Lignofuels Market is Growing at a CAGR of 7.75% (2023-2032): BIS Research

Dec 15, 2023 6:00 PM ET

With a heightened awareness of climate change and environmental degradation, lignofuels emerge as a sustainable solution. They are derived from lignocellulosic feedstocks such as non-food crops, agricultural waste, and forest residue, providing a carbon-neutral or even carbon-negative alternative to conventional fossil fuels. The growing interest in lignofuels is evident in the expanding market, particularly the increased use of wood-based lignocellulosic feedstocks in biofuel production, as seen with Finland’s UPM company.

The global lignofuels market is projected to reach $3.34 billion by 2032 from $1.58 billion in 2022, growing at a CAGR of 7.75% during the forecast period 2022-2032.

Market Analysis: Trends, Data, and Growth Projections

Ongoing research and development efforts have advanced the production processes of lignofuels, enhancing cost efficiency and effectiveness and driving market expansion. Leading-edge technologies in integrated biorefineries, exemplified by the Neste Porvoo Refinery in Finland, showcase the use of lignocellulosic sources for biofuel production. Global supportive policies, such as the U.S. Renewable Fuel Standard (RFS) mandating renewable fuel integration, ensure a stable market for lignofuels. The European Union’s Renewable Energy Directive (RED II) sets renewable energy targets, promoting the adoption of biofuels and lignofuels.

Increasing private and public investments in lignofuel projects spur innovation, with aviation and shipping sectors recognizing lignofuels as a viable and sustainable fuel source. Initiatives like biofuel testing in commercial aircraft by Boeing and Airbus signal a significant move towards sustainable aviation, which is expected to boost lignofuel growth.

BIS Research, a leading market research firm, has released a report titled- Lignofuels Market, which discusses the challenges, growth factors, and future opportunities driving the remarkable growth of the lignofuels market. The detailed study is a compilation of 6 market data tables and 163 figures spread across 202 pages.

Key Players and Market Segments

Some of the prominent producers of lignofuels are:

Gevo, Inc.
Aemetis Inc
BlueFire Renewables
Axens
New Energy Blue, LLC
Enerkem
Praj Industries
Clariant AG
Raizen
Gevo, Inc.
Lessaffre
Ensyn Corporation
Red Rock Biofuels LLC
BlueFire Renewables
American Process
Axens
Enerkem
LanzaTech Global
BlueFire Renewables

The lignofuels market is segmented by end-user, source, processing technology, and region. In 2022, the automotive segment led the market based on end users. The agricultural residue segment is expected to dominate the market during the forecast period (2023-2032) in terms of source. Thermochemical processing technology held the leading position in 2022. Geographically, Europe and China are projected to witness increased traction in the production of lignofuels due to heightened mandates related to ethanol blending in these regions.

Market Drivers, Challenges, and Opportunities

Regulatory advancements, ongoing research, and collaboration between industry leaders contribute to the growth of the lignofuels market. Government policies, particularly in the U.S., categorize biofuels, fostering the development of cellulosic ethanol with price premiums and support from venture capital. Global collaborations, such as the Global Bioenergy Partnership, ensure sustainability criteria, promoting transparency and consistency in the industry. Abundant feedstock from waste and residues contributes to the eco-friendly appeal of lignofuels, emphasizing responsible utilization for both cost benefits and reduced environmental impact.

However, challenges include the slower commercialization of lignofuels due to difficulties demonstrating cost-competitive high-yield production and the gradual upscaling of conversion technology. Managing the daily influx of often contaminated biomass proves intricate, hindering long-term industry growth. Feedstock price variations globally, with feedstock accounting for a substantial portion of production costs, pose additional challenges to the stability of lignofuels.

On the positive side, trade opportunities emerge in advanced biofuel markets, driven by European restrictions on conventional biofuels. Mandates for bioethanol blending, supported by regulatory measures and fiscal incentives globally, create a promising avenue for lignofuels, especially in the transportation sector. The industry faces a dynamic landscape shaped by regulatory support, technological challenges, and evolving market dynamics.

Analyst Note

BIS principal analyst suggests: “Lignofuels, also called 2G ethanol or cellulosic ethanol, is gaining traction in the aerospace industry owing to its increased consumption in sustainable aviation fuel (SAF). The lignofuels market is expected to grow at a higher rate with decreasing costs. Currently, the production cost of lignofuels is high compared to ethanol or first-generation ethanol; however, the cost is expected to decrease with increasing technological advancements.”

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