Pyrolysis Oil Market - Strategic Insights and Forecasts (2026-2031)

The pyrolysis oil market is forecast to grow at a CAGR of 8.3%, reaching USD 1,335.6 million in 2031 from USD 896.6 million in 2026.

Pyrolysis oil is a liquid blend made by rapid quenching or heating of biomass, waste, plastic and other materials in the absence of oxygen. Such oil finds applicability in fuels & chemicals among other usage owing to which they hold high scope of industrial usage. The growing demand for sustainable, energy efficient, cleaner and much greener fuel alternative to traditional fossil fuels ins majorly driving the demand for pyrolysis oil. 

Following this, renewable energy generates over 20% of all U.S. electricity, and that percentage continues to grow. In 2022, annual U.S. renewable energy generation surpassed coal for the first time in history. By 2025, domestic solar energy generation is expected to increase by 75%, and wind by 11%. The following graphic breaks down the shares of total electricity production in 2022 among the types of renewable power:

Another factor that has fueled growth in the pyrolysis oil market has been the increasing prices of traditional fuels and the need to ensure energy security. As the source of energy is indigenous, it becomes a feasible source as countries are looking to reduce dependence on imported fossil fuels. 

Moreover, the demand for sustainable packaging has created the development and launch of such related product solutions. Such as, in October 2023, ICIS became a global source of commodity intelligence, boasting the highest-quality, transparent, and reliable commodity data. It further launched its Pyrolysis Oil Pricing Indexes, intended to fill the growing demand from consumers for the pricing of chemical recycling outputs

What are the Pyrolysis Oil Market drivers?

• The rising demand from heat & power generation sectors has augmented the market growth.

Pyrolysis oil is formed via decarbonization of organic materials which makes them sustainable and low emission producer. And as many industries seek alternative means of sustainable and renewable energies to reduce dependence on fossil fuels, pyrolysis oil owing to their such high-performance feature are acting as an alternative to conventional fuel in heat & power generation.

In addition, concerns over energy security and increasing prices of fossil fuels are pushing for the use of locally produced renewable fuels, such as pyrolysis oil. Biomass sources are widely dispersed, which brings industries closer to generating their energy near the point of demand, reducing their dependence on imported fuels and enhancing energy security. In 2023, biomass consists of about 5% of U.S. total primary energy consumption. Biomass is applied both in heating and electricity production and as a transportation fuel. It is an important fuel in most countries, especially in developing countries, for cooking and heating.

Moreover, as per the India Climate and Energy Dashboard, in 2022-23 the electricity generation was 16,17,723 MU which surged to 17,34,375 MU in 2023-24. 

• Strategic collaboration in waste recycling is stimulating the market expansion.

Pyrolysis in comparison to landfill for treatment is much environment friendly and increases the scale of waste recycling. Since major industrial waste comprises on unprocessed plastic, biomass, and rubber among others, the demand for converting such materials in recycled fuel has resulted in various collaborations and pilot projects. 

For instance, in September 2024, APChemi in collaboration with U.S Department of State’s Bureau of Educational & Cultural Affairs organized a workshop which aimed to explore the possibilities of pyrolysis technology in waste recycling and their advancement in plastic waste conversion. 

Likewise, in October 2023, OMV formed a collaboration with Wood for the commercial licensing of former’s patented “ReOil” chemical recycling technology which converts waste into pyrolysis oil. The collaboration would enable the supply pyrolysis oil as a replacement for conventional feedstock for the production of sustainable & high-performance plastic. 

Pyrolysis Oil Market Restraints:

• Technical complexities regarding production and usage can hamper the market expansion

Pyrolysis oil has provided a new scope for the usage of sustainable oil in power generation, however, in order to achieve the required performance & functionality various technical aspects relating to waste recycling, decarbonization and breaking on molecule needs to be determined. Hence, fulfilling such technical requirements can be challenging given the oil must meet the required industrial as well sustainable standards. This will pose a challenge for the market growth. 

Segment analysis of Pyrolysis Oil Market:

• Fuel, based on application will constitute a considerable market share.  

By application, fuel is projected to hold a significant share of the market and is poised for a positive expansion, since pyrolysis oil relatively finds applicability as fuel in replacement for furnace oil in the industrial application. 

The various heavy industries using it consume a high amount of such oils for heating construction, steel, glass, cement, power, and boiler heating. This application offers a potential solution to mitigating greenhouse gas emissions and improving energy security using sustainable alternatives to traditional fossil fuels. The production of pyrolysis for transportation fuel is rapidly developing, spurred as well by the increasing focus on reducing carbon footprints and the implementation of renewable fuel standards and policies. Biofuels accounted for almost 6% of energy use in the transportation sector within the United States.

Such large amount of fuel is consumed in many industrial applications, such as power, industrial boilers, diesel engines, and power generation with gas turbines, hence the possible demand for pyrolysis oil-based fuels is anticipated to rise during the forecast period. Moreover, one of the major uses for pyrolysis oil is as fuel in various industries, with values having been put against it that are between 50 and 70% that of fuels produced from petroleum. Pyrolysis oil is now renewable and converted to transport fuel or as fuel for boilers.

What are the key geographical trends shaping the Pyrolysis Oil Market:

• North America will constitute for a considerable share during the forecast period.

Geographically, the pyrolysis oil market has been segmented into North America, South America, Europe, the Middle East, Africa, and the Asia Pacific. 

During the forecast period, the North American region is anticipated to show significant growth fueled by the growing demand for sustainable fuel for industrial application, investment in waste recycling and expansion of new applications in major regional economies namely the United States and Canada.

Likewise, cooperation among relevant stakeholders’ technology providers, waste management companies and energy producers are key in supporting the market growth of pyrolysis oil from plastic waste. For instance, Nexas Circular and LyondellBasell collaborated in February 2023 for the supply of 24,000 tons of recycled feedstock per year. The source for this will be Nexus Circular's new recycling facility, which is expected to be developed beginning this year.

Further, pyrolysis oil is primarily utilized in the United States for purposes like boiler combustion, engine and turbine fueling, transportation fuel upgrading, and as a renewable feedstock for materials and chemicals. The overall supply of renewable diesel has also grown as a result; for example, it went from 17,35,591 gallons in 2021 to 27,46,992 gallons in 2023.

Recent development in the Pyrolysis Oil Market:

• In April 2024: Neste Corporation concluded the trial run made from the discarded car and truck tires. The objective of the pilot run was to analyze the possibility of converting waste streams in high-quality products for chemical and other industrial applications, and moreover the chemical recycling of discarded tires keeps valuable materials in circulation. 

• In January 2024: Shell Chemicals formed a collaboration with Braskem to expand the latter’s production of polypropylene. Hence Shell will provide its highly processed pyrolysis oil which will be used to produce high quality feedstock that will replaced conventional virgin fossil feedstock. 

Pyrolysis Oil Market Scope: