Biorefinery Market

Market Overview

According to Straits Research, the global biorefinery market, valued at USD 45.6 billion in 2023, is projected to reach USD 99.8 billion by 2032, with a CAGR of 9.1% from 2024 to 2032. The primary drivers of market growth are global population growth, increasing energy consumption, and accelerated climate change due to rising GHG emissions.

A biorefinery is a facility that uses a variety of methods to convert biomass into valuable products such as biofuels, biochemicals, bioplastics, and other biobased materials. Biorefineries process crude oil to make fuels and chemicals like traditional petroleum refineries. They use renewable biomass feedstocks such as agricultural residues, forestry waste, energy crops, algae, and organic waste to create sustainable alternatives to fossil-based products.

As people become more concerned about environmental safety, the use of bio-based goods in industrial activities increases, as these products reduce pollutant emissions. Furthermore, biorefinery products are used extensively in producing cosmetics, resins, and alcohols. Moreover, the fuel produced by the biorefinery process is used to meet energy requirements cheaply and with low greenhouse gas emissions. Thus, these factors are projected to contribute to the growth of the worldwide biorefinery market over the forecast period. However, the gap between customers and suppliers limits the development of the worldwide biorefinery product market.

Market Dynamics

Global Biorefinery Market Drivers:

Government Regulations and Renewable Energy Policies

Many countries have adopted renewable fuel standards or biofuel mandates, which require a particular amount of transportation fuel from renewable sources such as biofuels. These mandates drive up biofuel demand and incentivize investment in biorefineries to meet regulatory requirements. The Renewable Fuel Standard (RFS) in the United States mandates that transportation fuels contain a minimum amount of renewable fuels, such as ethanol and biodiesel. The RFS was established by Congress in 2005 to reduce greenhouse gas emissions, increase the renewable fuels sector, and reduce dependency on imported petroleum. The Energy Independence and Security Act of 2007 enhanced and extended the Renewable Fuel Standard.

Furthermore, on June 21, 2023, the United States Environmental Protection Agency (EPA) issued a final regulation that increased the volume of biofuels necessary in transportation fuel from 2023 to 2025. The rule increases the overall amount of renewable fuels by 1.5% in 2023, 4.4% in 2024, and 8.2% in 2025. The rule also raises the volume requirements for cellulosic biofuels by 25% in 2023, 29% in 2024, and 33% in 2025.

Moreover, governments frequently offer tax breaks, subsidies, grants, and loan guarantees to encourage developing and implementing renewable energy technologies like biorefineries. These financial incentives lower the initial costs of biorefinery projects and increase their economic viability. For example, the United States federal government provides different tax credits and incentives to biofuel producers, such as the Blenders Tax Credit for ethanol blending and the Production Tax Credit for cellulosic biofuel production. These incentives encourage investment in biorefineries and help to build the biofuels industry.

Global Biorefinery Market Restraints:

Feedstock Availability and Sustainability Challenges

Biomass feedstocks utilized in biorefineries, such as agricultural leftovers, forestry waste, and energy crops, frequently compete with other industries, such as food and feed manufacturing. Crop residues such as maize stover and wheat straw, which have potential as biorefinery feedstocks, are also utilized in agriculture for animal bedding, soil amendment, and erosion prevention. Global feed production in 2023 is expected to be 1.287 billion metric tons (BMT), a 0.2% decrease from 2022. The IEA's Renewables 2022 research anticipates that the biofuel industry will experience a feedstock supply shortage from 2022 to 2027. The analysis estimates that demand for vegetable oil, waste, and leftover oils and fats would rise by 56% to 79 million tons during the projection period.

Furthermore, land use conflicts occur when biomass feedstocks compete with food crops for arable land. The cultivation of energy crops for biofuel generation, such as corn or sugarcane, may result in deforestation, land conversion, and displacement of food production, raising concerns about food security and biodiversity decline. Monoculture farming and intensive agriculture are examples of biomass production strategies that can have negative environmental consequences, such as soil deterioration, water pollution, and biodiversity loss. For example, the spread of palm oil plantations for biofuel production in Southeast Asia has been connected to deforestation and habitat destruction, posing threats to endangered species and ecosystems.

