Biofuels And Biodiesel Market Size, Share, Growth, and Industry Analysis, By Type (Bioethanol, Biodiesel) By Application (Agriculture, Transportation, Chemical, Pharmaceuticals) and Regional Forecast to 2033

BIOFUELS AND BIODIESEL MARKET OVERVIEW

The global biofuels and biodiesel market was valued at USD 143.56 billion in 2024 and is projected to reach USD 150.11 billion in 2025, steadily progressing to USD 214.42 billion by 2033, with a CAGR of 4.56% from 2025 to 2033.

With worldwide zeal for biofuels and biodiesel markets, many countries are seeking to replace fossil fuels, sustainably. In more concrete terms, biofuels that are bioethanol and biodiesel are the ongoing decarbonization options in pursuit of compliance with regulations, with applications that they are suitable for with order for furthering environmental and socio-economic rationale to meet energy demands. These biofuels are renewable because they can be made domestically and they can be made from feedstocks such as vegetable oils and animal fat; they have potential to reduce greenhouse gas emissions; and they can be useful fuels in transportation, and agriculture, and chemicals which can utilize existing engine technologies. With the strong option of biodiesel when compared to conventional fossil fuels (and their efficiencies) as they are made from, vegetable oils and animal fats. Bioethanol has always held prominence for the markets in biofuels, especially for whatever automotive application has taken place. The policies mentioned may offer new advancements in technology, proffer from governments, and sustainability agendas from businesses, creating growth in an established market. Giving legitimacy to consumer engagement in progress on clean energy markets which happen when people come together should see an eventual stabilization of growth rates in sustainable demand of bio-based fuels in future records of acceleration from what they used to be.

GLOBAL CRISES IMPACTING BIOFUELS AND BIODIESEL MARKET

COVID-19 IMPACT

Biofuels and Biodiesel market Had a Negative Effect Due to Decreased Decline in Transportation Activity During COVID-19 Pandemic

The global COVID-19 pandemic has been unprecedented and staggering, with the market experiencing

lower-than-anticipated demand across all regions compared to pre-pandemic levels. The sudden market growth reflected by the rise in CAGR is attributable to the market’s growth and demand returning to pre-pandemic levels.

The COVID-19 epic crisis greatly impacted biofuels and biodiesel in what was ultimately an unprecedented manner, and most directly, due to a tremendous decline in transportation activity and related industries. As travel and production reduced, the lockdowns reduced fuel demand and correspondingly reduced demand for bioethanol and biodiesel blends. Some production plants went into full lockdown, and many opted for a significant drop in production, with fewer employees or shipping logistics temporarily unavailable. Oil and gas prices dropped with crude oil collapsing, significantly hurting the price competitiveness of bio-based fuels. Some agricultural supply chains of feedstocks and crops were also disrupted further impacting raw materials used in biofuels. However, the crisis highlighted the lack of energy resiliency and the need for sustainable alternative fuels, as we entered the next structured recovery phase of the pandemic, mainly supported by green recovery programs across many regions.

LATEST TREND

Rise of Advanced Biofuels and Circular Feedstocks to Drive Market Growth

An important shift in trend and practice regarding biofuels and biodiesel is the shifting focus to advanced biofuels and circular feedstocks. Companies are trillions of dollars investing in developing second-generation biofuels produced from non-food biomass including agricultural residues, municipal solid waste, and algae. These advanced and alternative feedstocks typically offer more carbon savings and before potential human consumption which mitigates the most common arguments against traditional biofuels. Companies are also using waste materials as feedstock (e.g. used cooking oils, animal fats) which supports closed loop and more circular economy approaches. Additionally, Government is tightening sustainability standards and providing incentives to low Carbon fuels now facilitating the transition to advanced biofuels. Importantly, the move to "advanced" biofuels is not only allowing for emissions reductions in the more complex hard to abate industries, but is also developing a more resilient, agile and independent biofuels supply chain.

BIOFUELS AND BIODIESEL MARKET SEGMENTATION

BY TYPE

Based on Type, the global market can be categorized into Bioethanol, Biodiesel:

Bioethanol: Bioethanol, an alcohol produced from the fermentation of sugars from crops (primarily corn and sugarcane, but also from biomass), has evolved into one of the foremost renewable fuel projects in the worldwide marketplace. Bioethanol is most often used in raw form or blended with gasoline to reduce greenhouse gas emissions by replacing a fossil fuel source with renewable fuel source. Most of the bioethanol use will be in transportation fuel use going forward - with ethanol mandates already in place - meaning bioethanol use in transportation will remain in the forefront. Bioethanol is also being utilized in commercial applications in the chemical industry to produce solvents and other derivatives, and with environmental awareness and supportive regulatory framework, there is a flurry of investment towards next-generation ethanol, which is derived from agricultural/biomass waste. Bioethanol will continue to evolve with the inclusion of new innovations with an emphasis on efficiencies, scalability, and versatility with varying feedstocks.

