Biofuel Market | Global Industry Analysis 2033

Biofuel Market Overview

Global Biofuel Market size is estimated at USD 76076.9 million in 2024, set to expand to USD 115284.55 million by 2033, growing at a CAGR of 4.7%.

The biofuel market has grown into a pivotal segment within the global energy mix, addressing increasing environmental concerns and the urgent need to transition from fossil-based energy sources. In 2024, global biofuel production exceeded 160 billion liters, with more than 60 billion liters accounted for by biodiesel and the remaining 100 billion liters by ethanol. Ethanol dominates the biofuel spectrum, with over 70% of biofuel blends in transportation involving ethanol-based formulations.

More than 65 countries actively produce biofuels, with the United States, Brazil, and Indonesia leading in volume. The biofuel sector supports approximately 2.3 million jobs globally, driven largely by agricultural feedstock cultivation and refinery operations. In terms of feedstock distribution, corn remains the leading input for ethanol (with over 45% of total usage), whereas soybean oil and palm oil account for more than 60% of biodiesel production.

Government mandates and blending targets play a crucial role in shaping the biofuel landscape. More than 40 countries now mandate minimum biofuel blending rates, ranging from 5% to 20%. Notably, the U.S. Environmental Protection Agency enforces Renewable Volume Obligations (RVOs) annually, contributing to over 55 billion liters of biofuel being consumed domestically.

Key Findings

Top Driver reason: Increasing governmental mandates for ethanol blending across transportation fuels.

Top Country/Region: The United States accounted for over 40 billion liters of biofuel output in 2024.

Top Segment: Ethanol segment holds over 60% share in total biofuel consumption across automotive applications.

Biofuel Market Trends

The biofuel market is witnessing transformative trends as nations aim to decarbonize their energy portfolios. In 2024, second-generation biofuels—produced from non-food biomass—accounted for 18% of total global output, up from just 10% in 2020. These advanced biofuels reduce lifecycle greenhouse gas emissions by over 85% compared to traditional fossil fuels.

In the transportation segment, over 85% of fuel sold in Brazil included at least a 25% ethanol blend, demonstrating the country’s leadership in bioethanol adoption. Moreover, more than 150 airports globally have started using bio-based aviation fuels (SAFs), a trend supported by carbon neutrality pledges from over 40 airlines.

Another strong trend is the diversification of feedstocks. Algae-based biofuels, although still nascent, are gaining attention due to higher oil yields—algae can produce up to 30 times more oil per acre than traditional crops. Meanwhile, waste oils now contribute over 12% to biodiesel production, promoting circular economy principles.

Biofuel Market Dynamics

DRIVER

Increasing government mandates for renewable fuel blending.

Governments worldwide are reinforcing renewable fuel mandates, significantly driving biofuel demand. As of 2024, over 50 countries have set mandatory blending targets, including E10 and B20 standards. India’s Ethanol Blending Program, which aims for a 20% ethanol mix by 2025, resulted in an increase of 4.5 billion liters in domestic ethanol consumption between 2022 and 2024. Similarly, Indonesia mandated a B35 biodiesel blend in 2024, pushing national biodiesel consumption to exceed 10 billion liters. These mandates ensure consistent demand, provide a cushion against fossil fuel volatility, and reduce greenhouse gas emissions by 65% per unit of biofuel used.

RESTRAINT

Limited feedstock availability and price volatility.

Feedstock constitutes over 70% of biofuel production costs, and price instability directly affects profitability. In 2023, the price of soybean oil surged by 28% due to poor harvests in South America, significantly increasing biodiesel production costs. Moreover, the diversion of corn and sugarcane from food supply chains to ethanol production led to a 15% rise in staple prices in several developing nations. Land use conflicts and water resource constraints further restrict feedstock scalability, making biofuel supply sensitive to climatic and geopolitical disruptions.

OPPORTUNITY

Expansion of sustainable aviation fuel (SAF) demand.

The aviation industry consumed over 450 million liters of SAF in 2024, a figure expected to surpass 1 billion liters in the next two years due to corporate decarbonization goals. More than 70 airport hubs now have SAF distribution channels, and aircraft manufacturers are designing engines optimized for up to 50% biofuel blends. European Union directives under the ReFuelEU Aviation policy are pushing for mandatory SAF usage starting in 2025, opening up investment opportunities worth over $8 billion in refining, logistics, and R&D for bio-jet fuels.

CHALLENGE

Technological complexity and high capital investment.

