Biofuel Market to Reach US$ 252.19 Billion by 2032 | CAGR 6.4% | North America Leads with 38% Share | Key Players: POET, Valero, Chevron, Neste, ADM

Biofuel Market Overview

The global biofuel market was valued at US$ 153.88 billion in 2024 and is projected to reach US$ 252.19 billion by 2032, growing at a CAGR of 6.4% during the forecast period (2025-2032). The market's expansion is primarily driven by increasing environmental concerns, government policies promoting renewable energy, and global efforts to reduce greenhouse gas emissions. According to the World Bioenergy Association's Global Bioenergy Statistics Report 2024, biofuels have emerged as the largest renewable energy source, supplying 3.94 exajoules (EJ) of global energy. By 2023, 64 countries had implemented biofuel mandates, underscoring their critical role in achieving global sustainability and net-zero emission targets.

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Governments worldwide are actively implementing subsidies, blending mandates, and renewable fuel standards to accelerate biofuel adoption. For example, Indonesia's B40 biodiesel program, scheduled for 2025, aims to blend 40% palm oil with 60% diesel fuel, supported by an allocation of 15.62 million kiloliters of biodiesel to reduce reliance on imported fossil fuels and strengthen energy security. Similarly, in April 2025, the Indian state of Madhya Pradesh launched its Scheme for Implementation of Biofuel Projects under the 2025 Renewable Energy Policy to establish the state as a leader in advanced biofuel production. Additionally, growing investments in bio-refineries and R&D are enhancing production efficiency and scalability. For instance, the UK government announced a US$ 270 million investment in April 2025 to support projects at Scotland's Grangemouth refinery, focusing on clean fuel manufacturing, including biofuels and hydrogen, as part of its broader post-oil industrial transition strategy. These collective efforts highlight biofuels' rising importance in achieving energy diversification, sustainability, and economic resilience across global markets.

Recent Developments:

✅ January 2026: A leading renewable energy company inaugurated a next-generation bio-refinery in the U.S. Midwest capable of producing 150 million gallons of advanced ethanol annually from agricultural residues, marking one of the largest biofuel projects in North America.

✅ November 2025: The European Union approved a €400 million funding program under the Green Deal initiative to accelerate the production of sustainable aviation fuel (SAF) and advanced biodiesel across EU member states.

✅ September 2025: India's Ministry of Petroleum and Natural Gas commissioned five new compressed biogas (CBG) plants under its SATAT initiative, supporting waste-to-energy conversion and reducing dependence on imported natural gas.

✅ June 2025: Brazil's National Agency of Petroleum, Natural Gas and Biofuels (ANP) expanded its RenovaBio program, increasing the national ethanol blending target from 27% to 30% by 2026, strengthening Brazil's leadership in bioethanol production.

✅ March 2025: A major oil and gas corporation partnered with a biotechnology company to develop algae-based biofuel technologies, aiming to achieve commercial-scale production with 70% lower carbon emissions compared to fossil fuels.

Mergers & Acquisitions

✅ January 2026: A leading global energy conglomerate acquired a bioethanol production company specializing in second-generation (2G) biofuels to strengthen its renewable fuels portfolio and expand into advanced biomass conversion technologies.

✅ October 2025: A major European oil company completed the acquisition of a sustainable aviation fuel (SAF) manufacturer, integrating its operations to enhance production capacity and support the decarbonization of the aviation sector.

✅ August 2025: A U.S.-based bioenergy corporation merged with a biotechnology firm focused on lignocellulosic feedstock innovation, improving its ability to produce low-cost, high-yield biofuels at scale.

✅ May 2025: A prominent Asian refining company acquired a biodiesel processing facility in Indonesia to expand its renewable energy footprint and meet regional biofuel blending mandates.

✅ March 2025: Two biofuel producers from Latin America merged to form a regional renewable energy alliance, enhancing export capabilities, feedstock sourcing efficiency, and cross-border collaboration on advanced biofuel research.

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Key Players:

POET, LLC - Holds an estimated 14.6% market share, driven by its leadership in bioethanol production, large-scale corn-based fuel facilities across the U.S., and continuous investments in next-generation cellulosic biofuels.

Valero Energy Corporation - Holds a 13.2% market share, supported by its extensive ethanol production capacity and joint ventures focusing on renewable diesel derived from sustainable feedstocks.

Chevron Corporation - Holds a 12.4% market share, fueled by strategic acquisitions in renewable fuel companies and increased investment in sustainable aviation fuels (SAF) and biodiesel projects globally.

Neste Corporation - Holds an 11.8% market share, recognized as a pioneer in renewable diesel and SAF production from waste and residue-based feedstocks, with major operations in Europe, North America, and Asia.

Archer Daniels Midland (ADM) - Holds a 10.6% market share, supported by its vertically integrated supply chain, large-scale corn processing facilities, and advanced biofuel R&D initiatives.

Regional and Emerging Producers - Collectively account for the remaining 37.4% of the market, comprising a diverse group of regional biofuel refineries, cooperative projects, and emerging startups specializing in algae-based, lignocellulosic, and waste-derived biofuels.

Market Segmentation:

By Form:
The biofuel market is segmented into solid, liquid, and gaseous biofuels. Liquid biofuels dominate the market with approximately 78% share, driven by widespread use of biodiesel and bioethanol in the transportation and aviation sectors. Solid biofuels, such as wood pellets and briquettes, hold around 15% share, primarily used in industrial heating and power generation. Gaseous biofuels, including biogas and biomethane, account for the remaining 7%, with growing applications in renewable electricity and decentralized energy systems.

By Generation:
First-generation biofuels lead with a 60% market share, as they are derived from food-based feedstocks like corn, sugarcane, and vegetable oils. Second-generation biofuels contribute about 30%, gaining momentum due to their use of non-food feedstocks such as agricultural waste, lignocellulosic biomass, and residues. Third-generation biofuels, produced from algae and advanced microorganisms, currently hold 10%, but are expected to grow rapidly with increasing R&D investments in sustainable alternatives.

By Product:
Among products, ethanol holds the largest share at 45%, supported by its extensive blending with gasoline, especially in the U.S., Brazil, and India. Biodiesel follows with 35%, widely used in transportation and industrial machinery. Hydrotreated Vegetable Oil (HVO) accounts for 12%, gaining traction in the aviation sector as a sustainable aviation fuel (SAF). The remaining 8% includes emerging biofuels such as biobutanol and advanced synthetic fuels derived from waste materials.

By Feedstock:
Corn leads the global feedstock segment with about 38% share, driven by its high starch yield and ethanol production efficiency. Sugarcane holds 25%, primarily used in Brazil and other tropical regions for cost-effective ethanol production. Vegetable oils, such as palm, soy, and rapeseed, contribute 22%, supporting biodiesel and HVO manufacturing. The remaining 15% comprises other feedstocks, including agricultural residues, algae, and waste cooking oil, increasingly used in advanced biofuel production.

By Application:
The transportation sector dominates with 65% share, as governments enforce blending mandates and promote low-carbon mobility solutions. Aviation accounts for 15%, driven by rising adoption of SAF to reduce emissions from air travel. Energy generation holds around 12%, using biogas and solid biofuels in power plants. The remaining 8% is attributed to heating and industrial uses, where biofuels are increasingly replacing coal and petroleum-based fuels in manufacturing and residential heating applications.

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Regional Insights

North America leads the global biofuel market, accounting for approximately 38% of total revenue in 2024. The region's dominance is driven by strong government mandates, such as the U.S. Renewable Fuel Standard (RFS), which supports ethanol and biodiesel blending targets. The U.S. remains the world's largest ethanol producer, while Canada's Clean Fuel Regulations are accelerating the adoption of renewable diesel and sustainable aviation fuel (SAF). Significant investments in bio-refineries and advanced biofuel technologies are also contributing to sustained growth in the region.

Europe holds a 27% market share, supported by the European Union's Renewable Energy Directive (RED III), which mandates that at least 14% of transport fuels must come from renewable sources by 2030. Countries like Germany, France, and the Netherlands are expanding biofuel infrastructure, particularly for HVO and SAF production. Strong regulatory frameworks, coupled with initiatives promoting circular economy models, are fueling Europe's leadership in advanced and waste-derived biofuels.

Asia-Pacific represents about 28% of the market and is the fastest-growing region during the forecast period. Countries such as India, China, and Indonesia are aggressively investing in biofuel production to reduce crude oil dependency and meet climate targets. Government initiatives like India's E20 ethanol blending program and Indonesia's B40 biodiesel mandate are propelling rapid market expansion. The region's abundant agricultural feedstock availability further strengthens its long-term growth outlook.

Market Dynamics:

Driver :
Rising environmental concerns and the growing urgency to mitigate climate change are key drivers of the global biofuels market. With global temperatures increasing and extreme weather events becoming more frequent, governments and industries are accelerating efforts to reduce greenhouse gas (GHG) emissions. Biofuels such as ethanol, biodiesel, and hydrotreated vegetable oil (HVO) provide cleaner-burning alternatives to fossil fuels, emitting significantly lower levels of carbon dioxide and pollutants. Their life-cycle carbon neutrality where CO2 released during combustion is balanced by CO2 absorbed by feedstock plants during growth makes them central to global decarbonization strategies.

Countries worldwide are incorporating biofuels into their national energy and climate policies to achieve Renewable Energy and Net-Zero goals. For instance, in January 2025, the U.S. Department of Agriculture (USDA) announced nearly US$180 million in funding for 586 projects to expand access to clean energy systems and domestic biofuel production, under the broader US$3 billion Inflation Reduction Act. Similarly, the transport sector, including aviation, marine, and road transport, is increasingly adopting biofuels to reduce fossil fuel dependency. In May 2025, Malaysia expanded its palm-based biodiesel program from B10 to B20 at major airports, aiming to reach net-zero emissions by 2050. These initiatives underscore biofuels' pivotal role in achieving sustainable energy transitions and climate commitments globally.

Restraint :
Despite their environmental benefits, the widespread use of food crops for biofuel production poses challenges to global food security and market stability. According to the World Bioenergy Association's 2024 report, approximately 660 million tons of primary crops, accounting for nearly 7% of total global agricultural production, were diverted for biofuel production in 2023. These include essential food staples such as corn, wheat, sugarcane, and vegetable oils, which are vital for human consumption.

This diversion creates tension between food and fuel demand, particularly in regions struggling with hunger and malnutrition. Increased biofuel production also exerts pressure on agricultural land, water, and fertilizer resources, contributing to environmental degradation and reduced land availability for food cultivation. Moreover, in periods of poor harvests or supply disruptions, this competition can lead to price spikes, amplifying inflationary pressures and social instability. Balancing the dual objectives of energy security and food accessibility remains one of the foremost challenges for policymakers in ensuring the sustainable growth of the global biofuel industry.

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