Biodiesel: Biodiesel comes from renewable feedstocks such as animal fats, vegetable oils, and recycled greases, which can be used as diesel or blended with conventional diesel in all diesel applications including vehicles and machinery and power generation. Since biodiesel has lower emissions, improved engine lubricity and uses waste products as feedstock, it has become the preference in sustainability-led occupations. Biodiesel is also advantageous in places that have strong agriculture sectors, as that is where feedstock and locally sourced. Interest in biodiesel is now expanding with the development of novel transesterification processes, emergence of hydrotreated vegetable oil (HVO) technologies and start of the regionally available circular economy. With diesel emissions regulations tightening, we imagine biodiesel demand across all sectors will increase steadily.

BY APPLICATION

Based on application, the global market can be categorized into Agriculture, Transportation, Chemical, Pharmaceuticals:

Agriculture: Biofuels and biodiesel are becoming more popular in the agricultural industry as they can be used to help operate farm machines and vehicles, move farms away from fossil fuels, and create an absorbable and sustainable farming system. Farmers are already using biodiesel blends in tractors, harvesters, and irrigation pumps to reduce diesel emissions and impact, and to operate in a cleaner manner. Crop residues used to produce biofuels creates a purposeful loop in the agricultural waste lifecycle, while providing biofuels a way in which to extend energy access to rural areas often limited in their access to traditional fuel logistics (i.e., air, rail, water, km's of road access.). Biofuels also fit the bill of a more general move towards low carbon/green routes associated with farming systems. One can conclude that with an increase in bio-based energy use, agricultural industries, as in many of the industries highlighted within the sourcing section, will use biofuel or biodiesel blends in a far more prominent and integrated manner.

Transportation: Transportation is the largest user of biofuels, mainly bioethanol and biodiesel blends because efforts underway across the globe to cut vehicle emissions and pursue climate goals have prioritized this sector in decarbonization strategies. Bioethanol has become a prominent fuel in petrol (gasoline) motor vehicles, while biodiesel has become and remains one of the primary substitutes for diesel-based motor vehicles. The public transport fleet sector, aviation, and marine sectors are now actively seeking higher blend options as well as advanced biofuels to transition away from fossil-fuel-based transportation. With the use of biofuels being dictated by fleet fuel standards, mandates around government subsidies, as well as tax incentives, many public transport fleets have embraced biofuels with demonstrations and a growing number of trials to assess viability. As hybrid vehicles and flexible fuel vehicles gain favor in many markets, the biofuels market is benefiting from higher demand. Transportation continues to be an important sector for innovation and potential large-scale deployment of bio-based fuels considering the urgency to decarbonize all aspects of transportation in the growing push on climate change.

Chemical: Biofuels have found many applications in the chemical sector, for feedstocks to solvents, resins, lubricants, and other bio-based chemicals. The derivatives of bioethanol and biodiesel are used in many green chemistry and bio-based initiatives to develop clean and green interchangeable inputs for petroleum or fossil-based inputs. The motivation for using bio-based chemicals is common demand for sustainable sources and non-toxic counterparts for current petroleum sourced inputs in both industrial and consumer products. Additionally, biodiesel produces glycerin, an input used in many cosmetics and pharmaceutical products as inputs. Biofuels do not require new processes for chemical processes, providing ease of use and compliance with environmental regulations. The chemical sector is also looking to increase usage for bio-based input to achieve relatively carbon neutral production expectations.

Pharmaceuticals: Biofuels are used in pharmaceuticals as solvents and processing agents in drug formulation and manufacture. Bioethanol is preferred for its purity, safety, and compatibility in sensitive pharmaceutical formulations. Bioethanol is used frequently in the preparation of syrups, tinctures, sanitizers, etc. Most pharmaceutical companies are now being pushed towards bio-based inputs due to the focus on green manufacturing as they seek to reduce their environmental footprint. In medical products, prescription medications increasingly include biofuels as biodiesel-derived ingredients such as glycerol in topical products. Since regulators favor cleaner and safer production the use of biofuels in pharmaceutical processing environments is anticipated to grow.

MARKET DYNAMICS

Market dynamics include driving and restraining factors, opportunities and challenges stating the market conditions.                          

