Biodiesel Market size was valued at USD 50 billion in 2023 and is predicted to reach USD 135.9 billion by the end of 2036, registering around 8% CAGR during the forecast period i.e., between 2024-2036. In 2024, the industry size of biodiesel is assessed at USD 54 billion.
The market is poised to witness remarkable growth fueled by increasing concerns about the environment and the growing need for renewable energy sources. Due to global efforts to mitigate carbon emissions from human activities while swiftly moving away from fossil fuel dependence, biodiesel has slowly been put in the limelight as a durable alternative fuel. It is made from renewable raw materials such as vegetable oils and animal fats, hence tagged environment-friendly by different industries. Factors for the increase in biodiesel market movements include awareness about climate change and government incentives toward clean energy.
Companies in the biodiesel sector are scaling up production and joining forces with other companies to take full advantage of this burgeoning market. In April 2023, Neste Corporation declared a renewable diesel agreement with Marathon Petroleum to make solar-compatible fuel in California. It is expected that the joint venture will result in a substantial increase in biodiesel output to cope with surging demand for more environmentally friendly fuels. It is part of a trend toward alliances to improve market positioning and meet demand from customers for renewable power.
Growth Drivers
Challenges:
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Base Year |
2023 |
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Forecast Year |
2024-2036 |
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CAGR |
8% |
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Base Year Market Size (2023) |
USD 50 billion |
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Forecast Year Market Size (2036) |
USD 135.9 billion |
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Regional Scope |
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By Feedstock (Vegetable Oil, Animal Fats)
In 2023, the vegetable oil feedstock segment accounted for over 91.8% of the revenue generated in the overall biodiesel market. Its dominance in the market is very large relative to the availability and high yield of production. The reuse of waste vegetable oils in the production of biodiesel is also considered a green trend which may give a further push to this sector. In February 2024, Renewable Energy Group announced that it had expanded its vegetable oil-based biodiesel production facility in the U.S.
Application (Fuel, Power Generation, Others)
The fuel application segment is expected to remain dominant in the global biodiesel market, with a share of approximately 81.0% during the forecast period owing to high demand for biodiesel as an alternative to conventional diesel in the transportation industry. In 2020, Neste Corporation declared that it was expanding the production of its renewable diesel to cater to the increased demand for road transport fuels, which further strengthened this share.
Our in-depth analysis of the global market includes the following segments:
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By Feedstock |
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Application |
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Production Process |
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Europe Market Analysis
Europe is expected to lead the biodiesel market at 45% during the forecast period. The region's commitment to reducing carbon emissions and driving for renewable fuels plays a vital role in the adoption of biodiesel. The European Union’s Renewable Energy Directive II (RED II) requires a further step in the use of renewables in transportation, placing upward pressure on biodiesel demand. Further growth comes from Europe with its strong regulatory framework and favorable financials for renewable energy projects.
One of the major markets for biodiesel in Europe is Germany, a country with demanding environmental legislation and a strong automotive sector. With the priority of lowering greenhouse gas emissions, biodiesel demand has increased notably in transportation uses. In July 2023, German biodiesel producer Verbio AG made the enlargement and enhancement effort of production capacity as an indication that the demand for sustainable fuels continues to rise. The globally known commitment to renewable energy and environmental sustainability in Germany is another salient factor driving the market.
France is another major player in the Europe market with government measures including tax breaks for biodiesel use and subsidies from biodiesel producers. The measures led to an increase in 2022 biodiesel consumption by a rate of 7% based on figures released with the information, whose source is the principal from the French Ministry for Ecological Transition. In France, increasing focus on national targets for renewable energy and reduction in the consumption of diesel fuel will favor long-term growth.
Asia Pacific Market Analysis
Asia Pacific is projected to be the fastest-growing region, fueled by rising energy needs in countries such as China and India, along with favorable regulatory assistance from governments for developing renewable power sources. To get energy security and reduce environmental pollution, countries such as India, China, and Japan are investing a lot in producing biodiesel. These countries have a large population along with rapid industrialization, which is boosting the demand for biodiesel as an alternative source of energy.
The biodiesel market is also slated to proliferate across India, owing to government backing for bio-fuel production as the demand for renewable energy climbs. The National Biofuel Policy revised in 2023 by the Indian government aims to target blending at a percentage up to 20% of biodiesel blends with diesel. The policy is prompting investments in biodiesel production and infrastructure, rendering India a key player within Asia Pacific. In September 2023, Indian Oil Corporation revealed its plans to establish a new facility for biodiesel production, which can further enhance the respective capabilities and potential to supply more demand.
The government of China intensified carbon emission control and introduced more stringent regulations, contributing to the growth of the market. China has embarked on several initiatives to encourage the growth of its biodiesel sector by offering subsidies and tax breaks for local producers. For instance, Sinopec established a newly built biodiesel production plant in June 2023 to serve its high dedication power for accelerating the global shift toward clean sources. A commitment to sustainability and energy security continues to underpin China's market, providing plenty of scope for growth downstream.
The biodiesel market is highly competitive and fragmented, with several key players competing to increase their shares in the market by introducing new innovative products and strategic partnerships. Companies including Neste Corporation, Renewable Energy Group (REG), and Archer Daniels Midland Company are among the leading players in the industry due to their significant manufacturing capacity as well as presence across multiple regions. As a result, these companies are increasing their R&D activities to improve biodiesel productivity and develop new products — thereby enabling them to stay competitive in the changing market landscape.
Here are some leading players in the market:
Author Credits: Dhruv Bhatia
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