Biodiesel Market Size, Share, Trends & Industry Report

Biodiesel Market Outlook

According to the report by Expert Market Research (EMR), the global biodiesel market size reached a value of 44.07 billion litres in the year 2024. With the growing demand for renewable energy sources and the increasing emphasis on reducing carbon emissions, the market is projected to grow at a robust CAGR of 6.0% from 2025 to 2034, ultimately reaching a value of 74.45 billion litres by 2034. Biodiesel, derived from renewable resources such as vegetable oils, animal fats, and waste cooking oils, is a key component in the global transition towards cleaner energy alternatives.

Biodiesel is an alternative to petroleum-based diesel, offering substantial environmental benefits, including lower carbon emissions, reduced particulate matter, and less dependence on fossil fuels. These advantages, coupled with supportive government policies and the growing urgency to address climate change, are driving the market’s expansion across the world.

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Market Drivers

Government Policies and Incentives: One of the primary drivers of the Global Biodiesel Market is the increasing number of government policies and incentives promoting renewable energy. Many countries, particularly in Europe, North America, and Asia, have implemented strict emission regulations aimed at reducing their carbon footprint and promoting the use of cleaner energy sources. Biodiesel, due to its renewable nature and environmental benefits, has become an attractive alternative to traditional fossil fuels.

In regions such as the European Union, the United States, and Brazil, biodiesel production is heavily subsidized and supported through renewable fuel standards, tax credits, and mandates for blending Global Biodiesel Market with conventional diesel. Such policies have not only made biodiesel more competitive but have also led to increased investments in biodiesel infrastructure and production capacity.

Environmental Concerns and Sustainability: The growing concern over the environmental impact of conventional fossil fuels has significantly increased the demand for sustainable energy alternatives. The burning of fossil fuels contributes to air pollution, greenhouse gas emissions, and global warming. In this context, Global Biodiesel Market is viewed as an eco-friendly alternative, capable of reducing the negative environmental effects of traditional diesel fuels.

Biodiesel’s renewable nature ensures a continuous supply, which mitigates the depletion concerns of fossil fuels. Additionally, it can be produced from waste materials, such as used cooking oils and animal fats, which reduces waste and contributes to a circular economy. As such, the increasing emphasis on sustainability and environmental stewardship is expected to fuel further market growth for biodiesel.

Technological Advancements in Biodiesel Production: The biodiesel industry has experienced significant technological advancements in recent years, improving both the efficiency and cost-effectiveness of biodiesel production. Innovations in feedstock processing, the development of new catalysts, and improvements in production methods have made biodiesel more accessible and economically viable. These advances have allowed producers to lower costs, increase yields, and reduce the environmental footprint of biodiesel production.

One key technological advancement is the use of algae as a feedstock for biodiesel production. Algae-based biodiesel is seen as a highly promising renewable fuel, as algae grow rapidly and can be cultivated in non-arable land, requiring less freshwater and no pesticides. Research and development into a Global Biodiesel Market are expected to drive the next phase of innovation in the Global Biodiesel Market.

Rising Demand for Clean and Green Energy: As the world increasingly shifts towards cleaner energy alternatives, the demand for biodiesel is expected to grow. Biodiesel is particularly appealing in regions with high transportation needs, as it is compatible with diesel engines, requiring minimal or no modifications. This compatibility with existing infrastructure allows for a smoother transition from conventional diesel to Global Biodiesel Market without significant investments in new equipment.

Additionally, biodiesel is an important component of the global energy transition. It can be blended with petroleum diesel, enabling a significant reduction in greenhouse gas emissions without requiring extensive changes to fuel supply chains or vehicle fleets. As governments continue to introduce policies aimed at reducing their dependence on fossil fuels and addressing climate change, the demand for biodiesel is expected to rise.

Rising Agricultural and Waste Feedstock Availability: The availability of feedstocks is crucial to biodiesel production, and with the growing focus on waste utilization and agricultural byproducts, there has been a marked increase in the number of biodiesel plants that rely on non-food feedstocks. Used cooking oils, animal fats, and agricultural waste are increasingly being used to produce biodiesel. This not only helps reduce waste but also lowers the overall cost of biodiesel production by utilizing readily available and often inexpensive materials.

Furthermore, agricultural waste, such as soybean and canola oil, is a key feedstock in Global Biodiesel Market production. The expanding agricultural sector in countries like Brazil, Argentina, and the United States is expected to ensure a steady supply of biodiesel feedstocks, allowing biodiesel production to scale up effectively.

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Biodiesel Market Segmentation

The Global Biodiesel 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:

Kao Corporation
Kimberly-Clark Corporation
Procter & Gamble Company
Unicharm Corporation
Others

Market Challenges

High Production Costs: One of the primary challenges facing the Global Biodiesel Market is the relatively high production costs compared to conventional petroleum-based diesel. While technological advancements have improved the efficiency of biodiesel production, feedstock prices and the refining process still represent significant costs. This can make biodiesel more expensive than traditional diesel, especially when raw material costs for feedstocks like soybean oil or palm oil fluctuate.

Biodiesel producers may face challenges in remaining competitive in the face of price volatility for raw materials. Moreover, the cost competitiveness of biodiesel relative to conventional fuels can be affected by changes in oil prices. As a result, while subsidies and policies have been a critical driver of market growth, maintaining economic viability remains a challenge in certain regions.

Competition with Other Renewable Fuels: While biodiesel remains one of the most popular renewable fuels, it faces competition from other clean energy alternatives, such as ethanol, hydrogen, and electric vehicles. Ethanol, which is typically derived from corn or sugarcane, has a lower cost of production and is widely used in countries like the United States and Brazil.

The growth of electric vehicle (EV) adoption poses another challenge, particularly for the transportation sector. Governments’ growing focus on EV infrastructure development and clean energy solutions may, in the long term, reduce demand for biodiesel. However, biodiesel remains an important solution for sectors where electrification is less feasible, such as in heavy-duty vehicles, shipping, and aviation.

Impact of Land Use and Food Production: The production of biodiesel from crops such as soybeans, rapeseed, and palm oil has raised concerns about its impact on land use and food production. The competition for land between biofuel production and food crops can create a trade-off, particularly in countries with limited agricultural land. The conversion of forests into palm oil plantations, for instance, has been criticized for contributing to deforestation, biodiversity loss, and increased carbon emissions.

In response to these concerns, there has been a growing emphasis on developing second-generation (2G) biofuels, which use non-food feedstocks such as agricultural waste, algae, and waste oils. These feedstocks do not compete with food production and are seen as more sustainable and environmentally friendly alternatives to traditional biodiesel production.