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The global biorefinery market size was valued at USD 41.88 billion in 2021 and is projected to grow from USD 45.03 billion in 2022 to USD 80.26 billion by 2029, exhibiting a CAGR of 8.6% during the forecast period. The global COVID-19 pandemic has been unprecedented and staggering, with biorefinery experiencing lower-than-anticipated demand across all regions compared to pre-pandemic levels. Based on our analysis, the global market exhibited a growth of 3.1% in 2020 as compared to 2019.
A biorefinery is a facility that incorporates biomass conversion processes and equipment to produce fuels, energy, chemicals, materials, food, and animal feed from biomass. Growing demand for clean energy fuels has increased investments in the infrastructure setup for biorefineries.
Market Growth Impacted Due to Stalled Construction of New Biorefineries
There was a halt in construction activities due to COVID-19 lockdowns globally. The coronavirus pandemic affected many industries, including the biorefinery market growth. Furthermore, the sanctioning of new projects saw a slight reduction in annual growth rate due to lower investment potential owing to the economic turmoil in various countries.
However, there was a rise in the adoption of greener technologies during the pandemic. With technological advancements in biorefining technologies, the adoption of has biofuels revived. This directly enhanced the demand for establishing biorefineries.
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Rising Technological Advancements Due to Surging Dependence on Cleaner Fuels
With increasing dependence on cleaner fuels, there is increased importance on the development of efficient green energy production processes.
Biorefineries find massive applications in the field of chemical production. Cellulose and lignin from plant walls can be prospective renewable clean biofuel energy resources and high-value chemicals. However, it is challenging to disintegrate the intricate 3D structure of lignocellulosic biomass to harness this power.
The biomass is generally pre-treated before catalytic processing to overcome the hindrances in the lignocellulosic biomass deconstruction process. In 2019, Bloom Biorenewables SA developed the first technology to selectively transform cellulose and lignin into value-added chemical products.
In February 2022, the Oklahoma State University issued a patent for creating a new co-fermentation process that turns sugars into alcohols, organic acids, and ketones without any environmental impact. In this process, naturally occurring sugar-fermenting and gas-fermenting bacteria are incorporated and carbon dioxide is captured, which is further fermented to generate more biofuels. This process is anticipated to enhance biofuel yield.
In general, technological advancements in biorefining processes are anticipated to bolster the adoption of biorefineries globally.
Rapid Industrialization and Urbanization to Bolster Market Expansion
There has been tremendous development in the industrial sector in terms of massive production rates coupled with immense technological advancements globally. The growing energy consumption in the industrial sector has driven an extensive need for renewable energy development. This has bolstered the bioenergy market growth, enhancing biorefineries' setup.
For instance, according to Trading Economics Data, industrial manufacturing in the U.S. Increased by 3.9% year-on-year in July 2022. The U.S. manufacturing sector increased by 3.2%, whereas mining grew by 7.9% and utilities by 2.2%. The U.S. Energy Information Administration stated that the industrial sector consumed over 35% of the country's total end-use energy consumption in 2021.
The growing urbanization has further enhanced energy consumption in the residential and commercial sectors globally. According to the U.S. Energy Information Administration, the average annual electricity consumption for a U.S. residential utility customer was 10,715 kWh in 2020.
The increasing electricity consumption enhances consumer traction toward renewable energy sources such as bioenergy. According to the International Renewable Energy Agency, the U.S. had a total electricity capacity of 13,574 MW from bioenergy. This is almost 4.2% of the total renewable energy electricity capacity.
Increasing Regulatory Policies for Environment Protection to Bolster Investments
Increased environmental awareness has propelled efforts to curb air, water, and soil pollution. This has brought about reformatory regulations by the government to increase investments in cleaner fuels, as opposed to conventional oil and gas, which cause immense pollution and leave a considerable carbon footprint. Countries have increasingly grown conscious of their carbon footprints and have announced targets to reduce their carbon emissions post the Paris Climate Change Agreement. This has indirectly fueled investments in biorefineries over the years.
According to the 2030 Climate Target Plan, the European Commission proposed to raise the European Union's emission reduction target to 55% below 1990. Previously, this target was set to be 40%. According to the International Energy Agency (IEA Bioenergy), in 2019, renewables accounted for 12% of the total energy supply in the U.K., and approximately 60% of the renewable energy was from biomass in the country. Furthermore, the Total Energy Supply (TES) from biomass in the U.K. amounted to 572 PJ (petajoules) in 2019.
The increased environmental awareness led to an increase in converting waste to energy. This has propelled the demand for biorefineries. Furthermore, the increasing need to manufacture chemicals sustainably has propelled the setup of biorefineries for chemical production.
Restrictions on Feedstock Types to Hinder Market Growth
In September 2021, the German government announced that the use of palm oil in biofuel production would end in 2023. The country announced that it would target waste materials for biofuel production. Furthermore, in May 2022, Germany declared plans to reduce the use of biofuels produced from food crops due to growing food costs. Due to the Russia-Ukraine war, the disruption of exports led to a decrease in the supply of agricultural crops from Ukraine and Russia.
In 2007, China banned the use of grains as feedstock for biorefineries. The government started encouraging the growth of new biorefineries based on sweet potato, sweet sorghum, and cassava for ethanol production. After 2017, however, China stopped ethanol production grants for non-food grain and non-cellulosic feedstock use. Such restrictions on feedstock usage affect investments in biorefineries negatively.
Furthermore, many countries also lack a sound regulatory framework or targets for bioenergy and biorefinery. This has negatively affected investments in biorefineries. For instance, Australia does not have any biorefining targets. Nevertheless, the government has targeted 26% to 28% CO2 reduction by 2030. Furthermore, in October 2021, the government declared its CO2 reduction target of 100% by 2050.
