Biodiesel Market Outlook 2025–2031

The global Biodiesel Market size is estimated at US$ 52,000 million in 2025 and is projected to reach approximately US$ 78,000 million by 2031, growing at a CAGR of 6.9% during 2025–2031.
Rising renewable energy mandates, transportation sector decarbonization, and growing demand for low-carbon fuels are strengthening long-term market fundamentals.

Market Historical Performance

The Biodiesel Market has recorded stable growth over the past five years, supported by government blending mandates and climate-focused energy policies. Between 2020 and 2024, the market expanded from around US$ 41 billion to nearly US$ 49 billion, registering a historical CAGR of approximately 4.6%.

During this period, countries across Europe and North America increased biodiesel blending requirements to reduce greenhouse gas emissions from road transport. The recovery of industrial activity after 2021 and rising diesel consumption in logistics and agriculture further supported biodiesel demand. In parallel, technological improvements in transesterification processes enhanced production efficiency and fuel quality.

Market Overview & Key Statistics

• Market Size 2025: US$ 52 Billion
• Forecast 2031: US$ 78 Billion
• CAGR (2025–2031): 6.9%
• Historical CAGR (2020–2024): ~4.6%
• Major End Users: Transportation, Agriculture, Power Generation
• Fastest-Growing Region: Asia-Pacific

The market continues to benefit from supportive regulatory frameworks, rising fossil fuel price volatility, and increasing investments in sustainable fuel infrastructure.

What Is Driving the Biodiesel Market?

Biodiesel is a renewable, biodegradable fuel produced primarily from vegetable oils, animal fats, and used cooking oil. It is widely used as a substitute or blend with petroleum diesel in transportation, farming equipment, and power generation.

Government mandates requiring biodiesel blending—such as B10, B20, and higher blends—are a primary demand catalyst. Additionally, carbon reduction targets under global climate agreements are encouraging fuel distributors and fleet operators to adopt biodiesel as a transitional low-emission solution.

Key Market Drivers

• Renewable Fuel Mandates and Blending Policies
  National biofuel programs in the U.S., EU, Brazil, and India are increasing mandatory biodiesel blending levels, directly boosting consumption volumes.
• Rising Focus on Carbon Emission Reduction
  Biodiesel offers up to 60–80% lifecycle greenhouse gas emission reduction compared to conventional diesel, supporting climate targets.
• Growth in Agricultural and Commercial Transport
  High diesel usage in farming, freight, and public transport sectors sustains consistent demand for biodiesel blends.
• Utilization of Waste-Based Feedstocks
  Increased use of used cooking oil and animal fats improves sustainability while reducing dependence on virgin vegetable oils.

Market Restraints & Challenges

• Feedstock Price Volatility: Fluctuations in soybean oil, palm oil, and rapeseed prices affect production economics.
• Competition from Renewable Diesel: Hydrotreated vegetable oil (HVO) poses a competitive threat in developed markets.
• Infrastructure Limitations: Storage and blending infrastructure gaps restrict adoption in some regions.
• Policy Uncertainty: Changes in subsidies or blending mandates can impact long-term investment confidence.

Biodiesel Market Segment Analysis

1. By Product / Technology / Type

➤ Conventional Biodiesel (FAME) (Largest Segment – ~72% Share)
Fatty Acid Methyl Ester (FAME) biodiesel dominates due to established production processes and widespread regulatory acceptance.

➤ Advanced Biodiesel
Produced from waste oils and non-food feedstocks, this segment is growing at over 8.1% CAGR due to sustainability benefits.

2. By Application / End-User

➤ Transportation Fuel (48% Market Share)
Public transport fleets, commercial vehicles, and logistics operators are the largest consumers of biodiesel blends.

➤ Agriculture & Off-Road Equipment
Tractors, harvesters, and irrigation pumps use biodiesel to meet emission norms and reduce fuel costs.

➤ Power Generation & Industrial Use
Backup generators and industrial boilers increasingly adopt biodiesel in regions with strict emission controls.

3. By Region / Geography

➤ Asia-Pacific (Fastest-Growing – ~34% Share)
• Expanding biodiesel programs in India, Indonesia, and Thailand
• Rising diesel demand from agriculture and transport sectors
• Strong government support for domestic biofuel production

➤ Europe (~30% Share)
• Mature biodiesel market with strict emission regulations
• High adoption of waste-based biodiesel feedstocks

➤ North America (~24% Share)
• Strong renewable fuel standards in the U.S.
• Increasing investment in bio-refineries and feedstock supply chains

➤ Latin America & Middle East & Africa
• Emerging opportunities driven by agricultural feedstock availability and fuel diversification strategies

Emerging Trends in the Biodiesel Market

• Increasing shift toward waste-based and non-food feedstocks
• Integration of biodiesel with circular economy models
• Expansion of B20 and higher blend adoption
• Technological optimization to improve cold flow properties
• Strategic alliances between oil companies and biofuel producers

Investment Opportunities

• Development of advanced biodiesel plants using waste feedstocks
• Expansion of blending and distribution infrastructure in Asia-Pacific
• Strategic investments in feedstock supply chain integration
• Public-private partnerships supporting national biofuel programs
• High ROI potential in emerging markets with rising diesel demand

Although feedstock risks persist, long-term returns remain attractive due to regulatory backing and decarbonization commitments.

Key Companies in the Biodiesel Market

• Neste
• Renewable Energy Group
• Wilmar International
• Bunge Limited
• Archer Daniels Midland
• Louis Dreyfus Company
• Verbio AG
• Cargill Incorporated
• Petrobras Biocombustível

Future Outlook

The Biodiesel Market is expected to experience sustained growth through 2031 as governments strengthen renewable fuel mandates and industries pursue lower-carbon fuel alternatives. Advances in feedstock diversification and process efficiency will further enhance market competitiveness.

Conclusion

The Biodiesel Market plays a strategic role in the global energy transition by offering an immediately deployable, low-carbon alternative to conventional diesel. Supported by policy incentives, technological improvements, and rising sustainability goals, the market presents significant opportunities for producers, investors, and policymakers.

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