DRIVING FACTORS

Government Policies and Environmental Regulations to Boost the Market

Favorable government policies and extreme environmental legislation have been the most significant drivers for the markets for Biofuels and Biodiesel market growth. The global governments and others have established regulations and blending mandates for biofuels to reduce consumption of fossil fuels and to reduce greenhouse gas emissions, so that various incentives, stimulus and tax credit opportunities, and renewable energy targets and mandates are encouraging further use of bioethanol and biodiesel. Most of the time these regulations are creating new demands and opportunities to innovate and invest in new infrastructure as well. Climate accord commitments are further stimulating interest from the industry to explore and implement renewable energy alternatives, making it more favorable for long-term growth and investment in biofuels.

Advancements in Feedstock Technology and Production Efficiency to Expand the Market

An additional driver of growth is technological improvement of the feedstock itself and the efficiency of the processing aspects. The availability of the first-generation biofuels to second and third generation biofuels that cover agricultural wastes, algae or non-edible oily feedstocks has widened feedstock availability and has led to more sustainable options. In addition, efficacy in production through things like enzymatically hydrolyzed feedstocks, improved processes like hydrotreated vegetable oil (HVO), not only can improve emissions, quality of fuel but also reduce costs and improve energy yield. There is no denying that as research and development continues, biofuels are becoming more reliable and competitive with conventional fuels making them a viable alternative across many industry sectors.  This development is pivotal to meeting the ever-growing global energy demand sustainably.

RESTRAINING FACTOR

Competition with Food Supply and Land Use Concerns to Potentially Impede Market Growth

A significant limitation in the biodiesel and biofuels market is ongoing concern over competition with food supply and land use. First-generation biofuels are based on food crops such as corn, sugarcane, and soybeans, raised concerns about global food security. An increased demand for these similar crops, at the same-scaled volume for fuel production, can impact prices of food and apply pressures on food supply. Alternatively, and dedicating large tracts of arable land for biofuel feed stocks, can lead to loss of land, deforestation, and loss of biodiversity altogether, indicating that the sustainability goals of the biofuels and biodiesel market are no more plausible and meaningless. Environmental and attitudinal concerns have led to criticisms and heightened policy resistance in some areas, which pose challenges for market scale.

OPPORTUNITY

Integration with Circular Economy and Waste Utilization to Create Opportunity for The Product in The Market

With potential opportunities in the biofuels and biodiesel industry against a backdrop of a boom in global ruined used cooking oil and animal fat supplies, not to mention agricultural waste, waste recovery supports a circular economy. This gives biofuel producers access to a cost-effective feedstock while addressing some of the waste disposal and landfilling issues we face in the environment. Besides ensuring that reasonable sustainable fuels are derived from waste sources consumers are not pressured to utilize the land or purchase from food crops. As waste being turned into energy is a global initiative there are increased opportunities for support from both governments and investors. With the world continually focused on moving towards greener initiatives in the waste energy markets, waste-to-fuel technologies ensure that biofuels become a sustainable and enviro-friendly product and a growing opportunity in the marketplace.

CHALLENGE

Infrastructure and Distribution Limitations Could Be a Potential Challenge for Consumers

A major obstacle to market growth for biofuels and biodiesel is the lack of sufficient infrastructure and distribution networks. Unlike conventional fossil fuels which are usually interchangeable, biofuels require special handling, storage, and blending facilities and this infrastructure is not universally available in a region. The lack of established regional biofuel logistics creates inefficiencies in delivery and distribution; in addition, it limits access in areas with emerging and rural markets. The cost of retrofitting fueling stations and transportation systems for biofuel blends is further complicated by the need for collaboration amongst stakeholders and policy. While it can take significant time to establish and deploy new supply chains and storage without a reliable supply chain distribution, large scale adoption of biofuel is challenging, especially in the case of advanced biofuels. Overcoming this barrier will require active collaboration between governments, energy companies, and logistics companies to harness the power of the complete infrastructure ecosystem.

BIOFUELS AND BIODIESEL MARKET REGIONAL INSIGHTS

NORTH AMERICA

North America is one of the global leaders in the bioproducts / biofuels / biodiesel market space, leveraging the twin opportunities of strong policies and technological leadership. The United States Biofuels and Biodiesel market has renewable fuel standards and mechanisms related to ESG that facilitate and strengthen the industry for biofuels, across all sectors. With an abundance of agricultural feedstock reliably available to produce bioethanol and biodiesel, including from feedstocks like corn and soybeans, the United States also has research institutions and bio-refineries that advance research into second generation biofuels. Further, with increased awareness of climate change and goals to reduce emissions, many sectors are trending toward bio-based energy in terms of corporate sustainable development. North America, with federal assistance, has the highest participation of all major producers and is positioned as the dominate global player in bioproducts and sustainable development.

