Biodiesel Market Size and Share Analysis - Growth Trends and Forecast Report 2025-2033

One of biodiesel's primary uses is in the transportation sector, where it serves as an alternative to traditional diesel in vehicles with diesel engines. It is also used in agricultural and construction equipment and in marine and rail applications. Beyond transportation, biodiesel has industrial uses, such as in heating systems as a substitute for heating oil. It is valued for reducing greenhouse gas emissions, improving energy security, and supporting the circular economy by utilizing waste oils and fats, contributing to a more sustainable energy landscape.

Growth Driver in the Biodiesel Market

Increasing Demand for Sustainable Energy

The growing focus on reducing carbon emissions and combating climate change is a significant driver for the biodiesel market. Governments worldwide are adopting policies and incentives to encourage renewable energy, making biodiesel an attractive alternative to fossil fuels. Biodiesel’s ability to reduce greenhouse gas emissions by up to 80% compared to petroleum diesel positions it as a key solution in transitioning to a low-carbon energy system, particularly in transportation and industrial sectors. By 2040, India's primary energy demand is expected to double, with an increase in the usage of alternative fuels such as biodiesel. Biofuels are the most efficient alternative to fossil fuels and can be produced locally. As the final product is typically 95% carbon-free, these fuels also aid in reducing any adverse effects on the environment.

Supportive Government Policies and Regulations

Government mandates promoting biofuels, such as blending requirements and tax incentives, boost biodiesel production and consumption. For instance, countries like the United States and Brazil have implemented blending mandates to integrate biodiesel into their fuel supply. Subsidies for biodiesel producers and research investments further enhance market growth. These policies create a favorable environment for biodiesel adoption, ensuring compliance with environmental standards while driving economic opportunities for the renewable energy sector.  According to the ERIA report, the total demand for biodiesel in the ASEAN and East Asian countries will reach nearly 37 million tons by 2035.

Expanding Applications Across Industries

Biodiesel’s versatility across various industries supports its market growth. In addition to being used as a transportation fuel, biodiesel is increasingly adopted in power generation, heating systems, and industrial machinery. Sectors such as agriculture and marine also benefit from biodiesel’s cleaner-burning properties, improving equipment longevity and reducing environmental impact. Its use in off-grid power solutions in remote areas highlights biodiesel’s role in enhancing energy access, further expanding its market potential. The European Union has set a target to decarbonize the transport sector by 15% by 2025 and 30% by 2030.

Challenges in the Biodiesel Market

Feedstock Availability and Cost

The biodiesel market heavily depends on the availability and cost of feedstocks like vegetable oils, animal fats, and waste cooking oils. Fluctuations in agricultural production, weather conditions, and competing demand for edible oils in the food industry can lead to feedstock shortages and price volatility. High feedstock costs increase production expenses, making biodiesel less competitive against fossil fuels. Additionally, the reliance on specific crops, such as soybeans and palm oil, raises concerns about deforestation and sustainability, further complicating the sourcing of raw materials for biodiesel production.

Technological and Infrastructure Limitations

The biodiesel industry faces challenges related to technology and infrastructure. Producing high-quality biodiesel that meets stringent regulatory standards requires advanced technology, which can be expensive for smaller producers. Furthermore, inadequate distribution networks and a lack of widespread refueling infrastructure hinder biodiesel adoption, particularly in developing regions. Compatibility issues with older engines and concerns about cold-weather performance also limit its application. Addressing these technological and logistical barriers is essential for biodiesel's broader acceptance and integration in energy markets.

Fuel Biodiesel Market

Biodiesel, derived from renewable sources, is a cleaner-burning alternative to traditional fossil fuels, significantly reducing greenhouse gas emissions. It can be seamlessly integrated into existing diesel engines without significant modifications, making it a practical choice for transportation. As countries worldwide seek to decrease their reliance on fossil fuels and address climate change, biodiesel emerges as a fuel that supports both environmental goals and energy security. The widespread adoption of biodiesel in the transportation sector highlights its immediate impact on reducing carbon footprints and fostering a sustainable energy future.

Vegetable Oil Biodiesel Market

Vegetable oils, particularly soybean, palm, and rapeseed oil, serve as primary feedstocks for biodiesel production, offering abundant and renewable sources. Their adaptability to different climates and regions enhances their reliability. Additionally, vegetable oil-based biodiesel is compatible with existing infrastructure, allowing seamless integration into the transportation sector. As environmental awareness grows and the demand for renewable energy increases, the expanding role of vegetable oils in the biodiesel market meets the need for sustainable and efficient alternatives to traditional fuels. This makes vegetable oils a cornerstone of the industry's growth.

United States Biodiesel Market

Robust government support, including tax incentives and Renewable Fuel Standard (RFS) mandates, stimulates both manufacturing and consumption of biodiesel. A strong agricultural sector provides a sufficient supply of feedstock, primarily soybean oil, ensuring a consistent and abundant source for production. Stringent environmental policies increase the demand for biodiesel as a cleaner alternative, helping to reduce greenhouse gas emissions. Technological advancements in production methods improve both performance and cost-effectiveness.

