How can our industry accelerate its sustainability efforts?
At Neste, we’ve always cooperated with our partners to remain at the forefront of our industry’s sustainability activities. We don’t just talk the talk – we walk the walk, as demonstrated by our track record over the years. But it takes more than one team player’s efforts to move a whole industry forward in effectively combating climate change.
Are we lagging behind? This is certainly a question many of us have asked ourselves when looking at how other industries approach their sustainability activities. Examples are all around us. For example, Shell is planning a 65% cut in its greenhouse gas emissions per energy unit by 2050. Meanwhile, Microsoft has even more ambitious plans, to become carbon negative as soon as 2030.
Can the lubricants industry match such impressive efforts? The answer is simple – yes, we can, but we have no time to lose! Those who pause to think long and hard about their actions might miss the opportunity to benefit from the sustainable change we are all working on already.
The foundation for this claim lies both in my own professional experience, which I recently had the pleasure of sharing in the Lubes’n’Greases magazine article you can read here. But it is also supported by wider industry discussions, like the one I joined as a panelist during the ICIS Pan American Base Oil and Lubricants virtual conference in early December 2020. In the panel discussion, we talked about the role of the circular economy in our businesses, transparent communication of our efforts to the public and what it takes to accelerate our actions in the area of sustainability.
Where are we and can we do more?
The main driver for our industry’s sustainability efforts has been regulation and meeting OEM requirements. But a few emerging factors are now increasing pressure on our industry to move faster. First, branding and marketing have surfaced as additional factors pushing the development of sustainable products and components. Additionally, both consumers and investors are creating demand for businesses to formulate and follow sustainable strategies. And the industry is responding with bold goals for the coming years. A new wave of motivation is clearly being felt. But will it be followed by action?
The answer to this question can be found in a report published by the International Energy Agency, which noted that oil and gas companies allocate less than 1% of their capital spend outside of their core business areas. In other words, to actually achieve significant results in the area of sustainability (or even reach the ambitious targets set in strategies), this percentage must go up. This is especially true when industry players are becoming more vocal with their promises – the pressure to find new solutions and make change happen is rising.
Establishing a precise roadmap is essential
So, what do the companies’ roadmaps to carbon neutrality mean in practice? Every organization’s path is different, but Neste has announced comprehensive plans, with more than 70 identified measures for reaching carbon neutral production by 2035. For the planet, reducing the carbon footprint is just as important as the carbon handprint. Neste’s carbon handprint, as measured by the reduction of our customers’ carbon footprint attained by using our renewable products, amounted to 9.6 million tons of CO2 equivalents in 2019. But we are targeting 20 million tons annually by 2030. Meanwhile, on the footprint side – the greenhouse gas emissions resulting from our own activities – other actions are needed that will allow us to safely reach our ambitious goals. Investments in energy efficiency and use of renewable electricity, like increasing the share of wind power in Finnish refineries to 30% as early as 2022, are just the start.
We are also exploring further opportunities in implementing production methods with lower emissions and replacing fossil feedstock with recycled or renewable raw material. One target is to process over one million tons of waste plastics annually by 2030. Moreover, we have updated our investment criteria to make the greenhouse gas impact of all investments more transparent. We have also set an internal price for emissions in order to increase their weight in investment and business case evaluations. These actions are more than just window dressing and can make significant impacts on the sustainability of an industry like lubricants, which relies on base oils for the majority of its raw materials. And because many base oil manufacturers receive process feed from parent refineries or companies, strategic choices higher up the supply chain can make a great impact.
One last key element
Having covered motivation, funding and actual efforts, I’d like to shine a light on one other factor that is equally important in our journey towards sustainability: transparency. And this also includes the mutual will to establish common standards and accurately measure the impact of our product systems. Being protective of one’s internal data, results and measurements is understandable. But coming together to create widely accepted industry standards is a necessity. Transparency is critical if we want to communicate the value of our work and our products and demonstrate just how exactly we can lower GHG emissions.
Three actionable steps
Is the reality we are facing grim? Only if we fail to take action. We are all aware that we, as an industry, have come a long way in the last few years. We are driven and motivated to make a meaningful change. But there are just as many valid concerns about our industry as there are industry players. How can we address these issues in a simple yet effective way? From my perspective, this boils down to taking three clear steps.
- 1. Greater cooperation between market representatives and increased investments in GHG emission reductions
- 2. Acknowledging that our industry can agree on common standards to estimate the impact our products and activities have on the environment.
- 3. Uniting under one banner – speaking with one voice – when presenting our views and achievements to customers and legislative bodies alike.
We need to accept that change will not happen overnight. But we also need to remember that by acting together, we can accelerate our efforts and reach our goals faster. And those who need an additional incentive should just remember that a wise choice made today can become a competitive advantage tomorrow.