Likewise, Denmark also lacks a national strategy for the setup of biorefineries. However, the government established the National Bioeconomy Panel (NBP), an advisory body to enhance the country's bioeconomy.
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Starch & Sugar Crop Segment to Hold Significant Share Owing to Ease of Availability
Based on feedstock, the market is segmented into starch & sugar crops, energy crops, organic & agricultural residues, multifeedstock, and others. The starch & sugar crops segment is expected to hold a dominating share due to ease of availability.
According to the International Energy Agency, primary biomass is the main feedstock type of biorefinery, followed by secondary feedstock. Starch crops, sugar crops, energy (oil) crops, lignocellulosic biomass from croplands/grasslands, and lignocellulosic biomass from forestry can be classified under primary biomass. On the other hand, the main secondary biomass feedstock includes organic residues, followed by agriculture residues and forestry residues.
Biochemical Processes Segment to Dominate the Market Due to High Adoption of Fermentation Process
Based on process, the market is segmented into biochemical processes, chemical processes, mechanical/physical processes, thermochemical processes, and multiprocess.
The biochemical segment accounted for the highest global biorefinery market share in 2021.
According to the International Energy Agency, biochemical conversion is most commonly used in biorefineries and fermentation is massively used within that category. Chemical processes involve catalytic conversion, esterification, and hydrogenation as major technologies. The mechanical and thermo-chemical conversion processes include extraction, separation, gasification, and pyrolysis.
Energy Segment to Proliferate Due to Rising Demand for Biofuels
By product, the market is segmented into energy, chemicals, materials, and others, wherein the energy segment holds a significant market share.
According to the International Energy Agency, the main product group is energy, especially biofuels. Chemical is an important segment, which includes pharmaceuticals and nutraceuticals. Materials are the smallest product group, with polymers and fibers as the main types. The others segment includes animal feed and food.
Asia Pacific Biorefinery Market Size, 2021 (USD Billion)
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The market has been studied across five prominent regions. These include North America, Europe, Asia Pacific, Latin America, and the Middle East & Africa.
The global market portrays Asia Pacific as a dominant region. According to the U.S. Department of Energy, Alternative Fuels Data Centre, China has formulated policies that promote the production and usage of biofuel. The country is the third largest producer of ethanol at the global level.
Germany dominated the Europe market in 2021. The increasing policy development for Germany is anticipated to propel the country’s growth. The New German Bioeconomy Strategy of January 2020 provides the conditions to develop the full potential to strengthen Germany as a bioeconomy leader. The strategy highlights how biological knowledge and advanced technology are the pillars of a future-oriented, sustainable, and climate-neutral economy and relates to using biogenic raw materials by the industry.
The U.S. is projected to dominate the North America market during the forecast timeframe owing to increased government expenditure on bioenergy development initiatives. In June 2022, the U.S. Department of Energy (DOE) announced USD 59 million to enhance the production of biofuels and bioproducts in rural America. The funding supports the government’s Sustainable Aviation Fuel Grand Challenge goal of producing 3 billion gallons of aviation biofuel annually by 2030 and 35 billion gallons by 2050.
Brazil is anticipated to lead the Latin America market. The region has enhanced its focus on sustainable energy development and reducing its carbon footprint. This has propelled the launch of various investment initiatives pertaining to clean energy sources and biorefinery.
The Middle East & Africa market is anticipated to grow with increasing technological developments. For instance, in January 2022, a biorefinery was inaugurated in Istanbul. The plant will convert algae into jet fuel. The refinery deploys algae grown in reactors and tanks to produce biofuels, organic biofertilizers, animal feed, and dietary supplements.
UPM Global and Orsted to Dominate the Industry Landscape
The global market is highly fragmented, with many key players delivering a wide range of products and services across the supply chain at local and global levels. Numerous companies are actively operating across different regions to cater to the customers' specific demands. Many of these establishments focus more on delivering newer technological developments for biorefineries, forming a significant portion of the global landscape. Key participants operating in the industry include UPM Global, Orsted, Neste, and Honeywell International Inc.
In January 2021, Valero Energy Corp. and Darling Ingredients Inc. announced that their joint venture, Diamond Green Diesel, decided to proceed with constructing a biodiesel production facility at Valero's Port Arthur, Texas refinery.
An Infographic Representation of Biorefinery Market
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The global biorefinery market research report comprehensively assesses the global market by offering valuable insights, facts, industry-related information, and historical data. Several methodologies and approaches are adopted to make meaningful assumptions and views. Furthermore, the report offers detailed analysis and information as per various segments, helping to get a comprehensive global industry overview.
Value (USD Billion)
By Feedstock, Process, Product, and Region
Fortune Business Insights says that the global industry size was USD 41.88 billion in 2021 and is expected to reach USD 80.26 billion by 2029.
In 2021, the Asia Pacific market value stood at USD 15.67 billion.
The market is growing at a CAGR of 8.6% and will exhibit steady growth over the forecast period (2022-2029).
The starch & sugar crops segment is anticipated to hold a significant market share across all feedstocks and will dominate the market during the forecast period.
Increasing demand for energy due to rapid industrialization and urbanization is the key factor driving the market growth.
UPM Global and Orsted are the key participants operating across the industry.
Asia Pacific dominated the market in terms of share in 2021.
Increased environmental awareness has propelled efforts to curb air, water, and soil pollution and brought about reformatory regulations by the government to increase investments in cleaner fuels, which has indirectly fueled investments in biorefinery.
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