Biodiesel Market Size Projection: How Big Will It Be by 2030?

Aug 25, 2025 - 12:35

Global Biodiesel Market – Industry Size, Share, Trends, Competition Forecast & Opportunities, 2030F

Introduction

The global energy industry is undergoing one of the most significant transformations in its history, with sustainability, decarbonization, and renewable adoption taking center stage. Among the many renewable alternatives, biodiesel has carved a distinctive role as a low-carbon substitute for conventional diesel. According to TechSci Research’s report, “Biodiesel Market – Global Industry Size, Share, Trends, Competition Forecast & Opportunities, 2030F,” the sector stood at USD 42.82 billion in 2024 and is projected to expand at a robust CAGR of 9.88% over the forecast period.

Unlike many renewable fuels still in early stages of commercialization, biodiesel benefits from scalability, feedstock availability, technological maturity, and policy alignment across multiple regions. It is produced through the transesterification of oils and fats into fatty acid methyl esters (FAME), offering a renewable, biodegradable, and non-toxic fuel that significantly reduces greenhouse gas (GHG) emissions. These attributes make biodiesel not only a fuel of choice for the present but also a cornerstone of global climate action strategies.

The rising adoption of biodiesel is not just about environmental commitments but also about energy independence, rural economic development, and feedstock valorization. As governments, corporations, and consumers demand greener energy options, the Biodiesel Market continues to emerge as a critical pillar of the energy transition.

Regulatory Frameworks and Policy Incentives

The most decisive driver of biodiesel adoption is the strong policy framework established across regions. Governments are increasingly aligning their energy policies with carbon neutrality targets set under the Paris Agreement and other climate accords.

In Europe, the Renewable Energy Directive (RED II) mandates blending targets that push for renewable energy adoption in the transport sector. The directive requires member states to ensure that at least 14% of transport fuels come from renewable sources by 2030, creating a stable market for biodiesel.

In the United States, the Renewable Fuel Standard (RFS) mandates blending of renewable fuels with conventional petroleum products. The policy provides Renewable Identification Numbers (RINs), incentivizing refiners and fuel blenders to integrate biodiesel into mainstream distribution. Tax credits such as the Biodiesel Blenders Credit further improve cost competitiveness.

The Asia-Pacific region has also witnessed a surge in biodiesel policy activity. India, for instance, is expanding its National Policy on Biofuels with targets for increased blending of biodiesel with diesel. Similarly, China is exploring cleaner fuels as part of its broader strategy to cut carbon emissions and combat urban air pollution. Indonesia and Malaysia, the world’s largest palm oil producers, have aggressively pushed biodiesel programs, with Indonesia implementing a B30 mandate requiring 30% biodiesel blending in transport fuels.

These policies do more than create immediate demand—they foster long-term structural reliance on biodiesel, offering investors, producers, and distributors the assurance needed to expand operations. In essence, the regulatory environment has established biodiesel as a mainstream, not marginal, fuel.

Feedstock Availability and Supply Chain Security

The foundation of the Biodiesel Market lies in the availability of raw materials. Biodiesel production leverages a wide array of feedstocks, ranging from vegetable oils to waste cooking oils and animal fats. This diversity ensures resilience against supply shocks and price volatility.

Vegetable oils such as soybean, palm, rapeseed, sunflower, and corn oil account for the largest share of biodiesel feedstocks. Regions with strong agricultural economies such as the United States, Brazil, Argentina, Malaysia, and Indonesia dominate production, ensuring steady supply. Soybean oil is the most widely used feedstock in North America and South America, while palm oil remains dominant in Southeast Asia.

Animal fats also play an important role, particularly in Europe and North America, where poultry fats, tallow, and white grease are converted into biodiesel. These feedstocks help utilize by-products of the meat industry, thereby adding value to waste streams.

Waste cooking oils are increasingly being recognized as a sustainable and cost-effective feedstock option. Their utilization addresses two critical issues: waste management and low-carbon fuel production. Several countries are implementing policies that encourage the collection and conversion of used cooking oils into biodiesel, further enhancing sustainability credentials.

Feedstock flexibility not only reduces risk but also allows producers to adapt to price changes in global commodity markets. This capability is vital in maintaining the economic competitiveness of biodiesel compared to conventional fossil-based fuels.

Technological Advancements and Production Efficiency

Technology has played a decisive role in making biodiesel cost-competitive and environmentally efficient. Traditional transesterification methods, while effective, faced limitations in handling diverse feedstocks. Innovations such as enzymatic transesterification and heterogeneous catalysis have significantly improved yields, lowered costs, and minimized waste generation.

Advanced technologies now allow the conversion of low-quality and non-edible oils, such as jatropha, karanja, and microalgae oils, into high-grade biodiesel. This reduces reliance on edible feedstocks, mitigating the “food versus fuel” debate often raised in biofuel discussions.

The emergence of second-generation biodiesel technologies further strengthens market potential. These processes can efficiently utilize agricultural residues, forestry waste, and industrial by-products, providing a more sustainable supply chain.

Moreover, production facilities are increasingly integrating circular economy models, where by-products such as glycerin are refined for use in cosmetics, pharmaceuticals, and industrial applications, thereby improving profitability. The convergence of technology, sustainability, and cost optimization ensures biodiesel remains competitive in an era of fluctuating fossil fuel prices.

Market Challenges

Despite significant progress, the Biodiesel Market faces several challenges.

One key issue is infrastructure compatibility. While lower biodiesel blends such as B5 and B20 can be used seamlessly in existing engines and distribution networks, higher blends like B100 often require modifications. Storage infrastructure also needs to adapt to biodiesel’s hygroscopic nature, which can attract water and affect fuel stability.

