Biofuel Market Overview
The global biofuels market was US$ 153.88 billion in 2024 and is expected to reach US$ 252.19 billion in 2032, growing at a CAGR of 6.4% during the forecast period (2025-2032).
Increasing environmental concerns and the urgent need to reduce greenhouse gas emissions have accelerated the demand for cleaner, renewable energy sources like biofuels. For instance, according to the 11th Edition of the Global Bioenergy Statistics Report 2024 by the World Bioenergy Association, biofuels emerged as the largest renewable energy source, supplying 3.94 exajoules (EJ). By 2023, a total of 64 countries had implemented mandates to promote biofuel use. This highlights biofuels' growing role in global renewable energy strategies. Rising environmental concerns and the need to cut greenhouse gas emissions have intensified the global shift toward cleaner, renewable energy sources like biofuels. Biofuels offer a sustainable alternative to fossil fuels, aligning with efforts to combat climate change. Global climate goals, including netzero targets, further drive their adoption.
Government policies and regulatory frameworks, including subsidies, mandates, and blending targets, are further fueling the market expansion. For instance, Indonesia is set to implement its B40 biodiesel program in 2025, aiming to blend 40% palm oil with 60% diesel fuel. The government has allocated 15.62 million kiloliters of biodiesel for this initiative, with distribution to consumers expected to commence on January 1, 2025. This move is part of Indonesia's broader strategy to enhance energy security and reduce reliance on imported fossil fuels. Similarly, in April 2025, the Indian state of Madhya Pradesh launched the 'Scheme for Implementation of Biofuel Projects in Madhya Pradesh' under its 2025 Renewable Energy Policy, aiming to position the state as a national leader in advanced biofuel production.
Additionally, growing investments in R&D and bio-refineries are enhancing scalability. In April 2025, the UK government pledged US$ 270.36 (£200) million for projects at Scotland's Grangemouth refinery, focusing on clean fuel manufacturing options, including biofuels and hydrogen production, as part of a post-oil industrial transformation
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Biofuel Market Drivers
Environmental Concerns and Climate Change Mitigation
Environmental concerns and climate change mitigation are major drivers of the global biofuels market. As global temperatures rise and extreme weather events become more frequent, governments and industries are under pressure to reduce greenhouse gas (GHG) emissions.
Biofuels, such as ethanol and biodiesel, offer a cleaner-burning alternative to fossil fuels, emitting significantly lower levels of carbon dioxide and other pollutants. Their use helps in achieving international climate goals, including the Paris Agreement targets. Biofuels are considered carbon-neutral because the CO₂ released during combustion is offset by the CO₂ absorbed by the feedstock plants during their growth. This life-cycle advantage supports their adoption in transportation, one of the largest sources of global emissions.
Countries are integrating biofuels into their national energy strategies to lower carbon footprints and meet Renewable Energy and Net-Zero targets. For instance, in January 2025, the US Department of Agriculture announced nearly US$180 million in funding for 586 projects to expand access to clean energy systems and increase the availability of domestic biofuels. This is part of the broader US$3 billion investment under the Inflation Reduction Act.
The transport sector, including road, aviation, and marine, is increasingly adopting biofuels to reduce dependency on fossil fuels. In May 2025, Malaysia expanded the use of palm-based biodiesel from B10 (10% biodiesel) to B20 (20% biodiesel) for ground transport vehicles at its main international airport. This initiative is part of the country's broader strategy to achieve net-zero carbon emissions by 2050. Similar biodiesel trials are being conducted at major Malaysian ports, demonstrating progress toward sustainable development.
Biofuel Market Restraints
Impact on Food Security and Market Stability
The large-scale use of food crops for biofuel production raises serious concerns over food security and price volatility, becoming a significant restraint on the growth of the global biofuels market. According to the 11th Edition of the Global Bioenergy Statistics Report 2024 by the World Bioenergy Association, in 2023, approximately 660 million tons of primary crops, accounting for nearly 7% of global agricultural production, were diverted for biofuel production.
These crops included essential food staples such as wheat, corn, sugarcane, and vegetable oils, which form the backbone of diets in many parts of the world. This large-scale diversion raises serious concerns about food security, particularly in regions already grappling with hunger and malnutrition.
As biofuel demand grows, so does the pressure on agricultural land, water resources, and fertilizer use, leading to environmental stress and reduced land availability for food production. In times of poor harvests or supply shocks, this competition exacerbates price spikes in both food and fuel markets, contributing to global inflation and potential political unrest. Policymakers face mounting ethical and practical challenges in balancing energy needs with food access.
