Biofuels Market Size & Share Analysis - Growth Trends And Forecast (2025 - 2030)

Global Biofuels Market Trends and Insights

Transport-sector blend mandates intensifying in Asia & South America

Asian and South American governments are implementing higher blending requirements, which are reshaping feedstock allocation and production footprints. Indonesia’s B40 program alone lifts biodiesel consumption to 13.15 million kiloliters annually, cutting diesel imports and saving USD 9 billion in foreign exchange. India is fast-tracking its move to 20% ethanol blending by 2025, which drives parallel investment in distillation and logistics assets. Similar policies in the Philippines and Thailand add regional momentum, while Brazil keeps its long-standing ethanol platform. These mandates support rural incomes, curb crude import bills, and establish predictable demand that de-risks plant expansions. Together, they underpin the steep growth outlook for the global biofuels market.

Net-zero-aligned corporate PPAs driving renewable diesel demand in North America

Major logistics and retail brands now sign multiyear purchase agreements that guarantee low-carbon fuel supply beyond regulatory minimums. DHL Group intends to source 300,000 tons of SAF annually by 2030 under a partnership with Neste ^{[1]Staff, “DHL Commits to 300,000 Tons of SAF,” neste.com}. California’s Low Carbon Fuel Standard enables participating firms to monetize greenhouse-gas credits, which are often valued above the physical fuel price, thereby further sweetening long-term economics. These corporate commitments provide producers with clearer revenue visibility, enabling them to secure debt financing for new hydrotreatment units across the United States and Canada.

SAF tax incentives in the EU & U.S. Inflation Reduction Act

The United States now offers up to USD 1.75 per gallon through the Clean Fuel Production Credit, while the EU mandates 2% SAF in 2025 en route to 70% by 2050 ^{[2]Staff, “Clean Fuel Production Credit Guidance Released,” lanzajet.com}. The dual support structure narrows the price gap between SAF and conventional jet fuel, encouraging refinery conversions. Producers can stack the U.S. credit with California LCFS values, pushing total incentive levels near USD 2 per gallon and unlocking attractive margins for drop-in jet fuels.

Palm feedstock phase-out prompting algae & waste-oil investment in Europe

The EU Renewable Energy Directive III aims to eliminate palm oil-based biofuels by 2030, prompting rapid capital shifts toward algae cultivation, winter canola, and waste cooking oil processing. Neste and Bayer have agreed to co-develop regenerative winter canola supply chains that enhance soil carbon and secure regionally grown feedstock. The tighter rules improve traceability standards and push European producers toward higher-cost but more sustainable inputs, thereby differentiating them based on lifecycle emissions.

Volatile Feedstock Prices (Soy, Rapeseed, UCO) Squeezing Producer Margins

Soybean oil, used cooking oil, and tallow prices swung 40–60% during 2024, eroding margins and complicating hedge strategies for refiners. Fraud-related disruptions in European waste-oil imports inflated prices while creating challenges to traceability. Producers are countering volatility by diversifying into residues such as forestry waste and municipal sludges, although preprocessing adds capital cost and complexity. Near-term profitability, therefore, depends on agile feedstock portfolios and robust credit markets that offset commodity swings.

Infrastructure bottlenecks in collecting agri-residues in India & Indonesia

Crop residues are abundant but dispersed; hauling straw beyond a 50 km radius often costs more than its energy value. Consequently, farmers in Punjab continue to burn rice straw, thereby undermining air-quality goals. Similar logistics barriers limit the supply of palm empty fruit bunches in Indonesia. Pilot subsidy programs for balers, storage hubs, and rail transport are emerging, but commercial-scale cellulosic ethanol remains delayed until residue networks mature.

Segment Analysis

By Fuel Type: SAF outpaces traditional blends

Sustainable aviation fuel volumes scale from a small base at a 36.56% CAGR, reflecting airlines’ need for immediate emissions cuts and supportive mandates. Bioethanol retains the lion’s share because it is entrenched in U.S. E10 and Brazilian E27 blends. Yet hydrotreatment’s ability to co-produce SAF, renewable diesel, and bio-naphtha is shifting capital toward drop-in molecules that fit existing pipelines.

Second-generation biodiesel is plateauing because of compatibility issues with newer engine systems in cold climates. In contrast, renewable diesel gains market share thanks to its superior cetane numbers and parity with fossil diesel in terms of infrastructure. High-value co-products such as bio-propane further enhance project economics. The global biofuels market is therefore shifting toward fuels with cross-sector appeal and higher carbon credit valuation.

By Generation: Algae breakthroughs gain momentum

First-generation fuels still account for 68.56% of sales, driven primarily by sugarcane ethanol in Brazil and corn ethanol in the United States. The global biofuels market size for first-generation pathways is expected to rise modestly; however, the relative share will decline as advanced options scale. Third-generation algae projects now demonstrate 16.45% CAGR after genetics and photobioreactor advances cut production costs by double digits.

