The biorefinery market is estimated to be valued at USD 161.64 Bn in 2024 and is expected to reach USD 305.06 Bn by 2031, growing at a compound annual growth rate (CAGR) of 9.5% from 2024 to 2031. The biorefinery market is expected to witness strong growth with rising environmental concerns and national drive toward reducing carbon footprint.

Market Driver - Rising Emphasis on Energy Security due to Environmental and Geopolitical Concerns

Energy security has increasingly become an important strategic goal for many countries across the globe. There is a growing realization that dependence on imported fossil fuels exposes both businesses and economies to price volatility and supply disruptions caused by geopolitical events. At the same time, environmental concerns related to climate change have put additional pressure on governments to reduce emissions from fossil fuels and transition to cleaner, low carbon sources of energy.

Biorefineries provide a means to efficiently convert various types of biomass feedstocks into a range of bioenergy products including biofuels, heat and power. Additionally, biorefinery technologies allow the co-production of valuable bio-based materials like chemicals, plastics and paper products from renewable sources. By involving agricultural and forestry sectors in the value chain, biorefineries also create new economic and job opportunities in rural areas. Thereby, this will continue to drive growth of the biorefinery market.

Market Driver - Regulatory Incentives Promoting Renewable Energy Adoption

Governments across the world are putting strong policy pushes and financial incentives to boost the deployment of renewable fuels and energy sources. Numerous countries have enacted laws mandating minimum targets and blend requirements for renewable transportation fuels like biofuels. Setting clear policy objectives and volumetric obligations helps drive long term private sector investments into developing renewable fuel production capacity including biorefineries. Favorable regulations provide the biorefinery market certainty needed by project developers and encourage technological innovations.

Financial incentives in the form of tax credits, capital grants and loan guarantees further make renewable projects economically attractive compared to conventional fuels. Some governments also offer production subsidies or provide premium prices for biofuels through feed-in-tariff schemes. Robust regulatory framework and financial support instruments are translating into new commercial biorefining capacities coming online to meet growing demand for renewable fuels and products.

Market Challenge - High Establishment Cost of Biorefineries Limiting Entry for Small or Underdeveloped Markets

One of the key challenges currently being faced in the biorefinery market is the high capital cost required for establishing biorefineries. Setting up a biorefinery plant involves substantial investments in machinery, equipment and infrastructure that can process biomass into various fuels and chemicals. Massive initial capital expenditure poses a significant barrier for potential new entrants, especially in smaller, less developed regional biorefinery markets that may not offer sufficient economies of scale.

New players in such markets often find it difficult to secure financing for proposals involving such large outlays. Even for established ones, smaller biorefinery projects may not generate adequate rates of return required to justify the investments. This high upfront capital requirement therefore limits the entry of small or local biorefinery operators within their regional boundaries, negatively impacting geographical diversification and decentralized processing of biomass.

Market Opportunity - Increasing Production of Advanced Biochemicals for Pharmaceuticals and Cosmetics

The production of advanced biochemicals for applications in pharmaceuticals and cosmetics sector presents a major opportunity for growth in the biorefinery market. Biorefineries have the potential to leverage their production infrastructure to manufacture high-value biochemicals that serve as raw materials in these industries.

Bioproducts extracted through biorefining processes can replace traditionally derived petrochemical equivalents used in drug formulations and skincare/personal care products. The expanding global pharmaceuticals industry projected to surpass $1.5 trillion by 2023 along with the fast-growing natural cosmetics market valued at $25 billion in 2020 provide a huge demand driver for such biochemicals. Their production through renewable biomass feedstocks instead of fossil fuels also aligns well with the bio-based economy trend.

Biorefineries can successfully commercialize extraction and purification technologies for these biochemicals. Thereby, it will help diversify revenues beyond traditional biofuel offerings into higher margin specialty chemical segments in the biorefinery market.

Strategic Partnerships and Mergers & Acquisitions: Forming strategic partnerships and pursuing M&A activity has been a very successful strategy for large players to gain access to new technologies, capabilities and markets. For example, in 2018 Neste, one of the global leaders in renewable diesel production, acquired Marathon Petroleum's refinery in Martinez, California for $630 million.

Investments in R&D: Heavy investments in R&D have helped players develop cutting-edge biorefinery technologies and innovative processes. For example, between 2007-2017, DuPont invested over $2 billion in cellulosic ethanol R&D which helped them commercialize their patented cellulosic ethanol process in 2014.

Focus on Higher Value Products: Shifting focus to producing higher value biochemicals and biomaterials like biofuels, biochemicals and biomaterials instead of just fuels has allowed players to realize better profit margins. For example, Neste's focus on renewable diesel and sustainable aviation fuel rather than just biodiesel helped them achieve industry leading refining margins.

