Co-refining Market By Feedstock Type, By Process, By Product, By Region - Global Market Analysis & Forecast, 2024 to 2032

Market Overview

The co-refining market refers to the industry segment involved in the simultaneous processing of conventional crude oil and renewable feedstocks, such as bio-based oils, within existing petroleum refineries. This approach leverages existing refinery infrastructure and technology to produce both traditional petroleum products and renewable fuels, such as biodiesel and renewable diesel. The process typically involves blending renewable feedstocks with petroleum before the refining process or directly inserting them into the refinery's processing units. Co-refining is distinct from standalone bio-refinery operations, as it integrates renewable production within traditional fossil fuel operations, aiming to reduce capital expenditures and accelerate the transition to more sustainable energy sources. The co-refining market has garnered significant attention as industries and governments push towards more sustainable fuel options while maximizing the use of existing assets. This market is driven by the growing regulatory pressures for cleaner energy, the volatility in crude oil prices, and the increasing competitiveness of renewable feedstocks. Additionally, technological advancements in refining processes have facilitated the integration of bio-based and petroleum feedstocks, enhancing operational flexibility and economic viability. The market's growth is underpinned by the global shift towards reducing carbon emissions and the adoption of stricter environmental regulations which mandate the incorporation of renewable sources in energy production. Energy companies are increasingly investing in co-refining projects to meet sustainability targets and capitalize on government incentives for renewable fuel production. These factors are crucial in fostering a compound annual growth rate (CAGR) of 6.2%, indicating a robust expansion trajectory for the co-refining market over the forecast period. This growth is further supported by advancements in feedstock technology and increasing global demand for lower-carbon fuels.

Regulatory Push Towards Sustainability

The co-refining market is significantly driven by stringent global regulations aimed at reducing carbon emissions and promoting sustainability. Governments worldwide are implementing policies that mandate the inclusion of renewable fuels in the energy mix. For instance, the Renewable Fuel Standard (RFS) in the United States and the Renewable Energy Directive (RED) in the European Union enforce blending quotas that require fuel suppliers to increase the proportion of renewable fuels in their offerings. These regulations not only incentivize the adoption of co-refining practices but also ensure a consistent demand for renewable fuels. As a result, refineries are compelled to modify their operations to integrate bio-based feedstocks with traditional crude oil to produce fuels that comply with environmental standards, thereby sustaining market growth.

Expansion of Feedstock Availability

A major opportunity in the co-refining market is the expansion and diversification of renewable feedstocks. Technological advancements and agricultural innovations have significantly increased the availability and reduced the cost of bio-based feedstocks like vegetable oils, fats, and greases. The ability to process a wider variety of feedstocks not only enhances the flexibility of refinery operations but also helps in mitigating risks associated with feedstock supply disruptions. This diversification also supports the broader adoption of co-refining technologies as it enables refineries to adjust their feedstock use based on availability and cost, optimizing their production processes and improving profitability.

High Initial Investment Costs

One of the primary restraints in the co-refining market is the high initial investment required for modifying existing refineries to handle renewable feedstocks. Although co-refining utilizes existing infrastructure, significant upgrades and technological enhancements are necessary to process bio-based feedstocks. These modifications can include the addition of new hardware and software, safety measures, and training for personnel, all of which require substantial capital. This high upfront cost can deter smaller refineries or those in regions with less financial flexibility from adopting co-refining practices, thus slowing down market growth.

Complexity in Feedstock Integration

A significant challenge in the co-refining market is the complexity associated with integrating renewable feedstocks into the traditional petroleum refining processes. Each type of bio-based feedstock has different characteristics that can affect the refining process, such as acidity, impurity levels, and energy content. Managing these variations requires sophisticated refining technologies and process controls to ensure consistent quality and efficiency in fuel production. The need for specialized equipment and advanced technical expertise to handle these diverse feedstocks complicates the adoption of co-refining technologies, posing a considerable challenge to refineries aiming to expand their renewable fuel production capabilities.

Market Segmentation by Feedstock Type

The co-refining market is segmented by feedstock type into Crude Oil Co-refining, Biomass Co-refining, Waste Plastic Co-refining, and Renewable Feedstock Co-refining. Among these, Renewable Feedstock Co-refining is anticipated to exhibit the highest CAGR due to increasing global commitments to reduce greenhouse gas emissions and the improving economics of renewable feedstocks such as vegetable oils and bio-residues. This segment benefits from technological advances and favorable policies promoting renewable energy sources, driving significant growth. In terms of revenue, Crude Oil Co-refining remains the dominant segment, leveraging the extensive existing infrastructure and market maturity associated with traditional crude oil processing. This segment benefits from the vast scale and established global supply chains that support crude oil markets, ensuring it maintains a significant share of market revenue.

Market Segmentation by Process

In the co-refining market, segmentation by process includes Hydroprocessing, Catalytic Cracking, Fluid Catalytic Cracking (FCC), Hydrotreating, Hydrocracking, and Others. Fluid Catalytic Cracking (FCC) is expected to register the highest CAGR as it is crucial for the conversion of heavy crude components into lighter, more valuable products like gasoline and middle distillates, which are increasingly demanded in cleaner fuel formulations. The adaptation of FCC to accommodate bio-feedstocks and its pivotal role in processing complex feedstocks contribute to its rapid growth. Hydroprocessing, encompassing both hydrotreating and hydrocracking, commands the highest revenue within the process segments due to its essential role in removing impurities and enhancing the quality of the final products. Hydroprocessing is extensively utilized in both conventional and renewable fuel production, making it a critical component of modern refineries aimed at producing cleaner fuel options. This process segment benefits from continuous investments in upgrading refinery capabilities to meet stricter environmental standards and fuel specifications.

Geographic Trends in Co-refining Market

The global co-refining market is witnessing varied geographic trends, with significant growth observed across different regions. Asia-Pacific is expected to exhibit the highest CAGR from 2024 to 2032, driven by rapidly expanding industrial sectors, increasing environmental awareness, and supportive government policies promoting renewable fuels in countries like China and India. This region is rapidly adopting co-refining technologies to meet its growing energy needs while reducing environmental impacts. North America, led by the United States, accounts for the highest revenue share in 2023, due to established infrastructure, technological advancements, and stringent regulatory frameworks that encourage the integration of bio-based and recycled feedstocks in traditional refining processes. The robust presence of major oil and gas corporations, coupled with high demand for cleaner fuels, supports North America's dominant position in the market.

Competitive Trends and Key Strategies in the Co-refining Market

In 2023, the competitive landscape of the co-refining market was characterized by the strategic initiatives of major players such as 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 focus on expanding their production capabilities and enhancing their technological bases to support co-refining practices. Key strategies include investments in R&D for more efficient processing technologies and partnerships for securing a diverse range of feedstocks. ExxonMobil Corporation, for example, has been expanding its hydrocracking and hydrotreating capacities to better integrate renewable feedstocks with conventional crude oil. Similarly, Valero Energy Corporation and Marathon Petroleum Corporation are enhancing their FCC capabilities to handle a broader array of bio-based feedstocks. Strategic acquisitions and collaborations are also common, aimed at optimizing feedstock logistics and expanding geographic reach. Looking ahead from 2024 to 2032, these companies are expected to further intensify their focus on sustainability and innovation to align with global shifts towards low-carbon energy sources. This proactive approach is anticipated to help them capitalize on emerging opportunities in renewable fuels and maintain a competitive edge in the evolving market landscape.