Moreover, maize is the principal feedstock used in ethanol production, accounting for most biofuel feedstock consumption in the United States. The USDA anticipates that 5.3 billion bushels of maize will be utilized for ethanol production in 2023-24, a forecast reaffirmed in the September WASDE. The government reduced its projection for corn ethanol usage in 2022-'23 to 5.177 billion bushels, down from 5.195 billion bushels last month. This demonstrates the issues of feedstock supply and sustainability in the biorefinery industry. However, maize ethanol production competes with other uses of corn, such as food, feed, and exports, raising worries about diversifying agricultural resources away from food production.

Global Biorefinery Market Opportunity:

Integration of Advanced Conversion Technologies

Biorefinery technologies have advanced, converting biomass into a wide range of bio-based products such as biofuels, biochemicals, bioplastics, and biocomposites. Integrating sophisticated conversion technologies such as enzymatic hydrolysis, pyrolysis, and gasification improves process efficiency, product yields, and flexibility, creating new potential for product innovation and market expansion.

Additionally, hybrid biorefinery designs integrate conversion processes, such as biochemical and thermochemical pathways, to enhance resource usage, process efficiency, and product variety. Hybrid biorefineries can achieve economic and environmental sustainability by combining feedstock flexibility, product integration, and process optimization. Neste uses a wide range of sustainably produced raw resources to make renewable goods at its refineries in Finland, the Netherlands, and Singapore. Neste also employs lesser volumes of sustainably produced vegetable oils, and we are trying to introduce unique vegetable oils derived from regenerative agriculture practices to our raw material portfolio in the short to medium term.

Regional Analysis

Asia-Pacific Dominates the Global Market

The global biorefinery market analysis is conducted in North America, Europe, Asia-Pacific, the Middle East and Africa, and Latin America.

Asia-Pacific is the most significant global biorefinery market shareholder and is estimated to grow at a CAGR of 8.8% over the forecast period. The Asia-Pacific region dominated the market in 2023 and is projected to experience substantial expansion over the forecast period. The region's expansion can be ascribed to the increasing recognition of environmental contamination and converting waste into energy sources. The continuously growing population in the area significantly influences the need for energy sources, including natural gas, oil, and coal. EcoCeres Inc., a biorefinery company based in Asia known for its notable research and development, announced its inaugural shipment of ethanol made entirely from agricultural waste to the European markets.

Additionally, in November 2022, the Ministry of New and Renewable Energy (MNRE) announced that it will allocate a budget of Rs. 858 crore for energy recovery to sustain its collaboration with the National Bioenergy Program till 2025-2026, as reported by PwC India. The Program utilizes biomass, cattle dung, and industrial biowaste to extract energy, thereby helping India's efforts to promote the use of bioenergy.

North America is anticipated to exhibit a CAGR of 8.6% over the forecast period. North America is the most rapidly expanding region in the market and is expected to undergo significant growth over the projected period. The availability of raw resources, infrastructure, and transportation facilitates urbanization. The expansion of the biorefinery market in North America is mainly attributed to the Industrial Revolution. In addition, United Airlines Ventures announced a strategic investment in NEXT Renewable Fuels, which will enable the establishment of a biofuel refinery in Port Westward, Oregon, scheduled to commence operations in 2026.

Furthermore, due to heightened government spending on bioenergy development programs, the United States is expected to dominate the North American market throughout the predicted timeframe. In June 2022, the U.S. Department of Energy (DOE) allocated USD 59 million to bolster the manufacturing of biofuels and bioproducts in rural areas of America. The financing is intended to assist the government in achieving its target of producing 3 billion gallons of aviation biofuel per year by 2030 and 35 billion gallons by 2050 as part of the Sustainable Aviation Fuel Grand Challenge.

Europe holds a significant market share. In 2023, Germany had a dominant position in the European market. The anticipated expansion of Germany is expected to be propelled by the rising policy development. The January 2020 New German Bioeconomy Strategy establishes the necessary prerequisites for fully harnessing Germany's potential and solidifying its position as a leader in the field of bioeconomy. The plan emphasizes combining biological knowledge and innovative technology to create a future-oriented, sustainable, and climate-neutral economy. It specifically focuses on the industry's utilization of biogenic raw materials.

In the Latin American market, Brazil is expected to be at the forefront. The region has intensified its emphasis on developing sustainable energy and reducing carbon emissions. This has stimulated the introduction of multiple investment efforts focused on clean energy sources and biorefinery.

