Biofuels Market

Overview

The global Biofuels Market was valued at USD 168.2 billion in 2025 and is projected to reach USD 326.5 billion by 2032, expanding at a strong CAGR of 9.8% during 2026–2032. Biofuels are emerging as a strategic pillar in global decarbonization, offering lower-emission alternatives to gasoline, diesel and aviation fuel while supporting energy security and agricultural economic growth. Rising transportation fuel demand, national climate commitments, and the shift toward renewable liquid fuels are accelerating adoption across automotive fleets, marine vessels, aviation, and power utilities. According to the International Energy Agency, global biofuel production reached nearly 180 billion liters in 2025, driven by rising consumption in Brazil, the U.S., EU, China and India.

Technological innovation, expanding feedstock availability and strong policy support are reshaping the biofuels industry. Large bio-refineries are being commissioned to convert agricultural waste, used cooking oil, forest residue and municipal waste into high-value renewable fuels. According to industry reports, over USD 40 billion in new bio-refinery investments were announced globally between 2023 and 2025, with major expansions in North America, Europe and Southeast Asia. Aviation operators are increasing procurement of SAF as airlines commit to net-zero targets, while shipping companies adopt bio-marine fuels to reduce sulfur and carbon emissions. Power utilities are integrating biogas and biomass-derived fuels into generation systems to enhance grid flexibility.

Market Size & Share

Market Dynamics

Decarbonization Goals, Renewable Fuel Mandates and Transport Sector Transformation is the Key Driver

Global climate goals and tightening emission standards are driving aggressive adoption of biofuels across automotive, aviation and marine sectors. Governments mandate ethanol and biodiesel blending — with more than 70 countries implementing national biofuel blending policies — to reduce dependence on fossil fuels. Aviation is under strong regulatory pressure; the International Civil Aviation Organization aims to achieve 65% emission reduction by 2050, driving large demand for SAF. Automotive fleets transition to renewable diesel for immediate decarbonization without vehicle modification. Power utilities use biogas to support grid stability and renewable integration. Growing agricultural output and expanding circular-economy initiatives strengthen feedstock availability. With rising oil-price volatility and energy security concerns, biofuels continue to gain momentum as a strategic low-carbon fuel solution.

Feedstock Volatility, Land-Use Challenges and High Production Cost is the Key Restraint

Biofuel production depends heavily on feedstock availability — including corn, sugarcane, vegetable oils and agricultural residues — all of which are influenced by climate variations, supply chain disruptions and competing uses such as food supply. Land-use change and deforestation concern also limit expansion of traditional feedstocks. Advanced biofuels (cellulosic fuels, waste-based fuels, algae-based fuels) require high capex and complex processing technology, making production expensive compared to conventional petroleum fuels. Storage, transportation and feedstock preprocessing further increase cost. Variability in global commodity prices results in unstable production economics. These constraints make scalability challenging, particularly for developing nations with limited infrastructure.

Rapid Growth of SAF, Renewable Diesel and Waste-to-Fuel Technologies is the Key Opportunity

A major opportunity arises from the global push toward Sustainable Aviation Fuel (SAF), renewable diesel and advanced waste-derived fuels. SAF production is expected to grow eightfold by 2030, driven by airline net-zero commitments and government mandates. Renewable diesel demand is rising rapidly in North America and Europe due to its superior engine compatibility, cold-flow performance and high carbon reduction scores. Waste-based feedstocks — such as used cooking oil, animal fats and municipal solid waste — offer strong potential for low-carbon fuel production. Biogas upgradation to biomethane supports heavy transportation and pipeline injection. New gasification–Fischer–Tropsch and enzymatic conversion pathways are unlocking advanced biofuel markets. 

Sustainability Certification, Infrastructure Gaps and Global Policy Variability is the Key Challenge

Ensuring sustainability across the feedstock supply chain is a major challenge. Biofuel producers must meet rigorous certification standards for land use, emissions, biodiversity protection, and lifecycle carbon intensity. Infrastructure gaps, including collection networks for waste oils, storage for biogas, and blending terminals for advanced fuels slow adoption. Policy variability across countries creates uncertainty for producers planning long-term investments. Limited harmonization of emission credit systems and inconsistent incentive structures further complicate cross-border trade. Ensuring reliable sustainability verification, scaling supply-chain infrastructure and aligning global policies remain key challenges for the industry.

Key Insights

The report will cover the following key insights:

• Overview of Parent Market.

• Supply Chain Analysis

• Regulatory Analysis

• Industry SWOT Analysis

• Key Industry Developments

• Qualitative Analysis related to Covid-19

Biofuels Market Size (USD Billion)

Segmentation Analysis

Analysis by Fuel Type

Ethanol category held the largest market share of 40% in 2025, driven by widespread blending mandates in North America, Brazil, India, and parts of Europe. Ethanol is a key oxygenate in gasoline, improving combustion efficiency and lowering emissions. Major fuel markets rely heavily on E10, E15 and E20 blends, with Brazil using high-ethanol E27 and E100 fuel. Ethanol benefits from robust feedstock supply chains (corn and sugarcane), established infrastructure and proven commercial viability

Renewable Diesel category will grow at the faster CAGR of approx. 9.9% during the forecast period, as it offers superior engine compatibility, lower emissions, and drop-in fuel flexibility compared to biodiesel. Renewable diesel is increasingly adopted by logistics fleets, public transport agencies and heavy-duty vehicle operators seeking immediate carbon reduction without modifying existing engines. According to industry data, renewable diesel production capacity grew over 35% from 2023–2025, driven by new refineries in the U.S. and Europe.

