids • Commercial Marketing Forum • Nanotribology • Business Networking • Nonferrous Metals • International Audience • Power Generation • Rolling Element Bearings • Seals • Surface Engineering • Synthetic Lubricants and Hydraulics • Tribochemistry - Materials Tribology and Nanotribology Joint Session • Tribology of Biomaterials - Biotribology and Materials Tribology Joint Session • Tribotesting • Wear • Wind Turbine Tribology Society of Tribologists and Lubrication Engineers 840 Busse Highway, Park Ridge, Illinois 60068 (USA) P: (847) 825-5536 | F: (847) 825-1456 | www.stle.org | [email protected] Follow us on: F+L Magazine Quarter Two 2022 43

LUBE MAP The Asian Lube Map provides the latest information on Asia’s additive manufacturers, base oil refineries, lubricant blenders and grease manufacturers, including names, locations and manufacturing capacities. Scan the QR code or visit www.fuelsandlubes.com/asian-lube-map to view the interactive lube map. www.fuelsandlubes.com/asian-lube-map