Exhaust Heat Recovery System Market – Global Industry Size, Share, Trends Opportunity, and Forecast, Segmented By Component (Turbine, TEG Module, Compressor, Evaporator, EGR Valve & Cooler, Condenser And Others), By Technology (Exhaust Gas Recirculation (EGR), Thermoelectric Generator (TEG), Organic Rankine Cycle (ORC), By Vehicle Type (Passenger Cars, Commercial Vehicles), By Region & Competition, 2021-2031F

Forecast Period	2027-2031
Market Size (2025)	USD 35.01 Billion
CAGR (2026-2031)	7.51%
Fastest Growing Segment	Exhaust Gas Recirculation (EGR)
Largest Market	Europe
Market Size (2031)	USD 54.06 Billion

Market Overview

The Global Exhaust Heat Recovery System Market will grow from USD 35.01 Billion in 2025 to USD 54.06 Billion by 2031 at a 7.51% CAGR. The Global Exhaust Heat Recovery System Market involves the development and deployment of technologies designed to capture waste thermal energy from the exhaust stream of internal combustion engines and convert it into usable electrical or mechanical power. This market is primarily supported by the enforcement of stringent international emission regulations and the operational imperative for commercial fleet operators to reduce total ownership costs through improved fuel economy. These systems serve as a critical bridging technology to meet rigorous sustainability targets while internal combustion engines remain in use. According to the International Energy Agency, in 2025, vehicle efficiency improvements for heavy-duty trucks are projected to remain limited at 2% to 5% over the near term, highlighting the necessity for advanced thermal management interventions to achieve required performance gains.

A significant challenge that could impede market expansion is the high upfront cost of integration coupled with the accelerated global transition toward full fleet electrification. As automotive manufacturers and governments prioritize investments in battery-electric and hydrogen fuel cell architectures, the long-term viability of allocating capital to efficiency technologies for declining internal combustion engine platforms becomes less attractive. This shifting technological focus creates a risk of reduced adoption rates for heat recovery systems, particularly in the light-duty vehicle segment where electrification is progressing most rapidly.

Key Market Drivers

The implementation of stringent government emission regulations serves as the primary catalyst for the adoption of exhaust heat recovery systems, compelling automotive manufacturers to integrate advanced thermal management solutions. As regulatory bodies enforce tighter limits on nitrogen oxides (NOx) and carbon dioxide emissions, the ability to rapidly warm engine fluids and aftertreatment systems becomes essential for compliance. These regulations are particularly impactful in the heavy-duty sector, where effective thermal management is required to meet rigorous tailpipe standards during cold starts and low-load operations. According to the California Air Resources Board, effective January 2025, stricter nitrogen oxide standards for model year 2025 heavy-duty engines officially entered into force, necessitating the deployment of sophisticated exhaust control technologies to maintain compliance.

Simultaneously, the rising demand for improved vehicle fuel economy is driving the market, as manufacturers seek to maximize the efficiency of internal combustion and hybrid platforms before the full transition to electrification. Exhaust heat recovery technologies, such as cooled exhaust gas recirculation (EGR) and Rankine cycle systems, are critical for reclaiming waste energy to improve overall thermal efficiency and reduce fuel consumption. This continued reliance on combustion optimization is evident in supplier activities; according to BorgWarner, in May 2025, the company finalized extensions for exhaust gas recirculation system contracts with a major North American OEM that will sustain production through 2029, highlighting the enduring industry focus on efficiency gains. Furthermore, despite broader economic challenges, the sector continues to attract significant commercial activity. According to Valeo, in July 2025, the company reported a 30% increase in order intake for the first half of the year, reaching 11.8 billion euros, reflecting robust demand for advanced automotive technologies including thermal systems.

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Key Market Challenges

The high upfront cost of integration coupled with the accelerated global transition toward full fleet electrification presents a substantial barrier to the expansion of the exhaust heat recovery system market. As automotive manufacturers and commercial operators redirect their capital expenditure toward developing and purchasing battery-electric and hydrogen platforms, the financial justification for investing in efficiency technologies for internal combustion engines weakens significantly. This trend forces stakeholders to view combustion-based heat recovery solutions as short-term measures with diminishing returns on investment, leading to delayed adoption or the cancellation of retrofit programs for existing diesel fleets.

This hesitation is empirically supported by recent shifts in commercial vehicle registrations that demonstrate the contraction of the traditional engine market. According to the European Automobile Manufacturers' Association (ACEA), in the first nine months of 2025, registrations of diesel trucks in the European Union declined by 11.5%, while the market share for electrically chargeable trucks increased to 3.8%. This statistical evidence underscores the shrinking addressable market for exhaust heat recovery systems, as the industry volume for internal combustion engines contracts in favor of zero-emission architectures.

Key Market Trends

The Adoption of Organic Rankine Cycle (ORC) Technology in Maritime Propulsion Systems is rapidly evolving as shipbuilders seek compliance with tightening Carbon Intensity Indicator (CII) ratings. ORC systems utilize organic fluids with low boiling points to capture low-grade waste thermal energy from engine jacket water and exhaust streams, converting it into electricity for onboard consumption. This technology improves the overall thermal efficiency of vessels and reduces reliance on auxiliary engines without requiring alterations to primary fuel types. According to Climeon, November 2025, in the 'Interim Report for the Period January 1 – September 30, 2025', the company secured a breakthrough in the Asian market with an initial HeatPower 300 order valued at MSEK 4.6 from Jiangsu New Yangzi Shipbuilding, underscoring the increasing commercial viability of this solution for new maritime constructions.

