Bio-Based Chemicals Market size is forecast to reach $106 billion by 2025, after growing at a CAGR of 10.6% during 2020-2025. Strict government regulations concerning the use of synthetic chemicals in developing countries play a vital role in the growth of the global demand for bio-based chemicals. For instance, in 2017, the US adopted the Renewable Chemicals Act, which gives a 15%-pound tax credit to manufacturers that manufacture bio-based chemicals. The growing number of lignocellulosic biorefineries is expected to create lucrative opportunities for the players operating in the global bio-based chemicals market over the forecast period. In addition, an increasing focus on optimizing production costs through technological innovation is a current market trend.
Type - Segment Analysis
The bio-alcohols segment held the largest share in the bio-based chemicals market in 2019, owning to the wide-ranging adoption of bioethanol in industrial as well as potable applications. Bio-ethanol’s industrial uses include the manufacture of flavors and aromas, medicinal formulations, and formulations for cosmetics and personal care. The rising use of bio-based alcohols in the food & beverage industry is also driving the global demand for bio-based chemicals. In addition, the growing demand for bio-based lubricants in the automotive and transport sectors also boosts the growth of the bio-based chemicals market.
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Application - Segment Analysis
Industrial chemicals held the largest share in the bio-based chemicals market in 2019 and is growing at a CAGR of 11.2%, owning their vast demand from various end-use applications, such as engineered polymers, composites, additives and others. Due to its wide range of applications, such as biopesticides and biofertilizers, the agricultural segment is also expected to grow at a significant CAGR during the forecast period. The rising demand for high crop yields and disease-free crops are driving the market. In addition, the growing demand for pharmaceuticals and personal care products is expected to accelerate the market for bio-based chemicals. A further driving factor for the market is the use of bio-based chemicals as a food supplement and nutrient. Among others, the stringent government regulations against synthetic chemicals such as the Bio-Preferred Program and Registration, Evaluation & Authorization of Chemicals (REACH) favor product demand. Increasing trend in the use of biofuels in the automotive industry to reduce the use of crude oil also propels demand for bio-based chemicals. Bio-based chemicals-based plastics are widely used in packaging of food products such as vegetables, meat, and confectionery products. Bio-based chemicals are also used as building blocks for bio-based plastics synthesis and other components such as coatings, paints, and adhesives. In addition, bio-based chemicals can be used as a replacement for highly concentrated toxic chemicals, such as plasticizers based on phthalates and toluene.
Geography - Segment Analysis
Europe held the largest share in the global Bio-Based Chemicals Market in 2019 up to 30%, owing to the depletion of natural resources, rising prices of crude oil, and environmental policies rolled out by governments in the region. In April 2019, the governments of Poland, the Czech Republic and Slovakia decided on a joint agreement to promote bio-fuels production. In addition, the sustainable development goals set by the European Union to reduce greenhouse gas emissions by 40% and save on energy expenses by 27% by 2030 is expected to create various opportunities for the bio-based chemicals market.
Drivers – Bio-Based Chemicals Market
Increasing bio-alcohol demand
Bio-alcohols, especially bioethanol, are widely used in the food and beverage industry. In the production of alcoholic beverages such as vodka, brandy, gin, rum, whiskey, tequila, liqueurs, fortified wine, unfortified wine, and beer, it is used as an intoxicant in varying amounts. In addition, bioethanol is also used to extract and absorb flavors and aromas which are then used in the food & beverage industry as a flavoring agent. The global market for alcoholic beverages is seeing significant growth due to increasing alcohol consumption around the globe. With the growth of the market for alcoholic beverages, demand for bio-based alcohol will rise, which in turn will fuel market growth over the forecast period. Furthermore, the blending of bioethanol with petrol as a source of fuel is likely to spark and achieve climate goals. In April 2019, Enerkem, a Canadian biofuel producer, received $5.6 million in funding for developing sustainable facilities in Canada and the Netherlands. This is demonstrated by the United States government’s implementation of the Renewable Chemicals Act in 2017, which gives a tax credit to bio-chemical manufacturers. Alternative energies such as wind, geothermal, and solar cannot be used on a large scale, but because of its reliability biodiesel as a fuel can be used on a large scale and can be used easily in diesel engines with slight engine modifications. This would also give the bio-based chemicals industry a boost to growth.
