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The biofuels market size is forecast to increase by USD 26.6 billion, at a CAGR of 3.23% between 2023 and 2028. Market growth is influenced by several key factors, including the growing adoption of renewable sources of energy, the increasing demand for cleaner fuels, and consistent government support. The rising adoption of renewable energy sources, such as solar, wind, and hydropower, reflects a global shift towards sustainable energy production, driven by environmental concerns and the need to mitigate climate change. Concurrently, there is a growing demand for cleaner fuels, including biofuels and hydrogen, as industries and consumers seek alternatives to traditional fossil fuels to reduce greenhouse gas emissions and improve air quality. Moreover, steady government support through policies, incentives, and subsidies plays a crucial role in fostering market growth by providing regulatory certainty and financial incentives for investment in renewable energy and clean fuel technologies. These factors collectively create a conducive environment for market expansion, driving innovation, investment, and adoption of sustainable energy solutions to meet the world's growing energy needs while addressing environmental challenges. Our report examines historical data from 2018 - 2022, besides analyzing the current and forecasted market scenario.
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The market is shaped by transport fuel demands and policy design aimed at reducing greenhouse gas emissions. Biofuel production encompasses a diverse range of sources, including renewable diesel, hydrogenated oil, and vegetable oil. Driven by blending mandates and regulations like the Renewable Energy Directive (RED), the market focuses on sustainable practices and compliance with environmental regulations. Biomass sources such as jatropha, molasses, and coarse grain are utilized for liquid biofuels, alongside innovative options like algae-based biofuels and cyanobacterial development. Efforts in genetically modified yields contribute to enhancing biofuel production efficiency while meeting increasing demands for renewable energy sources. As the industry continues to evolve, biofuels play a pivotal role in transitioning towards a more sustainable and environmentally friendly energy landscape.
A key factor shaping the market growth is the rising need for cleaner fuels. Due to uncertainty in global fuel prices, energy security, and continuously rising emissions, there is an increasing interest in alternate fuels globally. As biofuel blends are being used in vehicles with little or no modification required in vehicle engines, there will be an increasing demand for biofuels in the coming years.
Further, developing nations such as India and China are implementing strategies to utilize more renewable fuels in their transportation sector in order to reduce GHG emissions, as these countries are more prone to pollution. Other factors such as the increasing depletion of conventional fossil fuels, increasing GHG emission levels, and volatile oil prices have a significant impact on the growth of global bio fuel market during the forecast period.
One of the key trends shaping the market growth is the expansion of advanced biofuels. Advanced biofuels, also referred to as second-generation or advanced-generation biofuels, are generated from non-food feedstocks such as agricultural waste, algae, cellulosic biomass, and other non-edible plant materials. Some of the significant advantages of advanced biofuels include improved environmental performance, higher energy efficiency, and reduced competition with food production.
Further, there is a growing adoption of advanced biofuels due to increasing concerns about climate change and the need to reduce greenhouse gas emissions. Thus, this trend is expected to continue and significantly contribute to the market growth of biofuels during the forecast period.
Fluctuations in oil prices are one of the key challenges hindering the biofuels market growth. Even though biofuels offer many advantages over fossil fuels, including lower GHG emissions and similar vehicular powers, it is much more expensive when compared to other conventional fuel prices. This can significantly impede the adoption of biofuels and hinder the growth of the biofuel market globally.
Further, the global oil and gas industry is highly dependent on crude oil prices, frequently fluctuating with high uncertainty. Therefore, the volatility of crude oil prices remains a threat to the global biofuels market in the forecast period.
The transportation segment will account for a major share of the market's growth during the forecast period. Due to increasing concerns about climate change, the need to reduce greenhouse gas emissions, and the desire for energy security, the biofuels market has experienced significant growth over the past decade. Government regulations and policies promoting the use of biofuels have also played a crucial role in the growth of the biofuel market during the forecast period.
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The transportation segment was valued at USD 100.40 billion in 2018. Some of the key factors which drive the biofuel markets include environmental concerns, government policies, and the need for energy diversification. Due to the growing importance, biofuels are expected to play a crucial role in the transition toward a more sustainable transportation system which in turn drives the market globally during the forecast period.
