The development prospects of pyrolysis oil refining are generally promising

The development prospects of pyrolysis oil refining are generally promising. Its core drivers come from the circular economy and dual-carbon policies, coupled with technological iterations and the global demand for treating organic wastes such as waste plastics and waste tires. The market scale is poised for steady expansion, yet it still faces multiple challenges spanning technology, cost, environmental protection, and policy compliance. The analysis is carried out from four aspects: core drivers, market potential, key challenges and future development paths as follows:

I. Core Development Drivers

Policy and Environmental Benefits

Countries around the world have tightened policies on solid waste treatment and renewable energy, such as China’s dual-carbon goals, the EU’s Circular Economy Action Plan, and the U.S. Renewable Fuel Standard (RFS). Pyrolysis technology, characterized by "waste-to-energy conversion", has been included in the list of advanced technologies and become the preferred solution for the ultimate disposal of waste plastics and waste tires.

Resource Recycling and Market Demand

This technology can process a variety of organic wastes including waste tires, waste plastics and waste engine oil. While solving environmental problems like "white pollution" and "black pollution", it produces valuable products such as fuel oil, carbon black and combustible gas, which can replace part of crude oil resources and effectively ease the pressure on traditional fossil energy supply.

Technological Innovation Breaking Bottlenecks

Continuous pyrolysis processes, anti-coking and anti-polymerization technologies, and intelligent temperature control systems are maturing, which significantly improve the yield of pyrolysis products and the stability of system operation while reducing equipment operation and maintenance costs. Meanwhile, advanced technologies for deep purification of tail gas, zero-discharge treatment of wastewater and high-value utilization of residues have been upgraded, driving pyrolysis projects to form an environmental protection closed loop and further enhancing the feasibility of project implementation.

II. Market Scale and Regional Pattern

The global pyrolysis oil market is expected to maintain a compound annual growth rate (CAGR) of 9.3% from 2025 to 2033, with its market size surging from $4.2 billion to $8.7 billion. Among all regions, Europe boasts the fastest growth rate (a CAGR of 10.5%), thanks to its stringent environmental policies and well-established circular economy system. The Asia-Pacific region has become the world’s largest pyrolysis oil refining market driven by the massive waste treatment demand brought by rapid industrial growth and strong policy support from various countries, with China and India emerging as the core growth engines in this region.

III. Key Challenges

Technical Threshold Restrictions

Coking, uneven product composition and high system energy consumption remain core pain points in the technological upgrading of the industry. In addition, small and medium-sized projects feature low automation, resulting in insufficient production efficiency and unstable product quality, which are difficult to meet the requirements of large-scale application.

Cost and Profitability Pressures

The costs of raw material collection, drying and transportation account for a relatively high proportion of the total project cost. Unstable raw material supply or excessive price fluctuations will directly affect project profitability. Moreover, small and medium-sized projects lack economies of scale, leading to weak cost competitiveness compared with products such as traditional refined oil and renewable diesel.

Strict Environmental Compliance Requirements

Tail gas VOCs, acidic gases generated during pyrolysis, and oily wastewater produced in the condensation process all require advanced treatment to meet emission standards, which substantially increases the environmental protection investment of projects. Environmental supervision in some regions continues to be tightened, and non-compliant projects face the risk of being shut down.

Complex International Market Access

International market access standards such as EU CE certification and U.S. EPA certification involve complicated procedures and strict requirements. Enterprises need to invest a great deal of time and capital in certification preparation, which increases compliance costs and cycles for the export of pyrolysis equipment and technologies.

IV. Future Development Paths

Technological Upgrading Directions

First, move towards large-scale and continuous operation by adopting modular equipment to expand raw material processing capacity and reduce unit production costs; promote intelligent control and remote operation and maintenance systems to minimize manual intervention and energy consumption. Second, drive high-value utilization of products by optimizing fractionation processes and hydrofining technologies to upgrade pyrolysis oil into high-value chemical raw materials such as gasoline, diesel that meet National VI standards and aromatic hydrocarbons, thereby increasing product added value. Third, strengthen low-carbon synergy by integrating carbon capture, utilization and storage (CCUS) technologies and matching with clean energy supply such as photovoltaic and wind power to reduce project carbon intensity and meet the requirements of the global carbon market.

Compliance and Risk Management

Proactively align with international environmental standards, such as the EU Regulation 2019/904, improve the emergency plan, emergency drill and emergency supplies management system of projects to ensure accident prevention and compliance with emission standards. Lay out international product certification and management system certification in advance, such as CE certification and ISO 14001 environmental management system certification, to meet the access requirements of target markets and reduce risks caused by international trade barriers.

V. Prospect Judgment and Suggestions

Short-term (1–3 years)：Driven by policies, pilot projects will be launched intensively across regions. The maturity of technology and cost control capabilities will become the core factors determining project success. Enterprises should prioritize the layout in areas with concentrated production of waste tires and waste plastics, such as around industrial parks and logistics hubs.

Medium-term (3–5 years)：Economies of scale will gradually emerge. Leading enterprises will expand their market share by virtue of technological advantages and industrial chain integration capabilities, and the industry concentration will be significantly improved. Small and medium-sized enterprises need to seek survival space through differentiated technological R&D or cooperative model innovation.

Long-term (5+ years)：Pyrolysis will become one of the mainstream paths for the resource utilization of organic wastes, and be deeply integrated with the refining, chemical and petrochemical industries to form a low-carbon circular industrial ecosystem of "waste recycling — pyrolysis oil refining — product deep processing".

It is recommended that enterprises focus on technological iteration to achieve cost reduction and efficiency improvement, strengthen the construction of raw material supply systems to ensure stable input, improve compliance management systems, prioritize the development of regional markets with strong policy support and abundant raw material resources, and lay out international certification in advance to expand overseas business.