Insights, By Type: Investments in Cellulosic Ethanol Fuels Second Generation Growth

In terms of type, second generation biorefinery contributes 38.8% share of the biorefinery market in 2024. This is due to significant investments and subsidies promoting cellulosic ethanol fuel production. Second generation technologies use non-food plant biomass like agricultural residues and wood residuals as feedstock to produce ethanol and other biofuels. Several governments are encouraging second generation technologies to enhance energy security and diversify fuel sources.

Notable investments include funding R&D to commercialize technologies converting cellulose and hemicellulose into ethanol cost-effectively. Several plants demonstrating cellulosic ethanol at a commercial scale have received funding. Subsidies support second generation ethanol blending into gasoline. This helps make cellulosic ethanol more price competitive with gasoline. Collaborations between technology developers and agrichemical giants also aim to lower production costs. Such initiatives are driving rapid capacity additions and scaling up of second generation biorefineries globally.

Insights, By Feedstock: Abundant Availability Drives Starch & Sugar Crops Dominance

In terms of feedstock, starch & sugar crops contributes 30.5% share of the biorefinery market in 2024, owing to its abundant worldwide availability at low costs. Starch & sugar crops such as corn, cassava, sugar cane and sweet sorghum are widely cultivated as food and feed sources across regions. They produce abundant biomass residues easily harnessed for renewable fuels and bio-based products.

Countries with large agricultural outputs have ample starch & sugar crops residues available year-round for conversion in biorefineries. Logistical networks for procuring and transporting these feedstocks are also well developed. Compared to other feedstocks, starch & sugar crops entail lower infrastructure and capital investment requirements for harvesting, preprocessing and transportation. This makes starch & sugar crops the most economically viable feedstock with stable supply, driving important trends in the biorefinery market.

Insights, By Product: Energy Applications Boost Energy Driven Demand

In terms of product, energy-driven biorefinery contributes the highest share of the biorefinery market owing to growing demand from the transportation and power generation sectors. Biorefineries engaged in the energy driven business model produce biofuels, biogas and renewable electricity to meet energy requirements.

Evolving emission regulations are incentivizing the blending of advanced biofuels into gasoline and diesel. This is creating offtake channels for biofuel offerings from energy driven biorefineries. Meanwhile, power utilities aim to increase the share of renewables in electricity production. Biomass-derived power meets sustainable energy targets in a cost-effective manner using proven technologies.

Large-scale projects are commissioning ample baseload renewable power capacity based on biomass gasification or direct combustion. Such capacity additions ensure consistent demand from the energy sector for the various co-products of energy-driven biorefineries.

• Asia Pacific is the largest biorefinery market due to population growth and demand for renewable energy sources.
• North America leads in growth rate, supported by infrastructure and resources.
• Asia Pacific leads the biorefinery market, with ongoing initiatives such as bioenergy programs in India targeting energy recovery from biomass.
• North America sees rapid adoption due to investment in biofuel refineries, like the United Airlines Ventures project.

The major players operating in the biorefinery market include Neste Oyj, UPM Global, BP PLC, Renewable Energy Group, Godavari Biorefineries Ltd., Valero Energy Corporation, Sekab Biofuels & Chemicals AB, Clariant AG, Zea2 Bioworks, Honeywell International Inc., Wilmar International Ltd., TotalEnergies SE, Vivergo Fuels, Assam Biorefinery Private Limited., Ørsted A/S, and Borregard AS.

• In February 2023, IIT Guwahati (Indian Institute of Technology Guwahati) established a sustainable microalgae biorefinery model and bio-alcohol production system. This initiative is part of their efforts to promote sustainable energy solutions.
• In October 2022, Afyren inaugurated a new plant dedicated to producing bio-sourced ingredients using fermentation technology. The plant is aimed at serving the cosmetics and perfume industries. Afyren's focus is on creating sustainable, bio-based products, which align with the growing demand for environmentally friendly alternatives in these sectors.
• In June 2022, Fintoil, a Finnish company focused on biofuels, and Neste Engineering Solutions, a subsidiary of the Finnish renewable energy company Neste, implemented Emerson’s technologies to enhance biofuel production in Finland. Emerson’s automation and control technologies were integrated into the project to improve efficiency, safety, and sustainability in the biofuel production process.

• By Type
  • Second Generation
  • First Generation
  • Third Generation
• By Feedstock
  • Starch & Sugar Crops
  • Energy Crops
  • Organic & Agricultural Residues
  • Multi-feedstock
• By Producta
  • Energy Driven
  • Material Driven
• By Technology
  • Industrial Biotechnology
  • Physico-Chemical
  • Thermochemical