Building advanced bio-refineries demands significant capital. A single commercial-scale cellulosic ethanol plant requires over $250 million in investment. Technology maturity remains a challenge—more than 60 pilot plants using lignocellulosic feedstocks reported underutilization due to inefficient enzyme performance or equipment failures. Furthermore, the regulatory certification process for new biofuels involves stringent lifecycle emission assessments, delaying commercialization by 18–24 months on average. These barriers hamper scalability and slow the transition to second- and third-generation biofuels.

Biofuel Market Segmentation

The biofuel market is segmented by type and application, with ethanol and biodiesel as the two major categories. Application areas span across transportation, aviation, industry, and miscellaneous energy sectors, each with specific adoption rates and technological considerations.

By Type

Biodiesel: Biodiesel represents over 35% of the total biofuel market volume. In 2024, more than 45 billion liters of biodiesel were produced globally. Key producers include the United States, Indonesia, and the EU, accounting for over 80% of output. Feedstocks include soybean oil, palm oil, and waste cooking oil. In Europe, rapeseed oil contributes 65% of biodiesel input. Biodiesel emits 50% less CO₂ per kilometer compared to traditional diesel and improves engine lubrication, which has extended engine life by an average of 12% in commercial vehicles.
Ethanol: Ethanol remains the dominant biofuel type, constituting over 60% of the market. Brazil alone produces over 30 billion liters annually, primarily from sugarcane. U.S. ethanol production exceeds 50 billion liters, mostly derived from corn. Ethanol is used extensively in E10 and E15 fuel blends and helps reduce tailpipe emissions by 30%. Its high octane rating (over 100) makes it suitable for high-performance engines, and ethanol-blended fuels now serve over 80% of light-duty vehicles globally.

By Application

Aviation: Aviation biofuels, especially SAFs, are gaining traction, contributing more than 500 million liters to global jet fuel demand. Over 70 airlines have incorporated SAF into their fleets, and testing with 100% bio-jet fuel blends has been completed by manufacturers such as Airbus.
Vehicle: Vehicles are the primary application segment, with over 110 billion liters of biofuel consumed in road transportation. In countries like the U.S. and Brazil, over 95% of gasoline stations offer ethanol-blended fuels. Biofuels in transport reduce particulate emissions by 20%.
Industrial: Industrial usage accounts for approximately 8 billion liters annually, especially in cogeneration and power backup. Biofuels supply over 5% of industrial heat in the EU. Factories using biofuel-fired boilers reported a 40% reduction in operating emissions.
Others: Other applications include marine fuels and rural electrification projects. In Africa, decentralized biodiesel microgrids support over 1.5 million people in off-grid communities.

Biofuel Market Regional Outlook

The global biofuel market is regionally diverse, driven by national mandates and resource availability. The U.S., Brazil, and Indonesia lead, while European countries are investing heavily in second-generation biofuels.

North America

North America leads in ethanol production, with the U.S. contributing over 50 billion liters in 2024. The Renewable Fuel Standard program facilitated the consumption of 60 billion liters across all applications. Canada increased its biofuel blend mandate to 15%, supporting regional output growth of 18% over two years.

Europe

Europe focuses on advanced biofuels, producing over 25 billion liters, 40% of which are second-generation. Germany, France, and the Netherlands are primary contributors. The RED II directive promotes waste-based biofuel adoption, with over 6 billion liters produced from used cooking oil in 2024.

Asia-Pacific

Asia-Pacific’s production surpassed 35 billion liters in 2024. Indonesia leads in biodiesel, with its B35 mandate consuming 12 billion liters. India doubled ethanol production to 10 billion liters under its blending program. China’s investments in algae-based biofuels exceeded $500 million in 2023–2024.

Middle East & Africa

The region is emerging, producing over 3 billion liters in 2024. South Africa leads, accounting for 1.2 billion liters. In the Middle East, UAE invested $150 million in a pilot SAF plant. Kenya and Nigeria expanded jatropha cultivation to support rural biofuel initiatives.

List of Top Biofuel Market Companies

Abengoa Bioenergy
Cargill
BTG
DowDuPont
Wilmar
Renewable Energy
POET
Archer Daniels Midland
VERBIO Vereinigte BioEnergie

Top Two Companies by Share

POET: Operates 33 ethanol plants across the U.S., producing over 9 billion liters annually.

Archer Daniels Midland: Accounts for over 7.5 billion liters of ethanol production yearly and manages over 100 million metric tons of corn processing capacity.

Investment Analysis and Opportunities

Investment activity in the biofuel market has intensified due to global sustainability agendas, net-zero targets, and energy diversification strategies. As of 2024, over 520 biofuel infrastructure projects were active worldwide, accounting for capital expenditures exceeding $65 billion. More than 70% of these investments were targeted toward advanced biofuel facilities, particularly those processing lignocellulosic biomass and waste oils.