The Middle East and Africa market is expected to expand due to rising technological advancements. In January 2022, a biorefinery was officially opened in Istanbul, for example. The factory will transform algae into aviation fuel. The refinery utilizes cultivated algae in reactors and tanks to manufacture biofuels, organic biofertilizers, animal feed, and dietary supplements.

Segmental Analysis

The global biorefinery market is segmented based on feedstock, process, and product.

The market by feedstock is further segmented into Starch and Sugar Crops, Energy Crops, Organic and Agricultural Residues, and Multifeedstock.

The starch and sugar crops category is projected to maintain a dominant market share primarily because of its high availability. Starch and sugar crops are mainly grown for their abundant starch or sugar content, which may be readily transformed into fermentable sugars to manufacture biofuels and biochemicals. Some examples of crops are corn, sugarcane, sugar beet, and wheat.

Additionally, these crops have high levels of carbohydrates, including glucose and sucrose, that can be broken down through enzymatic hydrolysis or fermentation to create bioethanol, biobutanol, and other bio-based products. First-generation biofuel production extensively utilizes starch and sugar crops because of their abundant sugar or starch content and well-established processing technology.

Energy crops are biomass crops cultivated only to produce bioenergy in biorefineries. These crops are chosen based on their potential to make a large amount of plant material, their fast growth rates, and their appropriateness for growing on areas of land that could be better for farming or have been damaged.

Furthermore, energy crops are becoming more commonly utilized in second-generation biorefineries to produce lignocellulosic biofuels derived from non-food biomass sources, such as cellulosic ethanol and renewable diesel.

Based on process, the market is fragmented into Biochemical, Chemical, Mechanical/Physical, Thermochemical, and Multiprocess.

The biochemical category held the largest market share in the global biorefinery market. Biochemical processes utilize biological organisms or enzymes to transform biomass into biofuels, biochemicals, and other bio-based products. These methods usually involve fermentation and enzymatic hydrolysis. Fermentation employs microorganisms such as yeast or bacteria to transform carbohydrates into ethanol, biobutanol, or other chemical compounds. Enzymatic hydrolysis utilizes enzymes to decompose complex carbohydrates in biomass into sugars that can be fermented. One instance is manufacturing cellulosic ethanol from lignocellulosic feedstocks such as agricultural leftovers. Biochemical methods offer benefits such as selectivity and gentle operating conditions.

However, they frequently necessitate pre-treatment procedures to render the biomass accessible to enzymes and microorganisms. The International Energy Agency states that biochemical conversion is the predominant method employed in biorefineries, with fermentation extensively utilized within this domain.

Chemical processes employ chemical reactions to convert biomass into valuable products. These processes frequently entail catalysis, in which catalysts expedite chemical reactions without being depleted. Illustrations encompass transesterification, a process in which vegetable oils or animal fats are transformed into biodiesel, and hydrolysis, a procedure in which intricate polymers such as cellulose are decomposed into more basic molecules. Chemical processes can generate diverse products, encompassing biofuels, bioplastics, and specialized chemicals. These technologies provide excellent conversion efficiency and can be customized for individual goods. However, they may necessitate significant energy inputs and produce chemical waste that needs to be handled appropriately.

The market can be further bifurcated by product into Energy, Chemicals, and Materials.

The energy-driven segment is projected to dominate the market, with volatility in fossil fuel costs affecting the competitiveness of energy-driven products. As fossil fuel costs increase, the economic attractiveness of renewable energy sources also increases. This factor is the primary driver of the segment's growth.

In addition, many people are becoming more aware of the environmental consequences of their choices and are actively looking for products that have sustainable attributes. Biorefinery-derived products frequently bear a green label indicating the product's sustainability, driven by energy. This element additionally emphasizes the expansion of the segment.

The material-driven segment is projected to be the most appealing component of the market. Biorefineries produce materials used in various industries, including biomaterials, bioplastics, and biochemicals. These items are commonly utilized as substitutes for traditional materials derived from fossil fuels, which makes them appealing to environmentally aware customers and industries.

Recent Developments

• May 2024- Honeywell partnered with Enel North America to enhance the stability of power grids by implementing energy management automation.
• March 2024- Sekab entered into a distinctive research partnership with prominent firms to eradicate greenhouse gas emissions.