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APAC is estimated to contribute 28% to the growth by 2028. Technavio's analysts have provided extensive insight into the market forecasting, detailing the regional trends and drivers influencing the market's trajectory throughout the forecast period. Another region offering significant growth opportunities to companies is North America. Automotive, mining, agriculture, power generation, marine, and railway are major end-user industries contributing to the main market share in North America. Due to the trade impact of the US, such as tariff change and import-export regulations, on its biofuel import from countries such as Argentina, Indonesia, and Malaysia, the market in the region is expected to grow at a moderate rate during the forecast period.
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
We also have detailed analyses of the market’s competitive landscape and offer information on 20 market companies, including:
Advance Biofuel, Alten SA, Archer Daniels Midland Co., Argent Energy UK Ltd., BlueFire Renewables Inc., Bunge Ltd., Cargill Inc., Chevron Corp., ENERKEM Inc., KFS Biodiesel GmbH and Co. KG, Louis Dreyfus Co. BV, Munzer Bioindustrie GmbH, Neste Corp., POET LLC, RB FUELS, Shell plc, Valero Energy Corp., Vance Group Ltd., and Wilmar International Ltd.
Technavio market research and growth forecast the an in-depth analysis of the market and its players through combined qualitative and quantitative data. The analysis classifies companies into categories based on their business approaches, including pure-play, category-focused, industry-focused, and diversified. Companies are specially categorized into dominant, leading, strong, tentative, and weak, based on their quantitative data analysis.
The market research report provides comprehensive data (region wise segment analysis), with forecasts and estimates in "USD billion" for the period 2024-2028, as well as historical data from 2018 - 2022 for the following segments.
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The market is driven by the need for sustainable alternatives to traditional gasoline and jet fuel, with a focus on reducing greenhouse gas (GHG) emissions. With feedstock ranging from sugar crops to biojet sources, the industry aims to meet the demand for renewable fuel while addressing environmental concerns. Policies such as ReFuelEU Aviation and FuelEU Maritime promote the adoption of sustainable aviation fuel and renewable fuel in maritime transport. Additionally, initiatives like the Renewable Fuel Standard and RenovaBio scheme incentivize biofuel production and usage, driving investment from prominent companies like Valero and Eco Energy. As electric vehicle gain traction, biofuels remain essential in sectors where electrification is challenging, such as aviation and heavy transport.
Further, biofuel researchers continue to innovate, exploring new feedstock options and improving production processes to further reduce reliance on petroleum oil and mitigate the impacts of inflation rates and oilfield discoveries. The adoption of electric vehicle not only contributes to GHG reductions and diminishes reliance on oil imports but also prompts policy on biofuel shifts towards biofuels, such as the ethanol blending mandate, aimed at mitigating the inflation rate while incentivizing investments like Valero investment in biojet production from sustainable sources like sugar crop, thereby curbing greenhouse gases emissions and advancing a more sustainable energy landscape.
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Market Scope |
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Report Coverage |
Details |
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Page number |
179 |
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Base year |
2023 |
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Historic period |
2018-2022 |
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Forecast period |
2024-2028 |
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Growth momentum & CAGR |
Accelerate at a CAGR of 3.23% |
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Market Growth 2024-2028 |
USD 26.6 billion |
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Market structure |
Fragmented |
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YoY growth 2023-2024(%) |
3.11 |
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Regional analysis |
North America, Europe, APAC, South America, and Middle East and Africa |
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Performing market contribution |
APAC at 28% |
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Key countries |
US, Brazil, China, UK, and India |
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Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
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Key companies profiled |
Advance Biofuel, Alten SA, ALTO INGREDIENTS INC., Archer Daniels Midland Co., Argent Energy UK Ltd., BlueFire Renewables Inc., Bunge Ltd., Cargill Inc., Chevron Corp., ENERKEM Inc., KFS Biodiesel GmbH and Co. KG, Louis Dreyfus Co. BV, Munzer Bioindustrie GmbH, Neste Corp., POET LLC, RB FUELS, Shell plc, Valero Energy Corp., Vance Group Ltd., and Wilmar International Ltd. |
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Market dynamics |
Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, Market condition analysis for the market forecast period. |
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Customization purview |
If our market report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
We can help! Our analysts can customize this market research report to meet your requirements. Get in touch
1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Application
7 Market Segmentation by Product
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Opportunity/Restraints
11 Competitive Landscape
12 Competitive Analysis
13 Appendix
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