Produced from organic feedstocks through advanced bio-refining processes, bio-based naphtha offers numerous applications across various industries. These include petrochemicals, plastics, and biofuels. The eco-friendly liquid fuel also contributes to a reduced carbon footprint and an environmentally conscious future. As per Inkwood Research, the global bio-based naphtha market is anticipated to record a CAGR of 17.07% in terms of revenue and 16.19% in terms of volume during the forecast period, 2023 to 2032.
With the rise in measures to encourage bio-based products’ use, businesses and consumers are increasingly prioritizing environmentally responsible practices. For example, the BioVerno Naphtha by UPM Corporation (Finland) is a sustainable alternative for replacing fossil raw materials in chemical production. Its lower carbon footprint and decreased reliance on finite resources help industries minimize their environmental impact.
Furthermore, several regions globally have implemented a number of regulations for sustainability and renewable energy, which has further increased the demand and adoption of bio-based naphtha.
These include –
- United States: In the United States, the Renewable Fuel Standard (RFS) mandates the blending of biofuels, including bio-based naphtha, into transportation fuels to reduce greenhouse gas emissions. Essentially, the national policy requires a certain volume of renewable fuel to reduce or replace the quantity of petroleum-based transportation fuel, jet fuel, or heating oil.
- European Union: With several initiatives to encourage the use of bio-based products, the Europe bio-based naphtha market is set to dominate the the global market. The region has also implemented numerous regulations for sustainability and renewable energy management. For example, The Bioeconomy Strategy, as well as the Renewable Energy Directive (RED), provide clear criteria and encourage the use of renewable feedstocks. In this regard, the Renewable Energy Directive (RED) sets targets regarding the use of renewable energy in fuels, thus promoting the adoption of bio-based naphtha.
- Brazil: In an effort to increase the use of biofuels, while reducing greenhouse gas emissions, Brazil’s energy ministry launched its national biofuels policy, RenovaBio, in 2018. The key concept of RenovaBio is to reduce carbon emissions and improve the life-cycle performance of biofuels through a carbon credit market. Moreover, it also incentivizes the production and use of bio-based fuels, including naphtha, through decarbonization credits.
- India: In India, the National Policy on Biofuels encourages the production and use of biofuels to reduce fossil fuel dependence and mitigate environmental impacts. The policy aims to utilize, develop, and promote domestic feedstock and its usage in the production of biofuels. While contributing to national energy security, it also helps in creating new employment opportunities.
- Australia: Australia’s renewables deployment has a positive outlook given the success of rooftop solar, ambitious targets, as well as increased funding at federal and state levels. Furthermore, in addition to passing the Climate Change Act in 2022, Australia also aims to increase the share of low-carbon power generation by 2030 – with 82% derived from renewable sources, thus influencing the demand for bio-based naphtha as a feedstock.
- Japan & Germany: Feed-in Tariff (FIT) is designed to support the development of renewable energy sources by offering a guaranteed, above-market price for producers. The policy also provides incentives for renewable energy generation, fostering the development of bio-based fuel and chemical production, including naphtha. Although common in the United States, FITs are used most notably in Japan and Germany.
In all, the aforementioned regulations reflect the global effort to transition towards sustainable and green energy sources. With a strong focus on reducing carbon emissions and promoting the use of renewable feedstock, these sustainable initiatives are set to play an essential role in boosting the global bio-based naphtha market growth during the forecast period.
By Akhil Nair
Bio-based or renewable naphtha is typically produced through processes like pyrolysis, gasification, or bio-refining, where biomass feedstocks are converted into liquid hydrocarbons.
Euglena Co Ltd, ENI Spa, Phillips 66, etc., are among the top companies operating in the global bio-based naphtha market.