Fuel Type categories include:

• Ethanol (Largest Category)

• Renewable Diesel (Fastest-Growing Category)

• Biodiesel

• Biogas

• Others

Analysis by Feedstock

Sugarcane held the largest market share of 35% in 2025, primarily due to strong ethanol production in Brazil and increasing use in India. Sugarcane’s high yield, efficient conversion rate, and stable supply chain allow consistent fuel-grade ethanol production. Its lower carbon intensity compared to corn-based ethanol improves sustainability scores and attracts regulatory incentives.

Waste Oils & Fats will grow at the fastest CAGR of approx. 9.2% during the forecast period, owing to rising demand for low-carbon renewable diesel (HVO) and SAF. Used cooking oil, tallow, and industrial waste oils are increasingly preferred for advanced biofuel pathways due to their low carbon intensity and minimal land-use impact. Governments in Europe and North America are pushing waste-based fuel mandates, accelerating adoption.

Feedstock categories include:

• Sugarcane (Largest Category)

• Waste Oils & Fats (Fastest-Growing Category)

• Corn

• Vegetable Oils

• Agricultural Residues

• Others

Analysis by Application

Transportation held the largest market share of 45% in 2025, supported by widespread ethanol and biodiesel blending mandates across major markets. Road transport remains the primary consumer of liquid biofuels globally, with strong adoption in passenger vehicles, commercial trucks, and public transport. Government incentives and lower lifecycle emissions improve overall fuel sustainability.

Aviation will grow at the fastest CAGR of approx. 9.4% during the forecast period, driven by global airline commitments toward net-zero emissions and rising SAF mandates. Aviation cannot electrify long-haul flights, making SAF the most viable decarbonization solution. Policy support from the U.S., EU, Japan, and Singapore accelerates SAF uptake.

End-user Categories include:

• Transportation (Largest Category)

• Aviation (Fastest-Growing Category)

• Power Generation

• Industrial

• Others

By Region

North America held the largest market share, of 40%, in 2025, driven by rising ethanol blending mandates, renewable diesel expansion, and strong policy support for SAF deployment. The United States leads global ethanol production through corn-based feedstocks and maintains extensive refining capacity across the Midwest. California’s Low Carbon Fuel Standard accelerates renewable diesel and SAF production, while major energy companies invest in biorefineries and co-processing facilities. Canada strengthens biofuel growth through Clean Fuel Regulations and expanded canola-based biodiesel output. Increasing focus on carbon reduction, strong agricultural output, and rising SAF procurement agreements position North America as a dominant biofuel hub.

Asia Pacific will grow at the fastest CAGR, of approx. 10.5%, during the forecast period, supported by rapid transport fuel demand, government blending targets, and expanding feedstock availability. India accelerates ethanol adoption with E20 rollout, while China increases biogas and bioethanol production from agricultural waste. Indonesia and Malaysia drive biodiesel growth through B35 and B40 programs. Japan and Singapore actively invest in SAF refining capacity to support aviation decarbonization. Abundant biomass resources, large vehicle fleets, and rising sustainability targets collectively strengthen APAC’s leadership in future biofuel expansion. 

Countries and region include:

• North America (Largest Regional Market)

o U.S. (Larger and Faster-Growing Country Market)

o Canada 

• Europe 

o   Germany (Largest Country Market)

o   U.K. (Fastest-Growing Country Market)

o   France

o   Italy

o   Spain

o   Rest of Europe

• Asia Pacific (Fastest-Growing Regional Market)

o   China (Largest Country Market)

o   India (Fastest-Growing Country Market)

o   Japan

o   South Korea

o   Australia

o   Rest of APAC

• Latin America

o Brazil (Largest Country Market)

o Mexico (Fastest-Growing Country Market)

o Rest of LATAM

• Middle East and Africa

o   Saudi Arabia (Largest Country Market)

o   South Africa (Fastest-Growing Country Market)

o   U.A.E.

o   Rest of MEA

Market Share

The global biofuels market is fragmented in nature, as production and supply are spread across many regional and country-specific producers rather than being controlled by a few global players. Biofuel production is closely tied to local agricultural feedstock availability, national blending mandates, and government subsidy frameworks, which encourages the presence of many domestic manufacturers. Ethanol and biodiesel markets operate largely on regional demand–supply dynamics, with limited cross-border consolidation due to trade restrictions, sustainability regulations, and feedstock price volatility.

Key Players Covered

• Archer Daniels Midland Company (United States)

• POET LLC (United States)

• Green Plains Inc. (United States)

• Wilmar International Limited (Singapore)

• Renewable Energy Group, Inc. (United States)

• Neste Corporation (Finland)

• Raízen S.A. (Brazil)

• Petrobras (Brazil)

• Verbio SE (Germany)

• Chevron Renewable Energy Group (United States)

• Eni S.p.A. (Italy)

• TotalEnergies SE (France)

Market News

• In October 2025, Neste Corporation, expanded its Singapore renewable refinery to increase SAF and HVO production capacity, strengthening its leadership in sustainable aviation fuels.

• In August 2025, Raízen S.A., inaugurated a new second-generation ethanol plant in Brazil utilizing sugarcane waste to scale low-carbon fuel output.

• In June 2025, Archer Daniels Midland Company, partnered with major airlines to supply SAF produced from agricultural residues under long-term offtake agreements.

• In April 2025, POET LLC, upgraded its bioprocessing facilities to enhance ethanol yield efficiency through next-generation enzyme technologies.

• In February 2025, Wilmar International Limited, expanded waste-oil collection networks across Southeast Asia to support growing HVO and biodiesel production.

Frequently Asked Questions