Eco-Friendly (Green) Polyols Market - Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented By Type (Polyether, Polyester), By End User (Furniture, Automotive, Packaging, Others), By Region and Competition, 2021-2031F

Forecast Period	2027-2031
Market Size (2025)	USD 5.78 Billion
CAGR (2026-2031)	5.76%
Fastest Growing Segment	Polyether
Largest Market	North America
Market Size (2031)	USD 8.09 Billion

Market Overview

The Global Eco-Friendly (Green) Polyols Market will grow from USD 5.78 Billion in 2025 to USD 8.09 Billion by 2031 at a 5.76% CAGR. Global Eco-Friendly (Green) Polyols are sustainable chemical intermediates derived from renewable biomass sources, such as vegetable oils, or recycled polyethylene terephthalate, serving as essential precursors for the production of bio-based polyurethanes. The market is primarily propelled by stringent environmental regulations aimed at decarbonization and the automotive sector’s accelerating shift toward lightweight, bio-based materials to enhance fuel efficiency and meet emissions standards. Additionally, the construction industry’s growing demand for energy-efficient insulation materials supports the adoption of these renewable substrates. According to European Bioplastics, in 2024, the global production capacity for bioplastics, which encompasses the bio-based polymer derivatives of these polyols, reached 2.47 million tonnes, reflecting the expanding industrial infrastructure supporting the bio-economy.

Despite this progress, the market faces a significant challenge regarding cost competitiveness compared to fossil-based counterparts. The complex extraction and refinement processes required to convert biomass into high-performance polyols often result in higher production costs, creating a price premium that can deter widespread adoption in price-sensitive applications. Consequently, achieving economies of scale to lower these costs remains a critical hurdle for broader market penetration.

Key Market Drivers

Technological advancements in bio-polyol production are fundamentally reshaping the market, as chemical manufacturers increasingly integrate renewable feedstocks to create "drop-in" solutions that require no modification to downstream manufacturing lines. This innovation addresses the critical need for cost-efficiency while meeting sustainability mandates, allowing producers to offer high-performance alternatives to fossil-based precursors. According to BASF, May 2024, in a corporate trade news release, the company expanded its biomass balance portfolio to include certified polytetrahydrofuran, enabling significant carbon footprint reductions for customers by replacing fossil resources with renewable raw materials at the beginning of the production process. The magnitude of this industrial shift is further evidenced by the sector's massive financial commitment to development; according to the European Chemical Industry Council (Cefic), in January 2025, in the '2024 Facts and Figures' report, the European chemical industry invested €10.2 billion in research and innovation, solidifying the broader push toward greener chemical synthesis and circular economy solutions.

Surging demand for energy-efficient building insulation also serves as a pivotal driver, compelling the construction sector to adopt sustainable polyurethane foams derived from green polyols to meet stricter thermal performance standards. As building codes tighten globally to combat climate change, the adoption of low-carbon insulation materials has become a strategic imperative for developers seeking to reduce embodied carbon. According to Kingspan Group, February 2024, in the 'Annual Report 2023', the insulation systems sold by the company in the previous fiscal year were projected to save an estimated 164 million tonnes of CO2 equivalent over their lifetime, demonstrating the immense environmental impact and growing commercial reliance on advanced, energy-saving material solutions in the built environment.

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Key Market Challenges

The primary obstacle impeding the expansion of the Global Eco-Friendly (Green) Polyols Market is the lack of cost competitiveness relative to conventional fossil-based alternatives. Manufacturers face substantial financial burdens due to the intricate extraction and refinement processes necessary to convert biomass into functional polyols. These processing requirements result in elevated production expenses, forcing suppliers to apply a price premium that limits product appeal in highly price-sensitive sectors. Without the ability to match the lower pricing structures of established petrochemical polyols, green alternatives struggle to secure the high-volume contracts essential for long-term commercial viability.

This pricing disparity effectively restricts the market to niche segments where sustainability takes precedence over procurement costs, thereby preventing the achievement of economies of scale. The inability to scale production further entrenches high unit costs, creating a cycle that slows industrial adoption. This volume disparity is evident in recent industry figures. According to European Bioplastics, in 2024, bioplastics represented approximately 0.5 percent of the global plastic production volume. This minimal market share underscores the significant difficulty green polyols face in competing with the established infrastructure and pricing power of the fossil-based polymer industry.

Key Market Trends

The commercialization of CO2-based polyol production technologies is emerging as a transformative trend, enabling manufacturers to utilize captured carbon dioxide as a primary feedstock rather than relying solely on petrochemicals. This innovation allows for the substitution of fossil-based carbon in the polyurethane backbone, significantly reducing the Global Warming Potential (GWP) of the final material while creating a functional circular carbon economy. The scalability of this technology is now becoming evident in large-scale industrial projects which are moving beyond pilot phases. According to Econic Technologies, June 2024, in a corporate news release, its partner Changhua Chemical broke ground on a new facility in China that is expected to produce annual commercial volumes of approximately 80,000 tons of CO2-based polyols starting in early 2025, validating the industrial viability of these next-generation materials.

