Global Biofuel Market - Forecasts from 2025 to 2030

The global biofuel market is expected to grow from USD 224.700 billion in 2025 to USD 318.719 billion in 2030, at a CAGR of 7.24%.

The global biofuel market is poised for significant growth, driven by the increasing demand for cleaner energy, stringent government regulations on desulfurization, and supportive financial incentives. Biofuels, including ethanol and biodiesel, are gaining traction as sustainable alternatives to fossil fuels, reducing particulate matter by 10% and carbon monoxide by 11% compared to diesel, according to Environmental Protection Agency assessments. The market is propelled by global mandates for renewable energy adoption and the depletion of fossil fuel reserves, encouraging a shift toward biofuels.

Market Drivers

Demand for Cleaner Fuels and Desulfurization Regulations

The need for cleaner energy sources and tightening government regulations on desulfurization of petroleum products are major drivers of the biofuel market. Biofuels significantly reduce air pollution, aligning with global efforts to combat climate change and meet environmental standards. Governments worldwide are implementing policies to reduce greenhouse gas emissions, promoting biofuels as a viable alternative to fossil fuels. These regulations, coupled with consumer demand for sustainable energy, are driving market growth by encouraging the adoption of biofuels in transportation and energy sectors.

Financial Incentives and Government Support

Supportive government initiatives and financial incentives are accelerating biofuel market expansion. For instance, in the United States, the Department of Energy introduced a 30% Alternative Fuel Infrastructure Tax Credit in December 2022 for fueling infrastructure using biofuels like E85 and diesel blends with at least 20% biodiesel. Similarly, Canada's plan to increase carbon taxes from CAD 10 to CAD 50 per ton of emissions starting in April 2022 incentivizes the adoption of biofuels with lower emissions. These policies, along with subsidies and funding programs, enhance the economic viability of biofuel production and infrastructure development.

Global Renewable Energy Mandates

Countries worldwide are setting ambitious renewable energy targets, driving demand for biofuels. For example, India's NITI Aayog report mandates a 20% ethanol blend in petrol by 2025, while Indonesia anticipates a 35% biodiesel blend starting in 2023. These blending requirements, combined with initiatives to reduce import duties on ethanol, as seen in Brazil in 2022, are boosting biofuel consumption. Such policies highlight the global commitment to sustainable energy, positioning biofuels as a critical component of the energy transition.

Geographical Outlook

United States' Market Leadership

The United States is a dominant player in the global biofuel market, driven by its robust production capacity and supportive policies. The U.S. Energy Information Administration projects that renewable diesel production will reach 5.1 billion gallons per year by the end of 2024, supported by ongoing and proposed projects. The transportation and energy sectors' increasing reliance on biofuels, coupled with initiatives like the EPA's streamlined evaluation of biofuels and the Alternative Fuel Infrastructure Tax Credit, are driving market growth. The U.S.'s focus on reducing greenhouse gas emissions further solidifies its position as a market leader.

Asia-Pacific and Europe

The Asia-Pacific region, particularly India and Indonesia, is witnessing rapid growth due to strong blending mandates and government support for biofuel production. Indonesia's focus on biodiesel and India's ethanol blending targets are key drivers. Europe is also a significant market, with initiatives like the Investment Plan for Europe and the Innovation Fund supporting biofuel development. The region's emphasis on sustainable aviation fuel (SAF) and renewable diesel aligns with decarbonization goals, boosting market demand.

Key Developments

In April 2023, Tecnicas Reunidas secured a contract from Cepsa to provide engineering, procurement, and construction management for a second-generation biofuels facility in southern Europe. The facility, using used cooking oils and agricultural waste, has a flexible capacity of 500,000 tons of SAF and renewable diesel for transportation. In January 2023, Zagros Petrochemical Company and Dalian Petrochemical Company signed a contract to build Iran's first ethanol plant, a methanol-to-synthetic ethanol facility with a 300,000-tonne annual capacity, set to be operational by 2026.

The biofuel market is on a strong growth trajectory, driven by the demand for cleaner fuels, stringent desulfurization regulations, and supportive government incentives. The U.S. leads the market with robust production and policy support, while Asia-Pacific and Europe contribute through blending mandates and sustainable fuel initiatives. Key developments, such as new biofuel facilities in Europe and Iran, highlight the industry's focus on innovation and scalability. As global energy transitions accelerate, the biofuel market is well-positioned for sustained expansion, meeting environmental and economic goals during the forecast period.

Key Benefits of this Report:

• Insightful Analysis: Gain detailed market insights covering major as well as emerging geographical regions, focusing on customer segments, government policies and socio-economic factors, consumer preferences, industry verticals, and other sub-segments.
• Competitive Landscape: Understand the strategic maneuvers employed by key players globally to understand possible market penetration with the correct strategy.
• Market Drivers & Future Trends: Explore the dynamic factors and pivotal market trends and how they will shape future market developments.
• Actionable Recommendations: Utilize the insights to exercise strategic decisions to uncover new business streams and revenues in a dynamic environment.
• Caters to a Wide Audience: Beneficial and cost-effective for startups, research institutions, consultants, SMEs, and large enterprises.

What do businesses use our reports for?

Industry and Market Insights, Opportunity Assessment, Product Demand Forecasting, Market Entry Strategy, Geographical Expansion, Capital Investment Decisions, Regulatory Framework & Implications, New Product Development, Competitive Intelligence

Report Coverage:

• Historical data from 2022 to 2024 & forecast data from 2025 to 2030
• Growth Opportunities, Challenges, Supply Chain Outlook, Regulatory Framework, and Trend Analysis
• Competitive Positioning, Strategies, and Market Share Analysis
• Revenue Growth and Forecast Assessment of segments and regions including countries
• Company Profiling (Strategies, Products, Financial Information, and Key Developments among others.

Segmentation:

By Production Technology

• First Generation
• Second Generation
• Third Generation
• Fourth Generation

By Biomass Source

• Wood fuels
• Agrofuels
• Municipal by-products

By State

• Solid
• Liquid
• Gas

By Geography

• North America
• USA
• Canada
• Mexico
• South America
• Brazil
• Argentina
• Others
• Europe
• Germany
• France
• United Kingdom
• Spain
• Others
• Middle East and Africa
• Saudi Arabia
• UAE
• Others
• Asia Pacific
• China
• India
• Japan
• South Korea
• Indonesia
• Thailand
• Others