Biodiesel Market Size to Surpass USD 101.6 billion in value by 2033

Introduction

The global biodiesel market is expected to grow significantly, with projections indicating it will increase from USD 38.8 billion in 2023 to USD 101.6 billion by 2033, at a compound annual growth rate (CAGR) of 10.1%. This growth is driven by several key factors, including increasing environmental concerns, government policies promoting renewable energy, and rising demand for sustainable fuel alternatives. Biodiesel, made from renewable sources like vegetable oils and animal fats, offers a cleaner-burning alternative to traditional fossil fuels, reducing greenhouse gas emissions and dependency on crude oil.

Challenges such as fluctuating raw material costs, stringent regulations, and competition from other renewable energy sources must be addressed to sustain growth. Recent developments in the market include the expansion of biodiesel production capacities and advancements in production technologies.

For instance, in 2022, BASF SE achieved a carbon-neutral certification for its biodiesel products, while Perstorp announced plans to increase its production capacity significantly. These initiatives highlight the industry’s commitment to innovation and sustainability, paving the way for future growth in the biodiesel market.

Key Takeaways

global biodiesel market will experience rapid expansion to reach USD 101.6 billion from USD 38.8 billion recorded as of 2023, 10.1% CAGR.
In 2023, vegetable oil dominated the market, constituting over 72% of the share. Palm oil, especially from Indonesia and Thailand, is expected to be a major feedstock, with these countries contributing over 80% to its production.
Fuel applications commanded a significant share in 2023, capturing more than 60% of the market.
Europe, historically the largest market, represented 48% of the global market share in 2023.

