Green Chemicals Market Revenue to Cross USD 274.2 Billion, Globally, by 2032

Introduction

The global green chemicals market, valued at USD 100.9 billion in 2022, is projected to grow to USD 274.2 billion by 2032, at a compound annual growth rate (CAGR) of 10.8%. This growth is driven by increasing awareness of environmental sustainability, stricter government regulations, and rising consumer demand for eco-friendly products across various industries, including automotive, agriculture, pharmaceuticals, and construction.

Green chemicals, produced from bio-based materials like plants, algae, and bio-waste, offer a lower environmental impact and reduced toxicity throughout their life cycle. Regulatory frameworks such as the European Union’s REACH law, which limits the use of hazardous chemicals, are accelerating the shift towards green chemistry, particularly in regions like Europe and North America. The bio-alcohols segment, which includes bioethanol, is expected to dominate the market due to its applications in transportation and energy sectors, holding a significant market share in 2022. Bio-polymers are also witnessing strong growth, driven by their use in packaging and agriculture as industries move toward biodegradable and sustainable alternatives to plastics.

However, the market faces challenges such as high production costs associated with advanced technologies required for green chemical production. The costs of catalysts, energy, and infrastructure make these products more expensive than their traditional counterparts, which could slow adoption, particularly in cost-sensitive markets. Furthermore, inconsistent regulatory support across different regions and a lack of widespread consumer awareness of the benefits of green chemicals also pose barriers to market growth.

Recent developments indicate increased investment in research and development for bio-based materials and government initiatives promoting the use of green chemicals. In addition, as industrial sectors such as construction, pharmaceuticals, and food and beverages strive to reduce their environmental footprints, demand for green chemicals continues to expand. The Asia-Pacific region is anticipated to show rapid growth, bolstered by rising environmental consciousness and supportive government policies aimed at reducing the use of non-degradable plastics.

Recent developments in the green chemicals market, focusing on key companies such as Apis Flora, Herb Pharm LLC, Bee Health Limited, and YS Organic Bee Farms:

Apis Flora (Brazil) has been actively expanding its product range, with a focus on propolis and other natural-based products. In 2023, the company launched a new line of eco-friendly products targeting the cosmetics and healthcare sectors, leveraging the growing demand for bio-based ingredients.

Herb Pharm LLC (United States) has increased its investments in sustainable extraction technologies. The company introduced an innovative bio-based solvent extraction process in 2022, aimed at reducing its carbon footprint. This initiative aligns with Herb Pharm’s commitment to green chemistry principles.

Bee Health Limited (United Kingdom) has been expanding its market presence through acquisitions. In 2023, Bee Health Limited acquired a smaller UK-based organic skincare company to enhance its product offerings in the bio-based cosmetics sector. This strategic move is expected to drive growth in the European market, where demand for natural products is increasing at a CAGR of 5.1%.

Organic Bee Farms (United States) launched a new range of propolis-based health supplements in 2023, focusing on the nutraceutical market. With rising consumer awareness of immune health and natural remedies, this product launch is aimed at capitalizing on a segment growing at a CAGR of 5.26% through 2029.

Sustainability Initiatives: Across the industry, companies have been adopting greener technologies, such as supercritical CO2 extraction methods, to reduce environmental impact. These advancements are part of the broader industry trend toward minimizing toxic chemical use, in response to increasing regulatory pressures in the European Union and North America.

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Key Takeaways

• Market Size: The global green chemicals market is expected to witness a compound annual growth rate (CAGR) of 10.8% from 2023 to 2032.
• Market Trend: Green chemicals, driven by the focus on sustainability and environmental concerns, have been gaining remarkable popularity across various industries.
• Product Type Analysis: Of these, the bioalcohol segment emerged as the most profitable in the global green chemical market, commanding a market share of 38% in 2022. Its projected CAGR is estimated to reach 11.2%.
• By Source Analysis: The market is categorized by source into plant-based, algae-based, bio-waste, and other sources. Among these, plant-based green chemicals dominated, holding the largest market share.
• End User Analysis: Of these, the construction segment held a 30.5% share of the total market for green chemicals in 2022. It is expected to maintain a CAGR of 11.6% during the forecasted period.

