Renewable Naphtha Market Size, Share & Industry Analysis, By Type (Light Naphtha and Heavy Naphtha), By Application (Plastics Production, Hydrogen Production, Fuel Blending, and Others), and Regional Forecast, 2026-2034

The renewable naphtha market is set to register moderate growth over the forecast period. Renewable naphtha is a low-carbon hydrocarbon feedstock produced from bio-based resources such as vegetable oils, agricultural residues, and waste fats or via green hydrogen pathways. It serves as a sustainable alternative to traditional fossil naphtha in applications such as biofuel blending, bioplastic production, and chemical synthesis. It can reduce CO₂ emissions by up to 80 % compared to its petroleum-based counterpart.

In May 2025, the Lappeenranta Biorefinery, the first commercial-scale facility in the world to create sophisticated biofuels from wood-based leftovers, marks a decade of profitable operations for UPM Biofuels.

Renewable Naphtha Market Driver

Rising Demand for Low-Carbon Feedstocks to Drive Market Growth

The growing emphasis on reducing greenhouse gas emissions and transitioning to sustainable production methods is significantly increasing the demand for low-carbon feedstocks such as renewable naphtha. Unlike fossil-based naphtha, renewable naphtha is derived from bio-based sources such as vegetable oils, animal fats, or waste biomass, making it a carbon-efficient alternative for use in the chemical and fuel industries.

In December 2024, the long-term Supplier Finance Agreement between BASF and INOCAS S.A. (Innovative Oil and Carbon Solutions), which comprises the off-take of Macaúba Kernel Oil and Macaúba Pulp Oil, and future options to purchase ownership shares in INOCAS, was signed by the two companies. The partnership includes financing of INOCAS’ plans to significantly increase the industrial-scale production of Macaúba oil in Brazil, thereby enhancing the nation's standing in the bioeconomy.

Renewable Naphtha Market Restraint

High Production Costs and Limited Feedstock Availability to Restrain Market Growth

One of the primary restraints facing the renewable naphtha market is the high production cost compared to conventional fossil-based naphtha. Producing renewable naphtha involves expensive processes such as hydrotreating vegetable oils, animal fats, or waste oils, which require advanced infrastructure and technologies.

Additionally, the limited availability of sustainable feedstocks, especially in regions with competing demand from biodiesel and SAF (sustainable aviation fuel), can lead to supply constraints and price volatility.

Renewable Naphtha Market Opportunity

Rising Investments in Bio-based Chemicals and Plastics to Create Market Opportunity

The increasing global focus on sustainable and circular materials is driving major investments in bio-based chemicals and plastics. Renewable naphtha, as a drop-in substitute for fossil naphtha, is ideally suited for producing green polyethylene, polypropylene, and other olefins. With leading packaging, consumer goods, and automotive companies aiming to reduce their carbon footprint, demand for bio-attributed polymers made from renewable naphtha is growing. This shift opens significant opportunities for renewable naphtha producers to expand into high-value, long-term applications beyond fuel blending, especially in markets such as Europe, Japan, and North America, where ESG goals and regulatory compliance are strong.

Key Insights

The report covers the following key insights:

• Recent Advancements in Renewable Naphtha Market
• Key Industry Trends
• Regulatory Landscape for Renewable Naphtha Market
• Key Industry Developments (Mergers, Acquisitions, and Partnerships)
• Impact of COVID-19 on the Renewable Naphtha Market

Segmentation

Analysis By Type

Based on type, the market is divided into light naphtha and heavy naphtha.

Light naphtha is the dominant segment, due to its versatile applications and high demand in petrochemical production. It is primarily used as a feedstock for steam crackers to produce ethylene, propylene, and other key olefins, essential building blocks for plastics and industrial chemicals.

Heavy naphtha is the fastest-growing segment in the market, due to its crucial role in reforming processes used to produce high-octane gasoline components such as reformate and aromatics such as benzene, toluene, and xylene (BTX). 

Analysis By Application

Based on application, the market is divided into plastics production, hydrogen production, fuel blending, and others. 

Plastics production is the dominating segment in the market, due to the increasing global demand for sustainable alternatives to conventional plastics. Renewable naphtha acts as a drop-in feedstock for producing bio-based polymers such as bio-polyethylene (bio-PE) and bio-polypropylene (bio-PP), offering the same performance as fossil-based plastics with a lower carbon footprint.

Hydrogen production is the second leading segment in the market, due to the growing need for low-carbon hydrogen across industries. Renewable naphtha serves as a sustainable feedstock in steam reforming processes to produce hydrogen with lower lifecycle emissions compared to fossil-derived naphtha.

Regional Analysis

By region, the market is divided into North America, Europe, Asia Pacific, the Middle East & Africa, and Latin America.

The renewable naphtha market in North America is growing steadily due to a combination of supportive regulations, strong demand for bio-based chemicals, and investments in sustainable fuel technologies. Moreover, the governments of the countries of the US and Canada strongly focus on clean energy, and attaining carbon neutrality is expected to boost the market in the forecast period.

Asia Pacific is the second-largest region in the market. Countries such as China, Japan, South Korea, and India are rapidly expanding their chemical manufacturing bases. Renewable naphtha is increasingly used as a feedstock for producing bioplastics (e.g., bio-PE, bio-PP), aligning with sustainability goals.

Key Players Covered

The global renewable naphtha market is fragmented in terms of the number of providers. Various market initiatives and R&D activities are anticipated to drive market growth. In May 2023, in an attempt to switch to renewable energy sources for manufacturing, Dow Inc. (DOW.N), a U.S. chemical producer, struck a long-term supply agreement with bio-conversion business New Energy Blue for plastic materials produced from maize residue.

• UPM Biofuels (Finland)
• Neste (Finland)
• Renewable Energy Group (U.S.)
• Borealis AG (Austria)
• Eni (Italy)
• BASF (Germany)
• Dow (U.S.)
• St1 (Finland)
• TotalEnergies (France)
• Repsol (Spain)
• Sunshine Biofuels (U.S.)
• Chevron (U.S.)
• Shell (U.K.)

Key Industry Developments

• In June 2025, Finnish refiner and Japanese trading company Mitsubishi announced the strategy to increase sales of Neste's biomass-based naphtha by improving their collaboration in Japan. In order to collaborate on encouraging a transition from traditional petroleum naphtha to Neste's bio-naphtha, the firms inked a partnership agreement on an unknown date.
• In April 2025, the potential for gasoline mixing and naphtha exports may be impacted by Saudi Arabia's intentions to combine its oil refineries with downstream petrochemical facilities. Recently, the state-controlled Aramco inked an agreement with the Chinese state-controlled Sinopec to construct and integrate a 1.8 million ton/year mix-feed ethylene steam cracker and a 1.5 million ton/year aromatics complex into the Yasref refinery, which processes 400,000 barrels per day.