Simultaneously, the market is witnessing a decisive transition toward second-generation non-food biomass feedstocks, particularly the utilization of lignin and forestry waste, to decouple polyol synthesis from the food supply chain. Unlike first-generation bio-polyols derived from vegetable oils, these wood-based alternatives utilize abundant industrial side-streams, thereby avoiding competition with agricultural food production and offering superior rigidity for applications such as insulation. This shift is driving massive infrastructure investments in the forestry sector to secure consistent supply chains. According to Södra, September 2024, in a press release regarding its partnership with UPM Biochemicals, the company is establishing the world’s largest commercial kraft lignin production facility in Sweden, which is anticipated to have a production capacity of 250,000 tonnes per year by 2027, ensuring a substantial volume of renewable precursors for the green chemical industry.

Segmental Insights

The Polyether segment is emerging as the fastest-growing category within the Global Eco-Friendly Polyols Market, driven by its critical role in producing sustainable flexible polyurethane foams for the automotive and furniture industries. This growth is fueled by technological advancements that allow manufacturers to derive high-performance polyether from bio-based monomers and recycled carbon dioxide, effectively replacing fossil-fuel-based counterparts. Furthermore, stringent sustainability mandates from regulatory bodies, such as the U.S. Environmental Protection Agency (EPA), are accelerating the shift toward these low-emission materials. Consequently, the segment is expanding rapidly as industries prioritize eco-friendly formulations that maintain the durability and comfort essential for mass-market applications.

Regional Insights

North America maintains a leading position in the Global Eco-Friendly Polyols Market due to stringent environmental regulations and consistent industrial demand. The United States Environmental Protection Agency enforces mandates on volatile organic compound emissions, compelling manufacturers to adopt bio-based alternatives over conventional petrochemicals. Furthermore, the USDA BioPreferred Program actively incentivizes the procurement of renewable materials within the automotive and construction industries. This supportive regulatory framework, combined with the strong presence of major manufacturers, solidifies the region's dominance and drives the continued expansion of the green polyols sector.

Recent Developments

• In November 2025, Monument Chemical commenced the first United States-based production of polyols derived from renewable carbon at its manufacturing facility in Brandenburg, Kentucky. The new product line, branded as Poly-CO2, utilizes a proprietary process developed in partnership with Econic Technologies to replace fossil-based feedstocks with captured carbon dioxide. This innovation is reported to reduce the global warming potential of the material by 20% to 30% compared to conventional options. The polyols are designed for use in high-performance polyurethane applications, including foams, coatings, and adhesives, offering enhanced resilience and supporting circular economy principles by keeping carbon in use.
• In April 2025, Anhui Putan New Materials Technology Co., Ltd. officially put into operation a breakthrough production unit for carbon dioxide-based polycarbonate polyols in Huainan, China. This facility, representing a significant investment of approximately 2 billion yuan, utilizes a proprietary technology to convert captured carbon dioxide into high-performance polyols, effectively replacing a portion of traditional fossil feedstocks. The continuous production line is described as one of the largest of its kind globally, marking a major milestone in the industrial application of negative-carbon materials. The project aims to support the sustainable development of the polyurethane industry by reducing carbon emissions.
• In August 2024, Cargill announced the upcoming launch of three innovative sustainability-focused products for the adhesives and sealants market. The new offerings, introduced at the FEICA 2024 trade fair, included a range of 100% bio-based polyols designed to serve as alternatives to petroleum-based options without sacrificing performance. Additionally, the company unveiled a revolutionary polyol derived from industrial waste polyethylene terephthalate (rPET) to promote recyclability, as well as a next-generation polyol that eliminates the need for isocyanates. These advancements underscore the company's commitment to providing advanced polymer solutions that address critical market demands for safety and circularity.
• In May 2024, BASF announced the expansion of its biomass balance portfolio to include new certified variants of 1,4-butanediol, tetrahydrofuran, and polytetrahydrofuran. Produced at sites in Europe and North America, these products utilize renewable raw materials such as bio-waste in their production process, attributed via a certified mass balance approach. This development allows customers to reduce the cradle-to-gate carbon footprint of their end products without compromising on quality or requiring technical modifications. The expansion aligns with the company's strategy to replace fossil-based feedstocks and support the sustainability goals of various industries, including the textile and automotive sectors.

Key Market Players

• Synthesia Technology Europe SL
• Unisol India Pvt Ltd
• BASF SE
• Cargill Incorporated
• Arkema SA
• Covestro AG
• IQS Inc
• BioBased Technologies LLC
• Emery Oleochemicals LLC
• Roquette GmbH

By Type	By End User	By Region
Polyether Polyester	Furniture Automotive Packaging Others	North America Europe Asia Pacific South America Middle East & Africa

Report Scope:

In this report, the Global Eco-Friendly (Green) Polyols Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• Eco-Friendly (Green) Polyols Market, By Type:

• Polyether
• Polyester

• Eco-Friendly (Green) Polyols Market, By End User:

• Furniture
• Automotive
• Packaging
• Others

• Eco-Friendly (Green) Polyols Market, By Region:

• North America
• United States
• Canada
• Mexico
• Europe
• France
• United Kingdom
• Italy
• Germany
• Spain
• Asia Pacific
• China
• India
• Japan
• Australia
• South Korea
• South America
• Brazil
• Argentina
• Colombia
• Middle East & Africa
• South Africa
• Saudi Arabia
• UAE