EUROPE

Europe's strong position in the biofuels / biodiesel markets can be associated with advanced climate ambitions and comprehensive policy structures around protecting the environment. The European Union and its member states have rules and regulations directed at incorporating renewables in the transport sector that are leading to greater demand for biodiesel and bioethanol. The leading countries in the EU have successfully established blending mandates and low-carbon fuel standards; these include Germany, France, and the Netherlands. In addition, we must recognize that Europe is great place and is already advancing the frontier using waste and advanced biofuels even more in a circular economy. As biofuels are positioned as sustainable aviation fuel or as part of green shipping technologies, it is likely demand in Europe will continue to grow. The European Union governance needs to grapple with short term land use and sustainability barriers while promoting innovation and diversification of feedstock for biofuels and ultimately positioning Europe for its ongoing role as a leadership force in the world's clean energy transitions.

ASIA

Asia is emerging as a high potential biofuels and biodiesel market due to urbanization, increasing energy demand, and demographic, socio-economic and environmental pressures. China, India, and Indonesia are all adding renewable energy infrastructure and domestic production of biofuel. Biodiesel can be sourced in the region from palm oil and bioethanol from primarily sugarcane and rice husk. Government authorities are subsidizing and permitting blending mandates to help develop biofuel markets in transportation and agriculture in the region. Although countries are committing to biofuel production, sustainability issues regarding feedstock and government enforcement are still concerns. Asia is likely to be a key differentiator for biofuels and biodiesel as its industrial sectors and populations grow.

 KEY INDUSTRY PLAYERS

Key Industry Players Shaping the Market Through Innovation and Market Expansion

Top companies in the biofuels and biodiesel market are concentrating on innovation, sustainability, and international expansion to maintain or increase their competitive advantage. Both Neste Oil Rotterdam and Renewable Energy Group are focused on technology upgrades with state-of-the-art refinery technology, and renewable circular feedstocks to advance fuel quality and environmental performance. Both Archer Daniels Midland (ADM) and Cargill are using their existing agricultural value chains to increase production output and add products to their fuel portfolios. While Louis Dreyfus and Total Group are pushing for courses in emerging markets and developing partnerships to enrich global distribution networks. Overall, this emphasis on innovation in feedstock sourcing, processing efficiencies, and low-carbon feedstock use will shape the future of the biofuels and biodiesel market.

LIST OF TOP BIOFUELS AND BIODIESEL MARKET COMPANIES

RBF (United States)

Avril (France)

Louis Dreyfus (Netherlands)

Neste Oil Rotterdam (Finland)

Bunge Ltd. (United States)

Raizen (Brazil)

Ag Processing (United States)

Verbio AG (Germany)

Cargill (United States)

Total Group (France)

Renewable Energy Group (United States)

ADM (United States)

KEY INDUSTRY DEVELOPMENT

May 2025: Malaysia affirmed its sustainability agenda, increasing the opportunity for palm-based biodiesel in ground transport vehicles at the nation's main international airport. The move aligns with Malaysia's future vision of a net-zero nation and a commitment to solving energy challenges with green alternatives. The announcement follows two rollouts of announcements of rolling-out initiatives in the region to promote biodiversity across the country and showcase how nationally everyone can grow. The strategic expansion to ground transport at the airport brought not only the use of palm oil biodiesel – however, demonstrated the significance of palm oil biodiesel infrastructure – fulfilling environmental goals alongside economic aspirations. In essence, the expansion at the airport represents a significant milestone of advancing biodiesel use in major transport hubs.

REPORT COVERAGE       

The study encompasses a comprehensive SWOT analysis and provides insights into future developments within the market. It examines various factors that contribute to the growth of the market, exploring a wide range of market categories and potential applications that may impact its trajectory in the coming years. The analysis considers both current trends and historical turning points, providing a holistic understanding of the market's components and identifying potential areas for growth. The research report delves into market segmentation, utilizing both qualitative and quantitative research methods to provide a thorough analysis. It also evaluates the impact of financial and strategic perspectives on the market. Furthermore, the report presents national and regional assessments, considering the dominant forces of supply and demand that influence market growth. The competitive landscape is meticulously detailed, including market shares of significant competitors. The report incorporates novel research methodologies and player strategies tailored for the anticipated timeframe. Overall, it offers valuable and comprehensive insights into the market dynamics in a formal and easily understandable manner.