Simultaneously, the Deployment of Electric Turbo-Compounding in Long-Haul Commercial Trucking is emerging as a pivotal strategy to maximize the efficiency of heavy-duty platforms. Unlike traditional mechanical systems, electric turbo-compounding employs a secondary turbine to drive a generator, feeding recovered electrical energy back into the vehicle’s powertrain or auxiliary systems to reduce engine load during high-demand operations. This architecture allows for precise energy management and supports the rising power demands of modern truck electronics while bridging the gap to full electrification. According to SAE International, March 2025, in the 'Evaluating the Potential of a Turbo-Compound System for a Heavy-Duty Natural Gas Engine' study, computational modeling indicated that the integration of optimized turbo-compound turbines can reduce fuel consumption by 2% to 4% in heavy-duty applications, providing a critical efficiency gain for long-haul operators.

Segmental Insights

The Exhaust Gas Recirculation (EGR) segment constitutes the fastest-growing component of the Global Exhaust Heat Recovery System Market, propelled by stringent international emission regulations. Authorities such as the United States Environmental Protection Agency and the European Union have implemented rigorous standards to curb Nitrogen Oxide emissions, compelling automotive manufacturers to adopt advanced EGR technologies. These systems recirculate exhaust gas to lower combustion temperatures, effectively reducing pollutants while enhancing fuel efficiency. Consequently, the rising integration of EGR units into gasoline and hybrid vehicles to ensure regulatory compliance is driving the segment's rapid expansion.

Regional Insights

Europe maintains a leading stance in the Global Exhaust Heat Recovery System Market, primarily due to rigorous environmental mandates enforced by the European Commission. Stringent policies, including the Euro 6 emission standards, obligate the automotive and industrial sectors to significantly reduce carbon dioxide emissions and improve energy efficiency. These regulatory requirements drive the widespread adoption of recovery systems as essential compliance tools. Furthermore, the region's committed transition toward a low-carbon economy accelerates the integration of these technologies, ensuring Europe remains the central hub for market expansion.

Recent Developments

• In December 2024, Climeon received an order to supply its HeatPower 300 marine waste heat recovery system for a new methanol-ready cement carrier owned by NovaAlgoma Cement Carriers. The technology utilizes an Organic Rankine Cycle process to harness low-temperature waste heat from the vessel’s engine jacket cooling water and exhaust gases, converting it into sustainable electricity onboard. This system will be installed as owner-furnished equipment on the 38,000 deadweight tonnage vessel currently under construction in China. The implementation of this solution is designed to decrease the ship's fuel consumption and overall environmental impact, supporting the maritime industry's transition toward decarbonization.
• In November 2024, GEA Group secured a contract to supply two advanced waste heat recovery plants to Asahi India Glass for their manufacturing facilities in Rajasthan and Uttarakhand. The project involves installing systems that capture high-temperature waste gases from glass melting furnaces to generate electricity, with each plant expected to produce approximately 1.8 megawatts of power. By converting thermal energy from exhaust gases into electrical power, the glass manufacturer aims to reduce its reliance on external power sources and lower carbon dioxide emissions. This installation highlights the growing adoption of exhaust heat recovery technologies in energy-intensive glass production processes.
• In July 2024, BorgWarner strengthened its position in the commercial vehicle market by securing contracts to supply exhaust gas recirculation (EGR) coolers to a major North American manufacturer. The company will provide two variations of its durable EGR coolers, featuring proprietary compact floating core architecture designed to withstand the high thermal stresses of heavy-duty engine applications. These components are essential for modern exhaust heat management, as they reduce nitrogen oxide emissions and improve fuel economy by recirculating cooled exhaust gas back into the engine intake. Production for these systems is scheduled to commence in late 2027.
• In February 2024, Cemex and Orcan Energy announced the extension of their partnership to implement large-scale waste heat recovery projects. This collaboration focuses on decarbonizing cement production by utilizing Orcan Energy’s modular Organic Rankine Cycle technology to convert excess heat from cement kilns into clean electricity. The initiative builds upon a successful initial installation in Germany and aims to deploy the flexible heat-to-power solution across multiple Cemex sites globally. By capturing and repurposing exhaust heat that would otherwise be lost, the companies intend to significantly reduce the carbon footprint and operational energy costs of cement manufacturing facilities.

Key Market Players

• FORVIA Group
• MAHLE GmbH
• Continental AG
• DENSO Corporation
• Honeywell International Inc.
• Dana Incorporated
• Marelli Holdings Co., Ltd.
• PHINIA Inc
• Mitsubishi Heavy Industries, Ltd
• Cummins Inc

By Component	By Technology	By Vehicle Type	By Region
Turbine TEG Module Compressor Evaporator EGR Valve & Cooler Condenser And Others	Exhaust Gas Recirculation (EGR) Thermoelectric Generator (TEG) Organic Rankine Cycle (ORC)	Passenger Cars Commercial Vehicles	North America Europe Asia Pacific South America Middle East & Africa

Report Scope:

In this report, the Global Exhaust Heat Recovery System Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• Exhaust Heat Recovery System Market, By Component:

• Turbine
• TEG Module
• Compressor
• Evaporator
• EGR Valve & Cooler
• Condenser And Others

• Exhaust Heat Recovery System Market, By Technology:

• Exhaust Gas Recirculation (EGR)
• Thermoelectric Generator (TEG)
• Organic Rankine Cycle (ORC)

• Exhaust Heat Recovery System Market, By Vehicle Type:

• Passenger Cars
• Commercial Vehicles

• Exhaust Heat Recovery System 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