Private equity involvement is also on the rise, with biofuel companies receiving over $9.8 billion in clean energy funding rounds between 2022 and 2024. Major institutional investors now classify biofuels under ESG-compliant portfolios. Pension funds from Canada, Norway, and Australia have collectively invested more than $2.5 billion into SAF refining projects and integrated ethanol-biodiesel complexes.

In the U.S., the Department of Energy committed over $1.8 billion to biofuel R&D grants and pilot-scale facilities during the 2023–2024 period. This investment supported 35 new projects, including algae farming systems and modular gasification units. The state of California alone provided over $300 million in low-carbon fuel infrastructure grants under its LCFS framework.

Emerging markets present significant capital inflow potential. In Southeast Asia, Indonesia and Malaysia launched a combined fund of $1.2 billion to co-finance biodiesel expansions and distribution networks. In Africa, bioenergy funds totaling $450 million were allocated to 18 rural electrification programs powered by biodiesel microgrids.

New Product Development

Innovation in the biofuel market has accelerated, particularly in the areas of process optimization, advanced feedstocks, and low-emission fuel variants. In 2024, more than 150 new biofuel-related products were launched across 30 countries, focusing on enhanced performance and environmental impact reduction.

One significant development was the commercialization of enzyme-enhanced ethanol. Several producers introduced bio-catalysts that reduce fermentation time by 20% and improve ethanol yield per ton of corn by 8%. These innovations allow ethanol plants to achieve higher output with reduced energy input, enhancing profitability and sustainability.

Another major product category gaining traction is renewable diesel. Unlike traditional FAME biodiesel, renewable diesel has similar molecular properties to petroleum diesel and can be used as a drop-in fuel. In 2023–2024, over 5 billion liters of renewable diesel entered the market, with performance benefits including lower NOx emissions and better cold flow properties.

Algae-derived bio-oils emerged as a frontier innovation. In 2024, three new commercial products using microalgae oil were introduced for aviation use, achieving energy densities up to 38 MJ/kg—comparable to conventional jet fuel. These biofuels showed emission reductions of up to 90% over the lifecycle and received initial certification for use in 25% blends.

The launch of multi-feedstock flexible refineries marked a technological leap. Facilities in Canada and the Netherlands began operations that can switch between feedstocks such as corn stover, waste cooking oil, and animal fats without equipment changes. These plants reduce downtime and ensure supply continuity amid feedstock fluctuations.

Five Recent Developments

POET: launched a new cellulosic ethanol facility in Iowa with a capacity of 150 million liters per year, using corn stover and achieving a 70% lifecycle emissions reduction.
Archer Daniels Midland: began operations at its first renewable diesel plant in Illinois, processing 3 million metric tons of soybean oil annually and supplying over 2.4 billion liters of fuel.
Wilmar: International expanded its biodiesel production in Indonesia with an additional 2.1 billion liters/year capacity to meet B35 mandate demands.
VERBIO: commissioned a biomethane facility in Germany that uses straw and organic waste, producing 250 million cubic meters of biogas and supplying over 200,000 households.
Cargill: launched an algae-based SAF collaboration with a startup in the Netherlands to produce 100 million liters per year by 2025, targeting 80% lifecycle GHG reduction.

Report Coverage of Biofuel Market

The report on the biofuel market offers in-depth coverage of key aspects influencing the industry across production, application, geography, and innovation. The scope includes a detailed analysis of primary and advanced biofuels, covering ethanol, biodiesel, renewable diesel, SAFs, and biomethane.

The report assesses global production metrics, highlighting the output from over 60 countries and quantifying more than 160 billion liters of biofuel processed annually. It also covers feedstock sourcing patterns, showing the dominance of corn, sugarcane, soybean oil, palm oil, and emerging options like algae and lignocellulosic biomass.

The report provides extensive segmentation by product type and end-use application. Ethanol and biodiesel are evaluated in detail, including their usage across road transportation, aviation, industry, and power generation. The analysis includes fuel characteristics, emission performance, compatibility with existing engines, and distribution infrastructure.

Regional analysis spans North America, Europe, Asia-Pacific, and Middle East & Africa. It examines national mandates, import/export volumes, refinery capacities, and policy incentives. In North America, over 60 billion liters of blending occurs annually, while Europe focuses on waste-derived fuels. Asia-Pacific leads in biodiesel blending mandates, and Africa shows strong rural microgrid applications.

The report also covers over 25 key market participants, including multinational firms like POET, ADM, and Wilmar, as well as regional producers and technology developers. Company profiles include refinery capacities, technology focus, production volumes, and partnerships.