PUBLISHER: Fortune Business Insights Pvt. Ltd. | PRODUCT CODE: 1916463
PUBLISHER: Fortune Business Insights Pvt. Ltd. | PRODUCT CODE: 1916463
The global bio-naphtha market is gaining strong momentum as industries transition toward renewable and low-carbon feedstocks. In 2025, the global bio-naphtha market size was valued at USD 2.77 billion, reflecting rising adoption in petrochemicals, gasoline blending, and sustainable fuel production. The market is projected to grow from USD 3.10 billion in 2026 to USD 8.06 billion by 2034, driven by regulatory support, sustainability commitments, and increasing demand for bio-based alternatives to fossil naphtha. Europe dominated the market in 2025 with a 37% share, supported by stringent climate regulations and strong renewable energy policies.
Bio-naphtha is a renewable liquid hydrocarbon derived from vegetable oils, waste animal fats, used cooking oil, forestry residues, and other organic waste materials. It is mainly produced as a byproduct of second-generation hydrotreated vegetable oil (HVO) processes used in renewable diesel and sustainable aviation fuel production, as well as through Fischer-Tropsch conversion and hydrotreating technologies. Its compatibility with existing petrochemical infrastructure makes it an attractive substitute for fossil-based naphtha in multiple downstream applications.
Market Trends
A major trend shaping the bio-naphtha market is the growing demand for renewable fuels. Governments and industries worldwide are accelerating the shift toward low-carbon energy solutions to reduce greenhouse gas emissions and dependence on fossil fuels. Bio-naphtha is increasingly adopted due to its lower carbon footprint and versatility in transportation fuels and petrochemical feedstocks. Advancements in bio-refinery technologies are further enhancing production efficiency, supporting market expansion during the forecast period.
Market Drivers
Environmental concerns and sustainability commitments are key drivers of market growth. Rising awareness of climate change and the need to meet international agreements such as the Paris Agreement are encouraging companies to integrate bio-based feedstocks into their supply chains. Industries such as chemicals, packaging, and automotive manufacturing are increasingly adopting bio-naphtha to achieve carbon reduction targets and align with corporate sustainability goals, directly supporting market growth in 2025, 2026, and 2034.
Market Restraints
Despite positive growth prospects, high production costs restrain market expansion. Bio-naphtha production involves costly raw materials, specialized processing technologies, and complex bio-refinery operations. These factors make bio-naphtha less price-competitive compared to conventional naphtha, limiting widespread adoption. Continuous innovation and scaling of production facilities are required to reduce costs and improve market competitiveness.
Market Opportunities
Regulatory support and government incentives present significant growth opportunities for the bio-naphtha market. Policies such as the EU Renewable Energy Directive (RED II), the EU Green Deal, and the U.S. EPA Renewable Fuel Standard are accelerating demand for bio-based solutions. Incentives such as clean fuel credits and renewable feedstock mandates are narrowing the cost gap with fossil fuels, encouraging refinery retrofits and co-processing projects. These regulatory frameworks are expected to sustain strong market growth through 2034.
Market Challenges
Limited feedstock availability poses a major challenge for market scalability. Bio-naphtha production relies on renewable feedstocks such as vegetable oils and biomass, which face supply constraints and competition from other biofuel applications. Although research into alternative feedstocks such as algae and waste materials is ongoing, large-scale commercialization remains limited, requiring further technological advancements.
By source, the vegetable oil segment dominated the market, accounting for 84.19% share in 2026, due to its versatility in producing bio-based plastics, chemicals, and fuel blends. Biomass and other sources such as animal fats and used cooking oils are also gaining traction.
By application, the petrochemicals segment led the market, holding 89.68% share in 2026, driven by the use of bio-naphtha as a sustainable feedstock for plastics, synthetic rubber, and chemical derivatives. Gasoline blending and other applications such as bio-benzene and bio-phenol continue to expand steadily.
Europe recorded a market value of USD 1.01 billion in 2025, driven by strong carbon-neutrality goals and renewable energy mandates. North America shows steady growth supported by regulatory incentives and advanced bio-refinery infrastructure. Asia Pacific is emerging rapidly, with China and India witnessing rising industrial demand and government support. Latin America benefits from abundant biomass resources, while the Middle East & Africa are exploring bio-naphtha to diversify energy portfolios.
Competitive Landscape
Key players operating in the market include UPM Biofuels, Chevron, Mitsui Chemicals, and Neste Oil Corporation. These companies focus on capacity expansion, strategic partnerships, and supply chain development to strengthen their market position globally.
Conclusion
The global bio-naphtha market is positioned for robust growth, expanding from USD 2.77 billion in 2025 to USD 8.06 billion by 2034, driven by sustainability initiatives, regulatory support, and rising demand for renewable petrochemical feedstocks. While high production costs and feedstock limitations remain challenges, ongoing advancements in bio-refining technologies, supportive government policies, and growing industry commitment to decarbonization are expected to sustain long-term market growth throughout the forecast period.
Segmentation By Source
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