Green Chemicals Statistics

• Around a third (currently increasing, around 40%) renewable
• Green fertilizers: Around 50% of worldwide grey hydrogen production is currently used for ammonia.
• Hydrogen is an established product. 70 million tonnes of hydrogen are produced today. With a cost per tonne of 1,000 to 1,500 $/tonne, this amounts to a market of roughly 100 billion dollars per year.
• Since 1950, global chemical production has risen 50-fold to keep pace with the demands of a growing human population (currently 7.7 billion).
• Scientific and media reports continue to heighten public concerns. For instance, the UN/WHO highlighted 12.6 million deaths per year from environmental chemical pollution.
• The European Union aims to achieve 50% recycling for household waste by 2020.
• The UK currently recycles 45.2%. We advocate 100% recycling of all solid waste, which, importantly, would permit the cessation of landfilling.
• Improved separation and processing of wastes will be required, facilitated by much stronger incentives and regulations to help achieve 100% separation at source.
• Its effectiveness in the former context is illustrated by the plastic bag charge, which has reduced use by 85% in the UK
• Hospitals implementing environmental initiatives in operating rooms saved more than $53 million in aggregate in 2018, with a median savings of over $100,000 per facility.
• 43% of hospitals in the data set now generate or purchase renewable energy as some portion of their energy portfolio.
• Of the 287 facilities indicating they had a sustainability lead at the health system level, 89% of the roles were full-time.
• 72% of hospitals in the data set have implemented a facility policy or commitment to design and construct all new buildings and/or major renovations to LEED (or another green building) design standards.

Emerging Trends

• Rise of Bio-based Plastics: The shift toward biodegradable and renewable plastics is gaining momentum, particularly in packaging and consumer goods. Bio-polymers like polylactic acid (PLA) and bio-polyethylene are increasingly favored as alternatives to traditional plastics, driven by rising demand for eco-friendly packaging solutions and regulatory efforts to reduce single-use plastics.
• Increased Focus on Circular Economy: Green chemicals are playing a significant role in promoting the circular economy. Companies are increasingly looking to design products that can be reused, recycled, or composted. This trend encourages waste minimization and the reuse of bio-based materials, reducing the environmental footprint of chemical production.
• Expansion in Agriculture and Food Sectors: The use of green chemicals in agriculture, such as bio-pesticides and bio-fertilizers, is expanding. These products help reduce the reliance on synthetic chemicals, promoting sustainable farming practices. Similarly, the food and beverage sector is adopting green chemicals for food packaging and processing to reduce chemical residues and ensure safety.
• Technological Innovations: Advances in biotechnology and green chemistry are enabling the production of more efficient and cost-effective green chemicals. Innovations in fermentation, biocatalysis, and algae cultivation are improving the scalability and affordability of bio-based chemicals, enhancing their appeal to industries ranging from energy to pharmaceuticals.
• Government Policies and Incentives: Governments worldwide are implementing stricter environmental regulations and providing incentives for the adoption of green chemicals. Policies that promote the reduction of greenhouse gas emissions and the use of renewable resources are accelerating the transition toward sustainable chemical production.
• Corporate Sustainability Initiatives: Major corporations are increasingly committing to sustainability goals, driving the adoption of green chemicals across various sectors. Industries such as automotive, textiles, and construction are incorporating green chemicals into their production processes to meet regulatory requirements and consumer preferences for environmentally responsible products.
• Growth of Renewable Energy Integration: The growing integration of renewable energy sources, like solar and wind, into chemical production processes is another emerging trend. This approach reduces the carbon footprint of chemical manufacturing and aligns with global efforts to achieve carbon neutrality.

