The global co-refining market, valued at US$ 39.7 billion in 2023, is poised for significant growth. This market is estimated to expand at a CAGR of 6.0% from 2024 to 2034, with expectations to reach US$ 73.0 billion by the end of 2034. The growing transition toward a low-carbon economy and increased adoption of biofuels are driving this surge in market value, as countries and companies strive to meet global carbon reduction goals and reduce the carbon footprint of energy production.

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Analyst Viewpoint

The transition to a low-carbon economy is one of the primary factors augmenting the growth of the co-refining market. Nations and industries are focusing on limiting global warming to 1.5°C and achieving net-zero greenhouse gas (GHG) emissions by the middle of the century. To achieve these ambitious targets, governments and companies are adopting low-carbon technologies and sustainable energy solutions. These technologies produce less pollution compared to traditional energy sources, contributing to a significant demand for co-refining.

Another key driver is the growing adoption of biofuels. Advanced biofuels, in particular, are becoming more popular as alternatives to fossil fuels, as they help reduce carbon emissions, especially in sectors that are challenging to decarbonize, such as aviation and heavy transport. This increased focus on biofuels is helping to propel the growth of the co-refining market. Refineries are also incorporating advanced processes to integrate biofuels into their operations, with a focus on co-processing woody fast pyrolysis bio-oils in fluid catalytic cracking (FCC) to create high-quality fuel alternatives.

Market Introduction

Co-refining, or co-processing, is an approach used in the oil and gas sector where various feedstocks, including animal fats, vegetable oils, biomass, waste plastics, and other bio-based materials, are processed alongside crude oil in refineries. This joint refining process allows for the production of transportation fuels and petrochemical feedstocks, while also enabling the incorporation of biofuels into the existing energy infrastructure.

Several refining techniques are utilized in co-refining processes, including hydroprocessing, catalytic cracking, fluid catalytic cracking (FCC), hydrotreating, and hydrocracking. These processes help convert feedstocks into valuable fuels and chemicals. Hydroprocessing, for example, is particularly effective for upgrading bio-crude oil into transportation fuels, while FCC is commonly used to increase the production of aviation fuels. Additionally, catalytic cracking of plastics requires less energy and facilitates the selective degradation of plastic waste.

Drivers of Market Growth

Transition Toward a Low-Carbon Economy

The oil and gas industry is experiencing a shift as countries look to reduce their reliance on fossil fuels. As of 2023, there were 825 operational crude oil refineries worldwide, and demand for oil is expected to peak by 2030, largely driven by the rise of electric vehicles (EVs). The co-refining market is being influenced by the growing need for renewable hydrogen, sustainable biofuels, and carbon capture technologies like Carbon Capture and Storage (CCS).

In 2024, the European Commission awarded €720 million to renewable hydrogen projects, while the U.S. Department of Energy has allocated US$ 7 billion to accelerate the development of hydrogen hubs across the country.

Adoption of Biofuels

Biofuels are playing an increasingly critical role in reducing greenhouse gas emissions and enhancing energy security as fossil fuel supplies decline. The International Energy Agency (IEA) reported that biofuel investments reached a decade-high in 2022, with capacity additions of around 260 kb/d. As petroleum refineries already possess the infrastructure to produce fuels and base chemicals, the co-refining of biomass-derived feedstocks alongside petroleum fractions offers an attractive option for producing biofuels.

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Regional Outlook

Europe is the largest market for co-refining, holding a significant share in 2023. The region's strong push for biofuel production to meet climate targets, particularly in the transportation sector, is driving market dynamics. In 2020, the EU supplied about 16 million tons of Oil Equivalent (Mtoe) of biofuels, accounting for 6.3% of total transport fuel consumption. This growth is complemented by investments in carbon capture and storage (CCS) technologies, such as the COREu project, funded by Horizon Europe.

Key Players in the Co-refining Market

Several prominent players are operating in the co-refining market, focusing on the co-processing of Sustainable Aviation Fuel (SAF) in response to the increasing demand for biofuels. These companies include Bharat Petroleum Corporation Limited, China National Petroleum Corporation, ExxonMobil Corporation, Saudi Arabian Oil Co., Valero Energy Corporation, Marathon Petroleum Corporation, Rosneft, and Petroleos de Venezuela S.A. These companies are strategically integrating renewable feedstocks into existing refinery infrastructure to produce SAF and other biofuels, positioning themselves as key players in the transition to a sustainable, low-carbon future.

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