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Statistics

The International Energy Agency (IEA) expects biofuel demand to grow from 146 billion liters/year in 2020 to between 186 and 342 billion liters/year in 2026.
The OECD-FAO forecast more modest biofuel consumption growth than the IEA (134 billion liters of biofuel in 2026)
India has proposed a target of 20% blending of ethanol in petrol, and 5% blending of biodiesel in diesel by 2030.
In 2021, Australia produced 180 million liters of fuel ethanol and 18 million liters of biodiesel.
The OECD-FAO estimates that between 2019 and 2021, 21% of world sugar cane production, 15% of world maize production, and 12% of oilseed production was used to make biofuels.
The majority of Australia’s $5.76b in canola seed exports in 2021-22 will be used to make biofuel in the EU.
Biofuel production has increased from 1.2 million barrels per day in 2011 to 1.8 million barrels per day in 2021 (an increase of 46%).
In 2021, the USA, Brazil, Europe, and Indonesia were the largest consumers of biofuel, accounting for 84% of global biofuel
consumption.
Today, almost 50% of biodiesel in the EU market is produced from rapeseed oil. With nearly 40% of vegetable oils delivered to biodiesel producers, the biofuels market is a major outlet for the vegetable oils industry.
These can replace petrodiesel completely, but more commonly the two components are blended at levels up to 10% or beyond of biodiesel for use in combustion engines.
According to the European Biodiesel Board in 2011 EU production (8.61 million tonnes), largely from rapeseed oil, was mainly in Germany and France. In 2012 production capacity was 23.5 million tonnes.
It is reported that much of the foreseen 18% expansion in oilseeds between 2010/11 and 2019/20 will be concentrated in Brazil, the EU, and Argentina.
The minister also said that India needs 1,000 crore liters for 20% blending in petrol. “We are going to get it. We are already at 600 crore liters,” he stated.
We are just 3% of the global market. The market for ethanol is $92 billion. It will go up to $162 billion in two years. But you are potentially looking at $500 billion.
Finnish renewable diesel producer Neste has posted a 6% rise in full-year operating profit to €983 million, compared to €925 million in 2015, helped by strong demand for its renewable products.
Speaking about its renewable products division, president and CEO, Matti Lievonen, said: “Our sales volumes reached 2.22 million tons, only 2% below the previous year, despite the scheduled major turnaround implemented at the Rotterdam refinery in the second quarter.
All key financial indicators showed improvement, and the return on average capital employed after tax reached 16.9%, which was over the long-term target level of 15%.”
the company’s oil products division posted a comparable operating profit of €453 million (€439 million).
Independent analysis by Cranfield University has shown that Firefly’s SAF offers a highly significant 92% CO2e saving versus fossil jet fuel.
GPS Renewables said it has more than 100 biogas plants, including Asia’s largest RNG plant based on MSW (Municipal Solid Waste) in Indore. The company currently has an order book of $240 million and MoUs worth $540 million for the execution of multiple plants of compressed biogas in India.
GPS Renewables reported $60 million in turnover for FY24, growing 225 percent over FY23.
Today, biofuels makeup around 4% of the total usage of fuel globally, with blends of biofuel and fossil diesel or petrol widely available at scale at fuel stations in multiple countries
demand to be around 160,000 million liters, with the road sector representing up to 98% of the total demand, followed by the maritime sector – alongside the aviation one- which is in the process of significant expansion.
In 2021, the biofuel market exceeded $110 billion, with an expected doubling in size by 2030.2 Biodiesel can be used directly as an environmental fuel for diesel engines, but currently, it is added to petroleum-derived diesel.
Located in central Iowa and commissioned in August 2002, the Ralston plant has a biodiesel production capacity of 30 million gal/year.
Demand for biofuels is set to grow 28% from 2021 to 2026, according to the International Energy Agency. SAF consumption in Europe alone is expected to grow to at least 800 million liters per year by 2026.
Ten biofuels have the potential to reduce GHG emissions by 60% compared to petroleum gasoline. The list includes alcohols, furan mixtures, and olefins.
In terms of environmental impact, GHG emissions were reduced by more than 60% in 12 of the 25 pathways, according to the GREET life cycle analysis.
Fossil fuel resources are therefore the single largest energy source, representing 88% of total world energy consumption.
Biofuel demand dropped 8% in 2020 year on year to 150bn liters, according to the International Energy Agency (IEA), with Brazilian and US ethanol production experiencing the most significant contraction.
Environmental Protection Agency (EPA) research indicates that biodiesel emits 11% less carbon monoxide and 10% less particulate matter than diesel.
According to Car Talk, a study done by the Department of Energy and Agriculture found biodiesel reduces net carbon dioxide emissions by 78%.
Diesel engines offer consumers 20-40% better fuel economy as well as more torque at a lower rpm than gasoline.
For manufacturers, the largest production cost is raw material, in this case usually CPO, which accounts for 70% of total production cost. Chemical inputs run to another 20%, and the remaining 10% is operating costs.
biodiesel mixed into standard diesel, which had risen from 2% to 5% in 2012 and then to 7% in 2014. This lifted demand from 1.72 million liters per day in 2011 to 4.1 million liters in 2017.
The UK government has announced that 2,351 million liters of liquid biofuels were used in transport last year, which was an increase of 24% from the year before.
In 2018, 1,899 million liters were consumed. The Renewable Transport Fuel Obligation (RTCO) put up the percentage of biofuel production for transport fuel production from 7.25% in 2018 to 8.5% last year.
According to the latest statistics from the Department for Business, Energy and Industrial Strategy, bioethanol consumption dropped slightly by 1%, from 761 million liters in 2018 to 753 million liters in 2019.
Biodiesel consumption rose by 40% from 1,138 million liters two years ago to 1,598 million liters last year.
Potentially, Ukraine can replace about 5% of traditional diesel. Instead, the share of RES in the transport sector in 2020 was 2.5%.

Emerging Trends

Increased Adoption of Sustainable Aviation Fuel (SAF): Companies like Technip Energies and TotalEnergies are investing in the production of SAF, converting traditional refineries to focus on sustainable fuel. For instance, TotalEnergies’ Grandpuits platform in France will produce around 210,000 metric tons of SAF per year, highlighting the shift towards more sustainable aviation fuel solutions.