Recent university studies show that engineered microalgae can convert 85% of waste oil into lipids suitable for hydrotreatment, thereby reducing land-use concerns. Second-generation cellulosic facilities, such as LanzaJet’s ethanol-to-SAF plant, are finally hitting commercial throughput and proving enzyme efficiency gains. Fourth-generation synthetic biology remains pre-commercial but attracts venture funding because it promises direct fuel synthesis from captured CO2.

Note: Segment shares of all individual segments available upon report purchase

By Feedstock: Waste streams move mainstream

Sugar crops supply 36.11% of current feedstock inputs, thanks to established supply chains, but debates over food security cap their growth. Algae feedstock’s 13.67% CAGR shows waste-based alternatives now meet sustainability scoring for EU and U.S. credits. Used cooking oil prices surged in 2024, yet demand persists because lifecycle carbon scores of used oils outperform those of virgin oils. The global biofuels market continues to diversify feedstock to hedge price risk and comply with stricter proven-sustainability criteria.

Residue-based lignocellulosic supply rises as pretreatment costs fall by 66% compared with 2020 levels. Regulators are tightening traceability rules and accelerating the deployment of digital ledgers across supply chains. Animal fats and tallows also gain traction for marine bunkering blends where sulfur content limits are secondary to carbon scores. The feedstock mix, therefore, tilts toward materials with minimal land-use implications.

By Technology: Hydrotreatment gains lead

Fermentation still accounts for 59.45% of the revenue, as it underpins ethanol production. Hydrotreatment, however, advances at an 18.61% CAGR on the back of refinery conversions that require limited new equipment. Topsoe HydroFlex™ lines commissioned in 2024 achieved nameplate output within 60 days, validating de-risked deployment models ^{[3]Staff, “HydroFlex™ Technology Selected for Biofuel Expansion,” topsoe.com}.

Gasification followed by Fischer-Tropsch synthesis is attracting interest where municipal waste is abundant, allowing city authorities to co-fund feedstock costs. Pyrolysis, paired with upgrading, allows for flexible feed mixes, providing drop-in outputs that blend seamlessly into diesel and jet pools. The integration of multiple unit operations is emerging as the best practice for maximizing product slate value.

Note: Segment shares of all individual segments available upon report purchase

By End-Use Sector: Aviation reshapes priorities

Road transport still accounts for 87.67% of volumes, but the adoption of electric vehicles in passenger cars tempers growth. Heavy-duty trucking remains a resilient subsegment because hurdles related to electrification persist beyond 400 km ranges. The global biofuels market size allocated to aviation is rising sharply as carriers lock in multi-year SAF contracts at premiums above twice that of conventional jet fuel. Marine operators are experimenting with B24 and B30 blends on long voyages to satisfy IMO reporting standards.

Power generation and district heating buyers continue to procure bio-oil where local policies credit renewable heat; yet, the sector’s growth lags behind transport due to competing solar and wind build-outs. Over the next decade, hard-to-abate aviation and maritime segments will anchor price premiums, encouraging producers to tailor output toward these niches.

Geography Analysis

North America is expected to control 43.12% of the global biofuels market in 2024, driven by mature corn ethanol plants, the growth of soybean oil-based renewable diesel, and generous tax credits. Installed renewable diesel capacity doubles to 5.2 billion gallons by 2025, and California’s LCFS consumes nearly the entire domestic pool, creating a stable price floor. The region’s policy clarity enables producers to secure financing quickly, while robust grain handling infrastructure ensures a stable feedstock flow. Mexico’s recent mandate extensions and Canada’s clean fuel regulations further enlarge regional demand.

Europe is transforming as the Renewable Energy Directive III sets a 42.5% renewable energy target by 2030 and phases out the use of palm oil feedstocks. Germany banned carry-over of prior-year greenhouse-gas certificates starting in 2025, forcing obligated parties to purchase more advanced biofuels immediately. Anti-dumping duties on Chinese biodiesel reroute trade and raise premiums for domestic HVO, encouraging local capacity additions. The complex policy mix fosters technological innovation while keeping volume growth moderate due to feedstock constraints.

Asia-Pacific posts the highest regional CAGR at 17.16%. Indonesia’s B40 mandate absorbs 13.15 million kiloliters of biodiesel annually and saves USD 15 billion in foreign exchange, while supporting the incomes of smallholder palm farmers ^{[4]Staff, “Indonesia Saves USD 15 Billion via Biodiesel,” jakartaglobe.id}. India’s march toward 20% ethanol by 2025 boosts demand for grain and molasses ethanol and seeds the market for 1,000 compressed-biogas plants. China’s joint ventures, such as BP’s stake in Jiaao’s upcoming SAF line, signal intent to decarbonize aviation. Ample agricultural residues, rising oil-price exposure, and supportive fiscal incentives combine to make Asia an unrivaled growth engine for the global biofuels market.