Additionally, a well-developed infrastructure facilitates the seamless integration of biodiesel into the existing transportation system. This comprehensive strategy positions the United States as a leader in promoting sustainable, regionally sourced biodiesel solutions. In January 2023, the US Department of Energy (DOE) unveiled plans to allocate $118 million across 17 initiatives to expedite the advancement of sustainable biofuels to meet the nation's transportation and manufacturing needs. These chosen projects are geared towards enhancing the domestic production of biofuels and bioproducts by advancing biorefinery development stages from pre-pilot to demonstration, thereby offering sustainable fuel options that reduce emissions linked with fossil fuels.

Germany Biodiesel Market

Germany's biodiesel market is one of the largest in Europe, driven by strong government policies promoting renewable energy use. The country has set ambitious targets for reducing greenhouse gas emissions, making biodiesel a key component of its energy transition strategy. Germany relies heavily on feedstocks like rapeseed oil, which supports its agricultural sector. Innovative technologies and improved production methods have enhanced the efficiency and sustainability of biodiesel production. Additionally, the country's extensive infrastructure enables the smooth integration of biodiesel into the transportation sector. As concerns about climate change grow, Germany's commitment to biodiesel solidifies its role in promoting cleaner fuel alternatives.

India Biodiesel Market

India's biodiesel market is rapidly evolving, driven by the country's urgent need to address energy security and environmental concerns. The government has introduced policies to promote the cultivation of non-food oilseeds, such as Jatropha, and used cooking oil as feedstocks for biodiesel production. India aims to blend biodiesel with conventional diesel to reduce dependence on fossil fuels. The rising awareness of sustainable practices and the environmental benefits of biodiesel are fostering growth. Additionally, initiatives like the National Biofuels Policy aim to enhance production capacity and promote research and development, positioning India as an emerging player in the biodiesel sector. The anticipated increase in global biofuel demand, mainly driven by higher blending targets in developing countries, signals a positive trajectory for biodiesel. Governments worldwide actively support biofuels through strategic policies, exemplified by initiatives like India's National Bioenergy Programme, which is set to continue until 2025‐“2026.

Saudi Arabia Biodiesel Market

The Saudi Arabian biodiesel market is witnessing significant growth, driven by the country's increasing focus on sustainable energy and diversification from oil dependence. With vast agricultural resources and government support, biodiesel production has gained momentum. Initiatives to promote renewable energy, including the National Renewable Energy Program, encourage investments in biodiesel production facilities. Rising environmental concerns and the global shift towards cleaner fuels are also fostering demand. As the market evolves, collaboration between private and public sectors is essential to enhance technology and establish a robust supply chain, ultimately positioning Saudi Arabia as a key player in the biodiesel industry.

Key Players

Archer Daniels Midland Company, FutureFuel, Nestlé, Renewable Energy Group, Inc., Bunge Global SA, Wilmar, and Shell are major players in the global biodiesel market.

October 2024: The ORLEN Group started selling its HVO100 fuel at two service stations in Germany. HVO100 is a second-generation biofuel made from vegetable oils and waste products from the food and hospitality industries. It can be used in most diesel engine vehicles without any modifications.

September 2024: Indian Oil Corporation achieved a biodiesel blending ratio of 0.49 percent, blending 23.24 crore liters of biodiesel with regular diesel. This surpassed the 0.43 percent blending ratio achieved by other oil marketing companies.

In November 2023, Eni SPA entered an agreement with Saipem SPA to evaluate potential projects to expand further subsidiary Eni Sustainable Mobility SPA‐™s capacity to produce biofuels, including sustainable aviation fuel (SAF) and renewable diesel.

In July 2023, BP invested $10 million in WasteFuel, which plans to develop a global network of plants to convert municipal and agricultural waste into bio-methanol. This biofuel is expected to play a significant role in decarbonizing hard-to-abate sectors like shipping.

In March 2023, Cargill will open a new Belgian-based plant to produce biodiesel. This addition will improve the plant's production capacity and directly impact Cargill's global market share.

Application – Market breakup in 3 viewpoints:

1.    Fuel
2.    Power Generation
3.    Others

Feedstock – Market breakup in 2 viewpoints:

1.    Vegetable Oil
2.    Animal Fats

Countries – Market breakup of 25 Countries Covered in the Report:

1.    North America

1.1    United States
1.2    Canada

2.    Europe

2.1    France
2.2    Germany
2.3    Italy
2.4    Spain
2.5    United Kingdom
2.6    Belgium
2.7    Netherlands
2.8    Turkey

3.    Asia Pacific

3.1    China
3.2    Japan
3.3    India
3.4    South Korea
3.5    Thailand
3.6    Malaysia
3.7    Indonesia
3.8    Australia
3.9    New Zealand

4.    Latin America

4.1    Brazil
4.2    Mexico
4.3    Argentina

5.    Middle East & Africa

5.1    Saudi Arabia
5.2    United Arab Emirates
5.3    South Africa

All the Key players have been covered from 3 Viewpoints:

•     Overview
•     Recent Development
•     Revenue Analysis

Company Analysis:

1.    Archer Daniels Midland Company
2.    FutureFuel
3.    Nestle’s
4.    Renewable Energy Group, Inc.,
5.    Bunge Global SA
6.    Wilmar
7.    Shell

Report Details: