U.S. Biofuel Market: Imports Decline, Local Producers Strengthen | Exclusive Report 2025

The global biofuels market was valued at US$ 153.88 billion in 2024 and is projected to reach US$ 252.19 billion by 2032, expanding at a CAGR of 6.4% during 2025-2032. This growth trajectory reflects the world's ongoing transition toward cleaner energy sources, rising energy security needs, and the push to decarbonize industries where electrification is not yet practical.

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Latest News of USA

The U.S. biofuel industry is undergoing major changes due to shifting policies. Federal agencies are reviewing the reallocation of refinery exemptions, a move that could increase blending obligations and raise demand for ethanol and biodiesel. Additionally, recent reforms to tax credits have redirected incentives toward domestic production, significantly reducing biodiesel and renewable diesel imports. These developments are tightening supply, improving the outlook for U.S.-based producers, but adding short-term price volatility.

Latest News of Japan

Japan has recently announced initiatives to boost biofuel use as part of its national decarbonization strategy. The government plans to introduce transport fuels with higher bio-content, targeting up to 10% blends in certain regions. Alongside this, new proposals aim to tighten carbon-intensity baselines for fuels, signaling stronger demand for biofuel integration. Japanese companies are also developing marine biodiesel additives and stability enhancers to strengthen local applications, laying the groundwork for broader adoption in the coming decade.

Market Dynamics

The biofuel industry is powered by two strong forces. On the upside, stricter emission norms, corporate sustainability commitments, and government decarbonization targets are accelerating adoption. Sustainable aviation fuel (SAF) and renewable diesel have become especially important because they integrate seamlessly with existing transport infrastructure while delivering significant carbon reductions. Innovation in second- and third-generation feedstocks - such as used cooking oil, municipal waste, and algae - further supports expansion, reducing reliance on food crops.

On the downside, the market faces challenges from policy fluctuations and feedstock price volatility. Shifts in blending mandates, subsidies, or tax credit structures can dramatically alter supply-demand dynamics in a short span. Oversupply situations, particularly in renewable diesel, have created margin pressures in recent years. Thus, while the long-term outlook is strong, the sector remains vulnerable to near-term policy and cost uncertainties.

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Investment Analysis

Biofuels represent a strategically attractive but policy-sensitive investment. Key factors that investors should evaluate include:

Feedstock security - Producers with long-term access to sustainable feedstock, such as agricultural residues or waste oils, are better positioned to weather volatility.

Policy framework - Markets with stable, long-term mandates are safer for investment than those reliant on temporary waivers or subsidies.

Operational integration - Companies integrating production with existing refining assets and logistics infrastructure gain cost advantages and efficiency.

SAF potential - Firms moving aggressively into SAF can secure premium margins, supported by strong demand from airlines seeking to meet net-zero targets.

Over the next few years, selective consolidation and cautious capital expenditures are expected, as companies balance growth ambitions with regulatory uncertainties.

Market Segmentation

The biofuels market can be broken down across several categories:

By feedstock: First-generation (corn, sugarcane), second-generation (waste oils, crop residues, cellulosic biomass), and third-generation (algae-based fuels).

By product: Bioethanol, biodiesel, renewable diesel (hydrotreated vegetable oil), and SAF.

By application: Road transport, aviation, marine, and power generation.

Bioethanol remains dominant in terms of global volume, especially for road transport due to established blending mandates. However, renewable diesel and SAF are the fastest-growing segments, driven by demand from aviation and heavy transport - sectors where electrification is not yet feasible.

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Competitive Landscape

ADM
Cargill, Incorporated
Chevron Corporation
Valero Energy Corporation
Neste
Wilmar International Ltd
VERBIO SE
POET, LLC
The Andersons, Inc.
Green Plains Inc.
Regional Outlook

North America: The U.S. remains one of the largest biofuel markets, shaped heavily by federal blending mandates and tax incentives. Recent reforms prioritizing domestic production have reduced imports, giving local producers a competitive boost but also creating short-term volatility.

Europe: The EU continues to lead with ambitious emission-reduction and SAF mandates. However, oversupply in renewable diesel has affected profit margins. Companies with diversified portfolios and SAF readiness are better positioned.

Asia-Pacific: Countries like Japan are moving toward higher biofuel blending rates and carbon-intensity standards. While demand is expected to rise, feedstock supply and logistics infrastructure remain challenges that must be addressed for large-scale adoption.

Conclusion

The global biofuel market is set for robust growth, rising from US$ 153.88 billion in 2024 to US$ 252.19 billion by 2032, at a CAGR of 6.4%. Long-term momentum will be supported by SAF adoption in aviation, renewable diesel in heavy transport, and the integration of advanced feedstocks. Short-term risks remain due to policy shifts and feedstock pricing, but the overall trajectory is upward. Success in this space will depend on securing sustainable feedstock, leveraging regulatory frameworks, and building resilient supply chains to meet the world's growing demand for low-carbon fuels.

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