PUBLISHER: Fortune Business Insights Pvt. Ltd. | PRODUCT CODE: 1887169
PUBLISHER: Fortune Business Insights Pvt. Ltd. | PRODUCT CODE: 1887169
The global Bio-naphtha market is witnessing accelerated growth as industries transition toward renewable feedstocks and low-carbon fuels. As per the latest market assessment, the Bio-naphtha market was valued at USD 2.49 billion in 2024, is projected to grow to USD 2.77 billion in 2025, and is expected to reach USD 6.36 billion by 2032, reflecting an impressive CAGR of 12.6% from 2025 to 2032. This strong growth momentum reflects wider sustainability transitions in petrochemicals, transportation fuels, plastics, and renewable energy systems.
Market Overview
Bio-naphtha is a renewable liquid hydrocarbon derived from sustainable feedstocks including vegetable oils, waste animal fats, used cooking oils, algae, and forestry residues. It is most commonly produced as a byproduct in the hydrotreated vegetable oil (HVO) process used for renewable diesel and sustainable aviation fuel (SAF). Additional production pathways include Fischer-Tropsch synthesis and hydrotreating of bio-based feedstocks.
The demand for bio-naphtha is rising sharply as companies pursue lower-carbon alternatives to fossil-based naphtha. Its applications in petrochemicals, renewable gasoline blending, bio-plastics, detergents, and chemical intermediates make it an essential input for industries focused on decarbonization. Major players such as UPM Biofuels, Chevron, Mitsui Chemicals, and Neste Oil Corporation continue to strengthen their production capabilities through technology upgrades and strategic partnerships.
Key Market Trends
A major trend shaping the market is the growing demand for renewable fuels. With global industries targeting net-zero emissions, bio-naphtha has emerged as a critical substitute for fossil naphtha due to its lower carbon footprint. This shift is strongly supported by regulatory policies such as the EU Renewable Energy Directive (RED II), the U.S. Renewable Fuel Standard (RFS), and the Clean Fuel Production Credit (45Z). These policies reduce cost barriers and increase investments in bio-refinery expansions.
Technological innovations-especially the integration of AI and IoT for process optimization-are improving bio-naphtha yields, reducing operational costs, and enhancing overall refinery efficiency. These developments are accelerating market adoption, particularly in the petrochemical and transportation sectors.
Market Dynamics
Drivers
Environmental concerns and sustainability commitments are major forces driving Bio-naphtha demand. Corporations, particularly in chemicals, packaging, and automotive sectors, are adopting renewable feedstocks to meet stringent emission goals. Commitments under global climate agreements, including the Paris Agreement, are also accelerating the transition toward bio-based chemicals.
Restraints
The market faces constraints due to high production costs. Compared to fossil naphtha, bio-naphtha production involves higher raw material costs, advanced refining technologies, and energy-intensive processes. Large-scale bio-refineries also require substantial capital investment, which limits cost competitiveness and slows adoption in price-sensitive sectors.
Opportunities
Strong regulatory support, sustainability incentives, and renewable fuel mandates present significant growth opportunities. The EU's push for RFNBOs (Renewable Fuels of Non-Biological Origin) and the U.S. EPA's renewable credits are encouraging companies to invest heavily in refinery retrofits, co-processing technologies, and alternative feedstock development.
Challenges
A major challenge is the limited availability of sustainable feedstocks. Competition for vegetable oils, animal fats, and waste materials restricts large-scale production. Although emerging feedstocks such as algae and microbial oils show promise, they remain in early development stages.
By Source
In 2024, the vegetable oil segment dominated the global market, driven by strong versatility in applications such as plastics, chemicals, and gasoline blending. Biomass-based bio-naphtha is expected to grow significantly due to increasing use of agricultural residues and forestry biomass. Other sources-such as animal fats, algae, and used cooking oil-are also gaining traction.
By Application
The petrochemicals segment led the market in 2024, as bio-naphtha is a key feedstock for polymers, synthetic rubber, and chemical intermediates. The gasoline segment is expected to see strong growth owing to rising demand for renewable gasoline blends. Other applications-such as Bio-benzene and Bio-phenol-are expanding as manufacturers seek greener chemical alternatives.
In 2024, Europe dominated the market with a 36.54% share, valued at USD 0.91 billion. Strong regulatory frameworks, corporate sustainability targets, and investments in bio-refineries support regional leadership.
North America shows strong growth driven by advanced refinery infrastructure and renewable fuel mandates.
Asia Pacific is expanding rapidly, supported by industrial growth and increasing domestic demand in China, India, Singapore, and Indonesia.
Latin America and the Middle East & Africa are emerging players, leveraging abundant biomass and growing investments in renewable energy diversification.
Conclusion
With the Bio-naphtha market expected to rise from USD 2.49 billion in 2024 to USD 6.36 billion by 2032, the industry is set for transformative growth. Driven by sustainability priorities, regulatory incentives, and advancements in refining technology, Bio-naphtha is poised to become a cornerstone of the global transition to renewable chemicals and cleaner fuels.
Segmentation By Source
By Application
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