Biodiesel Market Size, Share, Trends & Forecast

Biodiesel Market Outlook

According to the report by Expert Market Research (EMR), the global biodiesel market size attained a value of 44.07 billion litres in 2024. Driven by the growing demand for renewable energy sources, increased government mandates for biofuels, and the rising focus on environmental sustainability, the market is projected to further grow at a compound annual growth rate (CAGR) of 6.0% between 2025 and 2034, reaching a value of 74.45 billion litres by 2034.

Biodiesel, a renewable, biodegradable, and environmentally friendly fuel alternative derived from renewable biological sources such as vegetable oils, animal fats, and algae, has gained significant traction in recent years. It serves as a direct substitute for petroleum diesel and can be used in diesel engines with little or no modifications. As countries around the world seek to reduce their carbon footprints and move toward more sustainable energy sources, biodiesel has emerged as a critical component of the global energy transition.

The growing concerns over climate change, the volatility of crude oil prices, and the need to reduce dependency on fossil fuels are some of the major factors propelling the demand for biodiesel. Additionally, advancements in biodiesel production technologies, as well as government incentives and support for biofuels, are further contributing to the market's expansion.

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Key Drivers of Market Growth

Government Policies and Mandates: Governments worldwide are increasingly adopting policies and mandating the use of renewable energy sources to reduce greenhouse gas emissions, mitigate the environmental impact of fossil fuels, and promote energy security. Biodiesel, as a renewable and eco-friendly alternative to conventional diesel, has garnered substantial support through various policy initiatives.

In regions like the European Union (EU), the United States, and Brazil, biofuels are subject to specific blending mandates, which require a certain percentage of renewable fuels like biodiesel to be mixed with conventional petroleum diesel. These mandates have significantly contributed to the growing demand for biodiesel, as they offer a guaranteed market for producers and an avenue to reduce dependency on imported oil. As more countries adopt similar biofuel mandates, the market for biodiesel is set to experience robust growth.

Rising Demand for Renewable Energy and Environmental Concerns: The increasing global focus on environmental sustainability has further fueled the adoption of renewable energy sources, including biodiesel. As the world becomes more aware of the harmful impacts of carbon emissions from traditional fossil fuels, both consumers and industries are seeking alternatives to reduce their environmental footprint.

Biodiesel, when compared to conventional petroleum diesel, produces fewer harmful pollutants and greenhouse gases, such as carbon dioxide (CO2), particulate matter, and sulfur. Its use significantly lowers net carbon emissions, making it an attractive option for countries striving to meet international climate agreements, such as the Paris Agreement. Additionally, biodiesel is produced from renewable resources like agricultural crops, which absorb CO2 during their growth phase, further contributing to its sustainability credentials.

Advancements in Biodiesel Production Technology: Technological advancements in biodiesel production processes have enhanced the efficiency and cost-effectiveness of biodiesel manufacturing. The traditional method of biodiesel production, known as transesterification, has seen improvements in terms of the catalysts, feedstocks, and reaction conditions used, resulting in higher yields and reduced production costs.

Innovations in algae-based biodiesel production, for example, are showing considerable promise due to algae's high lipid content and rapid growth rates, offering a potentially more sustainable and scalable source of biodiesel. Research into genetically modified crops and waste oil utilization is also driving efficiency gains in the production process. As production becomes more cost-competitive with petroleum diesel, the affordability and attractiveness of biodiesel will continue to increase.

Volatility of Crude Oil Prices: The price volatility of crude oil is another key factor driving the growth of the biodiesel market. Fluctuations in the price of crude oil often lead to instability in fuel prices, making it harder for businesses and consumers to plan their fuel costs. Biodiesel offers a more stable alternative since its production is less affected by the global crude oil market.

The rising cost of petroleum-based fuels and the need for energy security have encouraged many countries to explore biodiesel as a viable alternative. As petroleum prices continue to fluctuate, biodiesel is expected to remain a reliable, cost-effective option for consumers and businesses alike, particularly in the transportation and agricultural sectors.

Sustainability and Circular Economy Focus: The growing emphasis on sustainability and the circular economy has led to an increase in the use of waste-based feedstocks for biodiesel production. Agricultural waste, used cooking oil, and animal fats are increasingly being utilized as raw materials in biodiesel production, further improving the sustainability of the biofuels industry.

These feedstocks not only help reduce waste but also lower the environmental impact of biodiesel production. By incorporating these by-products, the biodiesel industry supports the principles of a circular economy, which aims to reduce waste, extend the lifecycle of products, and minimize environmental harm.

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Biodiesel Market Segmentation

The market can be divided based on feedstock, type, technology, application, and region.

Market Breakup by Feedstock

• Vegetable Oil
• Animal Oil
• Others

Market Breakup by Type

• B100
• B20
• B5
• B2
• Others

Market Breakup by Technology

• Pyrolysis
• Hydro Heating
• Conventional Alcohol Transesterification
• Others

Market Breakup by Application

• Fuel
• Power Generation
• Others

Market Breakup by Region

• North America
• Europe
• Asia Pacific
• Latin America
• Middle East and Africa

Competitive Landscape

Some of the major players explored in the report by Expert Market Research are as follows:

Archer Daniels Midland Company
Louis Dreyfus Company B.V.
Ag Processing Inc.
RB Fuels
Renewable Energy Group, Inc.
Novozymes A/S
Others

Challenges in the Market

Despite the positive market outlook, there are several challenges faced by the biodiesel market. One of the primary concerns is the competition between biodiesel feedstocks and food crops, particularly in regions where land and resources are limited. Furthermore, fluctuations in feedstock prices and environmental concerns related to certain crop-based biodiesel sources may limit growth in some regions.

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