Co-refining Market to Hit $73 Billion by 2034: What’s Driving the Growth?

The global co-refining market, valued at US$ 39.7 billion in 2023, is on track to reach US$ 73.0 billion by 2034, expanding at a compound annual growth rate (CAGR) of 6.0% from 2024 to 2034. This growth trajectory is driven by the mounting pressure on industries and governments to shift toward low-carbon technologies, along with increasing investment in biofuels and sustainable refinery practices.

Request a Sample Report Copy

What Is Co-refining?

Co-refining, or co-processing, refers to the process of converting both traditional crude oil and renewable or alternative feedstocks—such as used cooking oils, animal fats, biomass, and waste plastics—within the same refinery infrastructure. The aim is to produce fuels like biodiesel, bioethanol, and sustainable aviation fuel (SAF) while minimizing the carbon footprint and leveraging existing oil refining assets.

Transitioning Toward a Low-carbon Economy

A critical factor propelling the co-refining market is the global energy transition. As nations strive to limit global warming to 1.5°C and ultimately reach net-zero emissions, co-refining is emerging as a practical and scalable solution. Unlike fully renewable refineries, which require significant capital investment and time to construct, co-refining allows traditional refineries to gradually pivot toward sustainable fuel production.

Governments and multinational corporations are setting ambitious decarbonization goals. For instance, the European Commission awarded nearly €720 million to renewable hydrogen projects in 2024, and the U.S. Department of Energy pledged $7 billion toward regional hydrogen hubs. These initiatives complement co-refining efforts, especially when renewable hydrogen is used as part of the fuel processing chain.

Biofuels: A Catalyst for Market Growth

The rise of biofuels, particularly hydrogenated vegetable oil (HVO) and bioethanol, is reinforcing the relevance of co-refining. According to the International Energy Agency (IEA), 2022 marked a decade-high in biofuel capacity additions, and the trend continues upward. Biofuels offer a pathway to reduce greenhouse gas emissions from sectors that are difficult to electrify, such as aviation, maritime, and long-haul freight.

Refineries worldwide are leveraging co-processing to meet the surging demand for SAF and other low-emission fuels. One notable example is Satorp, a Saudi Aramco and TotalEnergies joint venture that in 2023 successfully produced SAF by co-processing used cooking oil at its facility in Jubail.

Technological Innovation in Co-refining

Advanced processing techniques are crucial in enabling the co-refining of diverse feedstocks. Technologies such as:

• Hydroprocessing: Ideal for upgrading bio-crude to transportation fuels.
• Catalytic Cracking and Fluid Catalytic Cracking (FCC): Useful for breaking down heavy hydrocarbons and integrating plastic waste streams.
• Hydrotreating and Hydrocracking: Effective for removing contaminants and maximizing fuel yield.

These methods allow companies to integrate renewable inputs without overhauling existing refinery systems, thus reducing the entry barrier for co-refining initiatives.

Regional Spotlight: Europe Leads the Charge

Europe dominated the global co-refining market in 2023 and is expected to maintain its lead. With strong policy frameworks, climate mandates, and public-private partnerships, the region is investing heavily in biofuels, carbon capture and storage (CCS), and hydrogen infrastructure.

According to the IEA, the EU-27 supplied 16 million tons of oil equivalent in biofuels in 2020, accounting for 6.3% of total transport fuel consumption. Projects like COREu, Europe’s largest CCS research initiative launched in 2023, underscore the region’s commitment to integrated decarbonization strategies.

Key Players and Strategic Moves

Prominent companies in the co-refining sector include ExxonMobil, Saudi Aramco, Valero Energy Corporation, Bharat Petroleum Corporation Limited, and Marathon Petroleum Corporation, among others. These firms are actively developing infrastructure for the co-processing of sustainable feedstocks and exploring strategic partnerships.

In April 2024, Meridian Energy Group Inc. announced its refinery in North Dakota would be capable of co-processing up to 4,000 barrels/day of vegetable oil, demonstrating the growing industrial appetite for hybrid refining solutions.

Looking Ahead: A Strategic Imperative

As the world edges closer to critical climate deadlines, co-refining is no longer just an option—it's a strategic imperative. The ability to use existing refinery assets to process renewable feedstocks positions co-refining as a key technology in the energy transition playbook.

With strong government backing, rapid biofuel adoption, and continuous process innovation, the co-refining market is poised for robust, long-term growth. As 2034 approaches, stakeholders across the value chain—from policymakers to petrochemical giants—must align efforts to fully unlock the market’s potential and meet global sustainability goals.