Use Cases

1. Biofuels in Transportation
Biofuels, especially bioethanol and biodiesel, are widely used in the transportation sector as green alternatives to traditional fossil fuels. For instance, bioethanol, derived from corn and sugarcane, is blended with gasoline to reduce greenhouse gas emissions. In 2020, the global bioethanol market was estimated to be over 110 billion liters, showing its significant role in reducing carbon footprints in transportation. The use of biofuels helps decrease reliance on non-renewable energy sources, contributing to the decarbonization of the transportation sector.

2. Biodegradable Plastics in Packaging
Green chemicals are increasingly used to produce biodegradable plastics, which are utilized in packaging to reduce plastic waste. Bio-based polymers like polylactic acid (PLA) and polyhydroxyalkanoates (PHA) are used to make eco-friendly packaging materials. The demand for biodegradable packaging is growing, especially in the food and beverage industry, which uses green packaging solutions to address consumer concerns over single-use plastics. By 2024, the global market for biodegradable plastics is projected to reach over 7 million tons annually, driven by bans on traditional plastics in several countries.

3. Green Solvents in Paints and Coatings
The paints and coatings industry is adopting green solvents derived from renewable resources, such as plant-based solvents, to replace volatile organic compounds (VOCs) that contribute to air pollution. Green solvents are less toxic and emit fewer pollutants, making them ideal for use in industries like construction and automotive, where sustainability and regulatory compliance are priorities. The global green solvents market is expected to grow at a rate of over 5% annually, reflecting their increasing application.

4. Bio-based Fertilizers in Agriculture
In the agricultural sector, green chemicals are being used in bio-based fertilizers and pesticides to reduce the environmental impact of conventional agrochemicals. Bio-fertilizers, derived from organic materials, enhance soil fertility and crop yields without depleting natural resources or contaminating water sources. With the global population projected to reach 9.7 billion by 2050, the demand for sustainable agricultural inputs like bio-fertilizers is expected to rise, supporting global food security goals.

5. Bioplastics in Automotive Manufacturing
The automotive industry is adopting bioplastics made from renewable resources like corn and sugarcane to reduce vehicle weight and improve fuel efficiency. For example, biopolymer-based components are used in car interiors and exterior parts, leading to a reduction in greenhouse gas emissions during the manufacturing process. The bioplastics market in the automotive sector is growing, with a projected annual growth of 11.7%, as manufacturers aim to meet stricter emissions standards and consumer preferences for eco-friendly products.

6. Green Chemicals in Water Treatment
Green chemicals are used in water treatment processes to remove contaminants without harming aquatic ecosystems. Bio-based coagulants and flocculants, derived from natural sources like plants and minerals, are increasingly used to purify water in industries and municipalities. These green chemicals help reduce the use of hazardous chemicals in water treatment plants, aligning with environmental regulations and improving public health. The global water treatment chemicals market, driven by green alternatives, is expected to grow by 6% annually.

7. Pharmaceuticals
Green chemicals are being integrated into the pharmaceutical industry to reduce the environmental impact of drug manufacturing. The use of biocatalysis, a green chemical process, helps in producing cleaner, more sustainable pharmaceutical products. In 2021, the global demand for green chemistry in pharmaceuticals was valued at over USD 1 billion, and this demand is anticipated to rise due to strict environmental regulations in developed markets.

