Biorefineries in Europe: market outlook, drivers and the road to 2030

31/03/2026

A turning point for Europe’s bio-based economy

Biorefineries are no longer a niche concept. They are becoming central to Europe's strategy for a climate-neutral, circular economy. The next decade will bring accelerated investment, technological breakthroughs, and structural transformation across bio-based value chains.

Regulatory pressure is mounting. Sustainability expectations are rising. Geopolitical instability is pushing energy independence higher on the agenda. All of this is converging to create a perfect storm of opportunity for biorefining in Europe.

But the landscape is complex. Feedstock availability is limited. Capital expenditure is high. Technology maturity varies widely. Value-chain integration is essential. To navigate this terrain successfully, we need to understand the regulatory drivers, regional strengths, technological pathways, and economic conditions shaping the sector's future.

The current biorefining landscape

Europe's biorefining sector is diverse. It spans lignocellulosic conversion, thermochemical processes, sugar-based fermentation, anaerobic digestion, and emerging CO₂-based pathways. Each pathway has distinct feedstock requirements, technology readiness levels, and capital intensity.

As Riina Brade, expert at AFRY, describes, feasibility depends heavily on both feedstock availability and the maturity of the underlying technology. CAPEX varies substantially:

High: thermochemical and CO₂-based technologies
Medium to high: lignocellulosic and fermentation technologies
Lower: well-established anaerobic digestion

The complexity of these value chains means investors and project developers must secure operational frameworks early. This includes feedstock contracts, logistics, permitting, technology licensors, and offtake agreements. Understanding the full pathway from resource availability to final product blending with offtake LOIs becomes critical for project bankability.

EU regulatory drivers shaping market growth

EU regulation is the strongest accelerator for biorefinery investments. Several major frameworks define demand and create binding market pull.

RED III (Renewable Energy Directive) sets a 29% renewable energy target in transport by 2030, with a 5.5% minimum target for advanced biofuels and RFNBOs, including at least 1% synthetic fuels.
ReFuelEU Aviation mandates SAF blending, starting at 2% and rising to 6% by 2030. This drives massive demand for HEFA, BtL, and PtL fuels.
FuelEU Maritime (EU 2023/1805) mandates increasing GHG intensity reductions for maritime fuels toward 2050.
IMO GHG Strategy reinforces long-term decarbonization pressure across global shipping.

These frameworks collectively multiply the investment need, particularly for advanced biofuels and e-fuels for aviation, heavy-duty transport, and maritime sectors. The regulatory trajectory ensures that biorefineries are not only relevant but essential for the EU's decarbonization strategy.

Growth outlook in Europe toward 2030

Market projections show rapid acceleration. EU investment needs for biofuels alone run into the tens of billions of euros over the coming decade. Global SAF demand could require up to 400 new plants and USD 650 billion in investment by 2050.

AFRY estimates a 19% annual growth rate for advanced biofuels in EU road transport by 2030.

The focus is shifting sharply from first-generation ethanol to advanced, residue-based and waste-based fuels. This includes lignocellulosic biofuels, HVO, BtL, FT, and synthetic fuels. Drop-in fuels represent the most attractive category because they fit into existing infrastructure and require no changes to engines or distribution systems.

Biomethane shows strong growth potential in heavy-duty transport, industry, and maritime sectors.

Regional strengths: why the Nordics are leading

Finland and Sweden represent two of the most dynamic biorefinery markets in Europe. Approximately 75 to 80 projects are in the pipeline across the two countries.

Sweden has strong activity in renewable diesel (HVO), gasification-based BtL, and BECCS-related biogenic CO₂ utilization. Finland stands out in e-fuel development, especially e-methane and e-methanol, alongside a strong HVO base.

Both markets benefit from deep integration with the forestry industry, enabling lower CAPEX, shorter implementation timelines, and robust innovation ecosystems.

This industrial integration is a major competitive advantage. It allows Nordic biorefineries to utilize existing infrastructure, waste streams, and energy systems, ultimately supporting faster scaling and cost reductions.

Most competitive technology pathways and products

Several pathways show particularly strong competitiveness and investment momentum.

Advanced biofuels from lignocellulosic biomass, waste streams, and residues offer strong GHG savings, no competition with food, and alignment with EU biomass potential.
HVO and drop-in fuels (HVO, BtL, FT, PtL) are compatible with existing fuel infrastructure. They are critical for heavy-duty transport and aviation.
SAF is essential for aviation, where there is no near-term alternative to liquid fuels. HEFA is currently the most cost-effective pathway.
Synthetic RFNBO fuels are strongly supported by EU policy for aviation and maritime sectors.
Biomethane is central to the EU biogas strategy and attractive for both industrial and transport applications.

Focusing on integrated biorefineries that combine biofuels with biochemicals and other value-added products creates the strongest economic resilience and resource efficiency.

Technology development focus areas

Europe's competitiveness relies on accelerating innovation in key areas:

CO₂ recycling for producing e-fuels and synthetic chemicals
Catalyst development to enhance yields in HVO and FT
PtL (Power-to-Liquid) technologies for aviation and maritime transport
HTL (Hydrothermal Liquefaction) for wet biomass without drying
Advanced fermentation of lignocellulosic feedstocks
Algae cultivation for high-value products, despite current OPEX challenges

Brade highlights that combining biofuels with electrification can create hybrid solutions offering flexibility, efficiency, and low-carbon performance for heavy and maritime transport.

Global competition and strategic positioning

Europe faces increasing competition from North America, where policy incentives and biomass availability drive rapid SAF and HVO expansion. Brazil has biomass abundance and competitive production. Asia is investing heavily in emerging conversion technologies.

To maintain its competitiveness, Europe must combine strong regulatory frameworks with technological innovation and targeted investment incentives. Europe's competitive advantage increasingly lies in integration, sustainability performance, circularity, and high-value co-products.

The road ahead

Biorefineries are at the heart of Europe's bioeconomy and climate strategy. The coming years will see rapid expansion driven by regulatory mandates, advanced technology pathways, and strong market demand for sustainable fuels, particularly SAF, HVO, biomethane, and e-fuels.

However, success hinges on the EU's ability to scale technology, secure sustainable feedstocks, ensure investment stability, and leverage regional strengths such as the Nordic innovation ecosystems. With tens of billions in investment required and over 75 projects already underway in Finland and Sweden alone, the road to 2030 is one of both immense opportunity and strategic urgency.

Europe is well-positioned to lead, if it continues to invest in the right pathways, enable integrated value chains, and support first-of-a-kind projects that will define the next generation of biorefineries.