Government Initiatives and Support: Governments across various regions are introducing favorable policies and tax incentives to promote biodiesel production. These initiatives aim to reduce greenhouse gas emissions and reliance on fossil fuels. Countries like India are planning to blend more than 5% biodiesel into conventional fuels, while European countries are enhancing their regulatory frameworks to support biodiesel adoption.

Technological Advancements in Production: Innovations in biodiesel production technologies are enhancing feedstock utilization, production efficiency, and environmental sustainability. Research and development activities focus on optimizing the use of raw materials like used cooking oil (UCO) and animal fats, making biodiesel production more efficient and cost-effective.

Growth in the Asia-Pacific Region: The Asia-Pacific region, particularly countries like China and India, is experiencing a surge in demand for biodiesel due to rapid industrialization and urbanization. The region is focusing on reducing air pollution and dependence on fossil fuels, with significant investments in biodiesel production facilities. Indonesia and Malaysia, leading producers of palm oil, are leveraging this resource for biodiesel manufacturing.

Increased Use in Power Generation: Biodiesel is being increasingly used in power generation applications, driven by global efforts to adopt renewable energy sources to reduce greenhouse gas emissions. This trend is expected to grow significantly as governments continue to promote green energy initiatives.

Strategic Collaborations and Mergers: Major players in the biodiesel market are engaging in strategic collaborations, mergers, and acquisitions to expand their market presence and production capacities. For example, companies like Fluor Corporation and Imperial are developing renewable diesel complexes, while others are investing in new product launches and expanding their geographical reach.

Use Cases

Automotive Fuels: Biodiesel is extensively used as an alternative fuel in the automotive sector, particularly for diesel engines. It can be used in pure form (B100) or blended with petroleum diesel (e.g., B20, which is 20% biodiesel and 80% petroleum diesel). The use of biodiesel reduces emissions of carbon monoxide, particulate matter, and unburned hydrocarbons. In 2021, the fuel application segment dominated the global biodiesel market, accounting for more than 77.7% of overall revenue.

Marine Fuels: Biodiesel is also used in the marine industry as a cleaner alternative to traditional marine fuels. Its biodegradable nature and lower emissions make it a preferred choice for reducing the environmental impact of shipping activities.

Renewable Energy: Biodiesel is utilized in power generation to produce electricity more sustainably. It can be used in diesel generators, providing a renewable option for backup power and off-grid energy solutions. This application is gaining traction as governments and industries aim to reduce greenhouse gas emissions and promote the use of renewable energy sources.

Farm Machinery Fuel: Biodiesel is used to fuel agricultural machinery, including tractors and harvesters, providing a renewable alternative to conventional diesel. This helps in reducing the carbon footprint of farming operations and supports the overall sustainability of agricultural practices. Increased mechanization in agriculture is expected to drive the demand for biodiesel in this sector.

Lubricants and Cleaners: Biodiesel can be used as an industrial solvent, lubricant, and cleaner. Its non-toxic and biodegradable properties make it suitable for use in environments where traditional petroleum-based products pose environmental and health risks. This includes use in metalworking fluids, hydraulic fluids, and industrial cleaners.

Heating Oil: Biodiesel can be used as heating oil in residential and commercial boilers. Blends such as B20 are commonly used to provide a cleaner-burning alternative to traditional heating oil, reducing sulfur dioxide and particulate emissions. This application is particularly popular in regions with stringent air quality regulations.

Sustainable Aviation Fuel (SAF): With an increasing focus on reducing the aviation industry’s carbon footprint, biodiesel is being developed into SAF. For example, TotalEnergies’ Grandpuits platform in France aims to produce 210,000 metric tons of SAF annually. This development is crucial for meeting global aviation emissions reduction targets.

Production Volume: In 2022, global biodiesel production reached approximately 44.07 billion liters, and it is expected to increase further due to rising demand across various sectors.

Regional Insights: Europe accounted for more than 46.7% of the global market in 2021, driven by early adoption and government support for biodiesel production. The Asia-Pacific region, particularly China and India, is expected to register significant growth due to increasing industrialization and urbanization.