Major Challenges

• High Production Costs: Producing green chemicals often requires advanced technologies and processes, which are more expensive than conventional methods. The costs associated with biomass conversion, raw materials, and setting up infrastructure for green chemical production remain high. This limits the price competitiveness of green chemicals compared to their traditional counterparts.
• Limited Availability of Raw Materials: The supply of bio-based raw materials, such as plant-based feedstocks, is often inconsistent and subject to agricultural limitations. Weather conditions, land availability, and competition with food crops can impact the supply chain, leading to volatility in production.
• Lack of Awareness and Adoption: Despite increasing environmental awareness, many industries and consumers are still unfamiliar with the benefits of green chemicals. This lack of awareness slows the adoption of green solutions, especially in regions where regulations and consumer demand for sustainability are less pronounced.
• Scaling and Commercialization: Scaling up green chemical production to meet global demand remains a challenge. While small-scale operations may succeed in niche markets, achieving the same efficiency and cost-effectiveness at an industrial scale is difficult. Many companies face challenges in securing investments and partnerships to expand production capabilities.
• Inconsistent Regulatory Support: While some regions, particularly in Europe, have strong regulatory frameworks that promote green chemicals, other regions lack consistent policies or incentives. This uneven regulatory landscape makes it harder for companies to navigate compliance and take full advantage of global opportunities.
• Consumer Price Sensitivity: Green chemicals are often more expensive than conventional alternatives due to higher production costs. This price premium can deter price-sensitive consumers and industries from making the switch, especially in markets where cost is a primary concern.

Market Growth Opportunities

• Increased Demand for Biodegradable Plastics: With global concerns about plastic pollution, the demand for biodegradable plastics, particularly in the packaging sector, is rapidly rising. Green chemicals used to produce bioplastics, such as polylactic acid (PLA) and polyhydroxyalkanoates (PHA), are seeing increased adoption. Governments in various regions are implementing bans on single-use plastics, which further boosts the market potential for biodegradable alternatives.
• Sustainability in the Automotive Industry: The automotive industry is transitioning toward sustainable materials, and green chemicals are playing a key role. Biopolymers and bio-based materials are increasingly being used in car interiors and lightweight components, contributing to improved fuel efficiency and reduced emissions. With the global push toward electric vehicles (EVs) and stricter emission standards, the demand for green chemicals in automotive manufacturing is expected to grow significantly.
• Expansion in Emerging Markets: Developing economies in Asia-Pacific, Latin America, and Africa are focusing more on sustainable development and environmental protection. As these regions industrialize, there is a growing demand for green chemicals across various sectors such as agriculture, construction, and water treatment. The rising middle class in these regions also contributes to higher demand for eco-friendly products.
• Government Policies and Incentives: Many governments are introducing stricter environmental regulations and offering incentives for companies adopting green chemicals. These policies encourage industries to switch to sustainable alternatives, presenting significant growth potential, especially in regions with strong regulatory support.
• Technological Advancements: Innovations in bio-refining and green chemistry are reducing the production costs of green chemicals, making them more competitive with traditional chemicals. As these technologies become more efficient, they will further drive the adoption of green chemicals across industries.

Key Player Analysis

Arkema Group has made significant strides in the green chemicals sector, particularly focusing on sustainable development and high-performance materials. In 2023, the company took a major step toward reducing its carbon footprint by incorporating 100% green electricity at its Sartomer and Bostik factories in China. Additionally, Arkema filed 13 technology disclosures and eight patent applications in 2023, with 94% of them related to sustainable development. This emphasizes the company’s commitment to promoting green chemistry solutions across its operations.

In 2023, Balfour Beatty expanded its focus on sustainability, incorporating green chemicals and hydrogen fuel technologies to reduce its environmental impact. A key development was their Glasgow hydrogen trial where the company retrofitted vehicles, such as salt spreaders and impact protection vehicles, to run on hydrogen, reducing carbon emissions by around 26%. This trial is part of their larger M77/Glasgow Southern Orbital project, which aims to establish Scotland’s first construction hydrogen hub. Additionally, Balfour Beatty has integrated sustainable practices into its operations, including the use of green chemicals in construction materials to minimize environmental damage and contribute to the decarbonization of the construction industry​

In 2023, BASF SE continued to strengthen its position in the green chemicals sector by focusing on sustainability and innovation. Throughout the year, the company made significant strides in developing solutions for a circular economy, including bio-based and renewable chemicals. A key milestone was BASF’s increased investment in sustainable product lines, particularly in the agriculture, transportation, and consumer goods industries, which represent significant portions of its sales.