Another challenge is cold climate performance. Biodiesel has a higher cloud point than petroleum diesel, meaning it can gel in colder temperatures. While additives and advanced refining techniques mitigate this, it adds cost and complexity, particularly in northern regions.

Economic volatility also remains a challenge. Feedstock prices, especially for vegetable oils, are highly sensitive to global commodity markets, trade policies, and weather patterns. This can impact production costs and profitability, particularly in regions without strong subsidy support.

Finally, there is the growing competition from other renewable alternatives such as renewable diesel (HVO) and electric vehicles (EVs). While biodiesel holds unique advantages in heavy-duty and industrial applications, producers must innovate continuously to maintain relevance in a rapidly evolving energy landscape.

Segmental Analysis: Ingredient Insights

The global Biodiesel Market is segmented by application, feedstock, and region.

Application Insights

The fuel segment remains the dominant application, accounting for the largest share of biodiesel consumption in 2024. Its primary use is as a renewable substitute for conventional diesel in transportation. The increasing demand for low-carbon transport fuels, supported by blending mandates and incentives, ensures the continued dominance of this segment.

Biodiesel is also gaining traction in power generation. Utilities in regions with strong renewable policies are increasingly blending biodiesel into fuel for backup generators and decentralized power systems. Additionally, certain industrial sectors, including mining and construction, are adopting biodiesel blends to reduce emissions and comply with corporate sustainability targets.

Feedstock Insights

Feedstock selection varies significantly across regions. In the United States and Brazil, soybean oil dominates due to large-scale cultivation. Southeast Asia relies on palm oil, while Europe focuses on rapeseed oil. Waste oils and animal fats are growing in importance due to sustainability and cost advantages.

This feedstock diversity ensures resilience against supply disruptions while supporting the development of localized biodiesel supply chains tailored to regional strengths.

Regional Dynamics

Asia-Pacific

The Asia-Pacific region is the fastest-growing in the global biodiesel sector. Rapid industrialization, urbanization, and rising transportation fuel demand in countries such as China, India, and Indonesia drive adoption. The region also benefits from abundant agricultural feedstocks, including palm and soybean oil. Strong government support through subsidies, blending mandates, and renewable energy targets ensures structured demand growth.

North America

North America, led by the United States, is a major market. The RFS program, along with federal and state-level incentives, provides a favorable environment for biodiesel producers. Soybean oil dominates feedstock supply, while waste oils and animal fats add to sustainability. Adoption is concentrated in transportation, agriculture, and industrial fuel use.

Europe

Europe remains a mature and regulated market. RED II mandates provide long-term demand stability. Countries such as Germany, France, and Spain are leading consumers. Europe’s emphasis on sustainability and its push toward net-zero targets make biodiesel adoption inevitable across transportation and industrial applications.

Latin America

Brazil and Argentina dominate Latin America due to strong soybean oil supplies and government-backed blending mandates. Both countries also have export-oriented industries that enhance global biodiesel availability.

Middle East & Africa

Although still at a nascent stage, biodiesel adoption in the Middle East and Africa is expected to grow. Rising energy diversification policies, increasing renewable commitments, and expanding agricultural capacities provide future opportunities.

Competitive Landscape

Key companies in the Biodiesel Market include Archer Daniels Midland, Bunge Global, Cargill, Wilmar International, DuPont de Nemours, FutureFuel, Ecodiesel Colombia, and Bangchak Corporation.

These companies are heavily investing in technological upgrades, feedstock innovation, and regional expansion. Strategic collaborations with governments, transport authorities, and energy utilities ensure stronger market positioning. Many players are also exploring advanced feedstocks such as algae and waste-to-fuel technologies, positioning themselves for future competitiveness.

Future Outlook

The future of the Biodiesel Market is promising. With global carbon neutrality targets approaching, demand for low-carbon fuels will remain high. The transition to electric mobility may reduce biodiesel’s role in light vehicles but will not significantly impact its importance in heavy-duty, marine, aviation, and industrial sectors where electrification faces barriers.

Advanced feedstocks, second-generation technologies, and integration with circular economy practices will enhance sustainability while ensuring long-term viability. Emerging markets such as India, China, and Africa are expected to become growth frontiers, complementing the already strong markets in Europe and North America.

FAQs on the Biodiesel Market

Q1: What is the size of the global Biodiesel Market?

Answer: The Biodiesel Market was valued at USD 42.82 billion in 2024 and is projected to grow at a CAGR of 9.88% through 2030.

Q2: Why is biodiesel demand increasing globally?

Answer: Demand is increasing due to government mandates, decarbonization goals, feedstock availability, and cost competitiveness of biodiesel compared to conventional diesel.

Q3: Which application segment dominates the Biodiesel Market?

Answer: The fuel segment leads the Biodiesel Market, driven by its use in transportation, agriculture, and marine industries.

Q4: Which region shows the fastest market growth?

Answer: The Asia-Pacific region is the fastest-growing, supported by industrialization, renewable energy targets, and abundant feedstocks.

Q5: What are the major challenges in the Biodiesel Market?

Answer: Challenges include feedstock price volatility, cold climate performance, infrastructure compatibility, and competition from alternative renewables.

Q6: Who are the major players in the Biodiesel Market?

Answer: Leading players include ADM, Cargill, Bunge Global, Wilmar International, DuPont, FutureFuel, and Bangchak Corporation.

Q7: What is the future outlook for biodiesel?

Answer: The Biodiesel Market will expand with the energy transition, especially in heavy-duty transport, marine fuels, and industrial applications, supported by innovation in advanced feedstocks and government mandates.