Key Players Analysis

Ag Processing, Inc. is a leading agribusiness cooperative engaged in biodiesel production. AGP operates three biodiesel plants in Iowa and Missouri, with a combined annual production capacity of 175 million gallons. These facilities utilize soybean oil as a primary feedstock, which enhances the value of AGP’s core products. The company’s integrated strategy supports local farmers by creating demand for soybean oil and contributes to reducing harmful emissions through the production of high-quality biodiesel.

Archer Daniels Midland Company (ADM) is a major player in the biodiesel market, focusing on sustainable fuel production. ADM operates several biodiesel plants, leveraging its extensive network of oilseed processing facilities. The company’s biodiesel production is integrated with its agricultural supply chain, utilizing soybean oil as a key feedstock. ADM’s commitment to renewable fuels aligns with global environmental goals, reducing greenhouse gas emissions and promoting sustainable energy solutions.

Bunge Ltd. is significantly expanding its renewable diesel capacity, projecting an increase from 2 billion gallons to approximately 5 billion gallons by 2024. This expansion is driven by joint ventures, such as the collaboration with Chevron, which aims to enhance the production of soy-based diesel at facilities in Illinois and Louisiana.

Cargill, Inc. is actively involved in the biodiesel sector through substantial investments in expanding production facilities in both the U.S. and Europe. Cargill’s biodiesel operations focus on utilizing various feedstocks, including soybean oil, to produce biodiesel that meets growing market demand and supports environmental sustainability.

Ecodiesel Colombia S.A. is a prominent player in the Colombian biodiesel market, focusing on producing biodiesel from palm oil. The company’s operations support Colombia’s national biodiesel blending mandates, contributing to the reduction of carbon emissions and promoting the use of renewable energy in the region.

FutureFuel Corp. is engaged in the production of biodiesel and other bio-based products, leveraging its facility in Batesville, Arkansas. The company focuses on converting waste oils and animal fats into high-quality biodiesel, supporting the renewable energy market’s growth. FutureFuel’s commitment to sustainability and innovation is reflected in its continuous efforts to improve production processes and expand its market presence.

Manuelita S.A. is a prominent player in the biodiesel sector, producing biodiesel from palm oil. The company has a significant capacity, exporting approximately 28 million liters of biodiesel annually to Europe. Manuelita’s biodiesel production is recognized for its sustainability, holding the International Sustainability and Carbon Certification (ISCC), which ensures reduced greenhouse gas emissions and high environmental standards.

Renewable Biofuels, Inc. specializes in producing biodiesel from renewable resources, focusing on reducing carbon emissions and promoting sustainable energy. The company operates advanced biodiesel production facilities strategically located near port areas, ensuring efficient distribution. This positioning helps reduce transportation costs and enhances the company’s competitive edge.

TerraVia Holdings, Inc. engages in the development of renewable and sustainable biodiesel through innovative biotechnology. The company uses microalgae as a primary feedstock for biodiesel production, which offers a higher yield and lower environmental impact compared to traditional feedstocks.

Wilmar International Ltd. is a leading agribusiness group in the biodiesel sector, producing biodiesel from palm oil and other feedstocks. The company’s biodiesel production facilities are mainly located in Indonesia and Malaysia, which are major palm oil producers. Wilmar’s biodiesel is used domestically and exported to various markets, contributing to the global shift towards renewable energy.

Conclusion

The biodiesel market is poised for substantial growth, driven by increasing environmental regulations and a rising demand for sustainable energy sources. This expansion is largely attributed to the global shift towards renewable energy, government incentives for biofuel production, and advancements in technology that enhance biodiesel efficiency.

Additionally, the adoption of biodiesel in various sectors, including transportation and industrial applications, further supports market growth. The ongoing investments in research and development are expected to introduce innovative production techniques and improve cost-effectiveness, positioning biodiesel as a viable alternative to traditional fossil fuels.

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