Favorable government policies
Government initiative such as Energy Independence and Security Act (2007) by the U.S. Congress, which stated to increase the production of clean renewable fuels and the U.S. Energy Policy Act (2005), which stated petroleum distributors to add ethanol to gasoline are driving bio based chemicals market growth. In addition, growing environmental concerns with the dumping of non-biodegradable plastics in landfills and government regulations to ban conventional plastics are also contributing to bio-based chemicals market growth. In May 2019, the house representatives of Nigerian banned the import, usage and production of plastic bags in the country. In October 2017, Cambodia enforced tax on plastic bags. In January 2017, large retailers are required to charge the customers for plastic bags with handles in Israel. In 2018, Taiwan announced its strategy to ban petroleum-based plastics in stores by sticking prohibition in offering bags at stores in 2020, increasing the price in 2025 and then finally by 2030 total ban of petroleum-based bags. In December, 2015 the United States Food and Drug Administration (FDA) amended the Federal Food, Drug and Cosmetic Act (FD&C Act) by passing the Micro bead-Free Waters Act, which prohibits the manufacturing, packaging, and distribution of rinse-off cosmetics containing plastic micro beads. The Unites States Department of Agriculture (USDA) is Certifying various bio-based Product label, as a market development initiative to increase consumer and buyer recognition, which will further lead to increasing adoption of bio products. Therefore, these initiatives are driving bio based chemicals market growth.
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Challenges – Bio-Based Chemicals Market
High cost compared to conventional chemicals
The price volatility of raw material prices may hamper the market’s growth to some extent in the near future. The major factor limiting the growth of the bio-based chemicals market is the high cost of raw materials, along with cost competition from conventional chemicals. This aspect restricts the widespread adoption of these naturally sourced products, thus inhibiting market growth. Additionally, the lack of raw materials & feedstock supply chain model along with low level of acceptance in bio-pesticides is also limiting market growth. In addition, the factors such as the food safety issues due to the significant climatic changes are also expected to delay the market growth.
Market Landscape
Technology launches, acquisitions and R&D activities are key strategies adopted by players in the Bio-Based Chemicals Market. In 2019, the market of Bio-Based Chemicals Market has been consolidated by the top five players accounting for xx% of the share. Major players in the Bio-Based Chemicals market are Mitsubishi Chemical Corporation, Mitsui Chemicals Inc., Corbion NV, BASF SE, BioAmber Inc., Braskem, Methanex, Novozymes A/S, BEWiSynbra Group AB, and PTT Global Chemical Public Company Limited, among others.
Acquisitions/Technology Launches
In 2017, Virent Energy Systems, Inc., collaborated with U.S. refinery, Tesoro Company, to expedite the processing technology of Bio-Based Chemicals and fuels.
Key Takeaways
With growing support from governments for biobased chemicals and the implementation of legislation, the use of biobased materials is expected to grow in the industrial chemical, agricultural, pharmaceutical and energy sectors.
In addition, various environmental issues about exposure to harmful chemicals and the rapid depletion of fossil fuels contribute to increased production of bio-based chemicals.
Growing policy measures to encourage green chemistry and business sustainability programs such as banning plastic bags in their regions and limits on the free distribution of disposable bags also lead to market growth.
However, operations in various industries such as automotive, chemical, and so on is being significantly affected due to the COVID-19 epidemic, as most of countries have issued “stay at home guidance” i.e., lockdown. And it is expected that the outbreak of COVID-19 will be seen in the whole year of 2020, and a few months in 2021. Therefore, this factor is limiting bio-based chemicals market growth,
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