In 2023, Cargill made significant advancements in its green chemicals and sustainability initiatives. The company invested $78 million in sustainability projects aimed at improving operational efficiency and reducing greenhouse gas emissions. By the end of 2023, Cargill had successfully reduced its Scope 1 and 2 emissions by 10.97% compared to its 2017 baseline, surpassing its target of a 10% reduction by 2025. Additionally, Cargill increased its use of renewable energy, including partnerships in Indonesia that helped the company purchase over 70,000 megawatt-hours of clean electricity, leading to a reduction of more than 50,000 tonnes of CO₂. Looking ahead, Cargill has multiple renewable energy projects set to become operational by 2024, which are expected to further reduce emissions by an estimated 715,000 tonnes annually.

In 2023, DuPont de Nemours, Inc. made significant progress in the green chemicals and sustainability sectors, highlighting its commitment to reducing environmental impact. The company achieved a 58% reduction in Scope 1 and 2 greenhouse gas emissions compared to its 2019 baseline, surpassing its 2030 target. Additionally, DuPont sourced 57% of its electricity from renewable sources, doubling its previous year’s efforts. The company also launched numerous R&D initiatives aimed at eliminating substances of concern (SoCs) from its products, commercializing over 25 new solutions designed to reduce environmental harm.

In 2023, Evonik Industries AG made notable progress in its green chemicals sector by focusing on sustainability and circular economy initiatives. The company achieved 43% of its sales from Next Generation Solutions, which are products designed to be more environmentally friendly. A key achievement was the introduction of the ECOHANCE® program, producing skincare products from plant-based residues. Additionally, Evonik partnered with leading recycling companies to improve the sustainable recycling of polyurethane and plastics.

In 2023, George Weston Foods Ltd. (GWF), one of Australia and New Zealand’s largest food manufacturers, expanded its focus on sustainability and green chemical practices. Particularly through its Jasol division, GWF has emphasized the production of environmentally friendly cleaning and industrial chemicals. Jasol, a leader in cleaning and hygiene solutions, has been developing bio-based and less harmful chemical alternatives to meet growing demand for green chemicals in the food and manufacturing sectors. Additionally, GWF has invested in improving packaging sustainability, achieving a high performance level in the 2024 Australian Packaging Covenant Organisation (APCO) annual report, reflecting its commitment to reducing plastic waste and contributing to a circular economy

In 2023, Givaudan continued to expand its commitment to sustainability within the green chemicals sector. The company made significant advancements by acquiring the cosmetic ingredients portfolio from Amyris, which includes bio-based ingredients like Neossance® Squalane, a high-performance emollient, and Neossance® Hemisqualane, a plant-based silicone alternative. This acquisition is part of Givaudan’s broader strategy to strengthen its portfolio of sustainable beauty products and meet increasing market demand for eco-friendly and bio-based solutions. By 2024, Givaudan aims to grow its green chemicals business further, leveraging these acquisitions to cater to the rising demand for sustainable beauty and personal care products. The company continues to focus on sustainable sourcing and product innovation to support its long-term environmental goals​

Conclusion

In conclusion, the green chemicals market is poised for substantial growth, driven by increasing global demand for sustainable and eco-friendly solutions. Companies across sectors, from automotive to cosmetics, are turning to bio-based chemicals to reduce their environmental impact and comply with stricter regulations. Innovations in biotechnology and the circular economy are making green chemicals more accessible and cost-effective, helping industries meet sustainability goals. However, challenges such as high production costs and limited raw material availability persist, which companies are addressing through technological advancements and strategic partnerships. As more businesses adopt green chemistry principles, the market will continue to expand, offering both environmental and economic benefits. The future of green chemicals looks promising, with further opportunities emerging as industries worldwide prioritize sustainability.

Sources

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