For instance, in 2024, Ireland's Transport Minister Eamon Ryan called on the European Commission to scrutinize imported biofuels, citing alarming concerns over fraudulent and unsustainable practices, particularly involving virgin palm oil. During an EU Energy Council meeting, Ryan highlighted accusations that some biofuel suppliers, notably from China, are falsely labeling shipments of virgin palm oil as sustainable biofuels. The situation intensifies the Food vs. Fuel debate, as palm oil—widely used in food and household goods—faces growing global demand from both energy and food sectors.
Biofuel Market Segmentation Analysis
The global biofuels market for solid biofuel was US$ 47.57 billion in 2024 and is expected to reach US$ 73.63 billion by 2032, growing with a CAGR of 5.7% between 2025 and 2032.
Global demand for solid biofuels is growing steadily as governments seek alternatives to fossil fuels and pursue decarbonization strategies. Solid biofuels, such as wood pellets, briquettes, chips and agricultural residues are being adopted in heating, power generation and industrial energy systems across multiple regions.
Recent developments, including the AgroBioMass Certification and the addition of biofuels on India’s Moglix B2B platform, reflect efforts to streamline the supply chain and improve the quality and traceability of these fuels. In the European Union, solid biofuels are the largest source of renewable energy, accounting for 45.4% of gross inland renewable energy consumption in 2022, according to Eurostat. Many EU countries have long used biomass for heating and power, supported by policies under the Renewable Energy Directive. Germany, for example, reported that solid biofuels made up 12.8% of renewable energy use in 2023, according to the Federal Environment Agency.
To improve quality assurance and trade consistency, the AgroBioMass Association launched a new certification in 2024 for solid biofuels derived from agricultural residues. The certification focuses on environmental, combustion and sustainability criteria and applies to materials like straw, pruning waste and shells. It aligns with EU policy and makes cross-border trade in agricultural biomass easier. Germany and Austria are expanding biomass heating through public subsidies, while Italy and France are converting agricultural by-products into usable fuels. These countries are expected to benefit from the AgroBioMass certification as they scale up residue-to-energy conversion, particularly in rural areas.
In Japan, solid biofuels are part of a national push to diversify electricity generation after the Fukushima disaster. The Ministry of Economy, Trade and Industry (METI) confirmed that over 600 biomass power plants are operational.
Geographical Analysis
North America’s biofuels market was valued at US$ 69.15 billion in 2024 and is estimated to reach US$ 107.88 billion by 2032, growing at a CAGR of 5.8% during the forecast period from 2025-2032.
The North American biofuels market is experiencing significant growth, driven by government policies, environmental concerns, and technological advancements. In March 2025, the US Energy Information Administration (EIA) reported that the total operable biofuel production capacity in the US reached 25 billion gallons per year, marking an increase of 10 million gallons per year (MMgy) compared to the April month and an increase of 1.274 billion gallons compared to March 2024. Ethanol capacity specifically reached 18.436 billion gallons, up 10 MMgy from February and up 551 MMgy from March 2024. Biodiesel capacity remained steady at 1.984 billion gallons, unchanged from both the previous month and March of the previous year.
The US Department of Energy (DOE) has taken steps to support domestic bioenergy production by updating its 45Z Clean Fuel Production Tax Credit (45ZCF-GREET) modeling tool. This update incorporates new methods of alternative fuel production, including ethanol from corn wetmilling and natural gas from coal-mine methane, allowing a wider range of farmers and companies to participate in the alternative fuels market. These developments underscore the significant role biofuels play in the US energy landscape. The expansion of production capacity and the inclusion of diverse feedstocks reflect the country's commitment to renewable energy and support for rural economies.
In Canada, the biofuel sector is also expanding, influenced by federal regulations and environmental goals. The Clean Fuel Regulation (CFR), implemented in July 2022, aims to reduce carbon intensity in fuels, potentially increasing ethanol use by 700 million liters and low carbon-intensity diesel by 2.2 billion liters by 2030
Competitive Landscape
Market Share Analysis
The global biofuels market is characterized by a diverse competitive landscape, with a few key players holding notable market shares. POET, LLC leads the market with a 4.27% share, followed closely by Valero Energy Corporation at 3.90%.
Chevron contributes 2.93% to the global share, while Neste, known for its renewable diesel innovations, holds 2.27%. ADM accounts for 1.99%, leveraging its integrated agribusiness operations.
Despite the presence of these major companies, the market remains highly fragmented, with a large portion—84.64%—comprising numerous other regional and emerging players contributing to the supply of biofuels across the globe.
This market fragmentation highlights strong growth potential and opportunities for both established and emerging players to expand their footprint in the global biofuels industry.
