United States Biodiesel Market: Powering America’s Green Fuel Revolution

The United States is accelerating toward a greener energy future, and biodiesel has firmly positioned itself as one of the country’s clean fuel cornerstones. As industries, governments, and consumers shift away from high-carbon fossil fuels, the biodiesel market is gaining momentum at scale—backed by policy support, environmental urgency, and technological innovation.

According to Renub Research, the United States Biodiesel Market is projected to reach US$ 20.29 billion by 2033, rising from US$ 12.23 billion in 2024, registering a CAGR of 5.79% from 2025 to 2033. This impressive growth is driven by a strong national push for renewable fuel adoption, expanding demand across transportation and power sectors, and growing investment in sustainable feedstock innovation.

What is Biodiesel and Why is America Betting Big on It?

Biodiesel is a renewable, biodegradable fuel produced from vegetable oils, animal fats, and recycled cooking grease. Unlike petroleum-based diesel, biodiesel dramatically lowers greenhouse gas emissions and can be used in standard diesel engines either in pure form (B100) or blended with petroleum diesel (B5, B20).

In the U.S., biodiesel adoption extends across:

Transportation (trucks, public transit, freight)

Agriculture (tractors, farm machinery)

Marine and industrial operations

Power generation

Residential and commercial heating (Bioheat®)

With federal and state governments pressing ahead with climate commitments and clean air directives, biodiesel has become central to America’s energy transition—promising lower emissions, higher energy security, and circular waste utilization.

Market Drivers Fueling U.S. Biodiesel Growth

✅ 1. Strong Government Policies & Renewable Fuel Standards (RFS)

The U.S. government has been instrumental in scaling biodiesel consumption through mandates and incentives, including:

Renewable Fuel Standard (RFS) requiring biofuel blending

Biodiesel Tax Credit (BTC) to offset production costs

State-level clean fuel programs like California’s LCFS

In December 2023, the U.S. Environmental Protection Agency (EPA) announced RFS volume requirements for 2023-2025, strengthening biofuel incorporation into the national energy mix. These regulations ensure consistent demand, price support, and investment security for biodiesel producers.

✅ 2. Growing Demand for Low-Carbon & Sustainable Fuels

Corporate fleets, logistics providers, public transit networks, and agricultural operators are turning to biodiesel to meet sustainability goals. States such as California and Washington, which enforce aggressive emissions reduction policies, have become key consumption hubs.

Adding to this momentum, the U.S. Department of Energy (DOE) spotlighted sustainable aviation fuel (SAF) pathways, reinforcing bio-based fuels as a long-term decarbonization pillar.

✅ 3. Technological Advancements in Feedstock and Processing

Modern processing techniques like:

Transesterification

Hydrotreated Vegetable Oil (HVO) technology

Algae-based biofuel innovation

Waste-derived feedstock utilization

…are making biodiesel more cost-efficient, scalable, and engine-compatible. In 2023, Be8 entered the U.S. biofuel market to scale ethanol and renewable fuel technologies, underscoring industry confidence in technological transformation.

Barriers the Market Must Overcome

❌ Feedstock Price Volatility

Primary biodiesel feedstocks—such as soybean oil, canola, and animal fats—are vulnerable to:

Climate disruption

Crop yield fluctuations

Global commodity price volatility

Supply chain interruptions

These factors can destabilize production costs and challenge biodiesel’s competitiveness against conventional and renewable diesel.

❌ Increasing Competition from Emerging Alternatives

Biodiesel competes with:

Renewable diesel (chemically closer to petroleum diesel)

Electric vehicles (EVs)

Hydrogen fuel technologies

Though biodiesel leads in market adoption today, sustained innovation will be essential to preserve long-term demand.

Segment-Wise Market Insights

🚚 By Application: Fuel Leads the Market

Biodiesel is primarily utilized in:

Commercial fleets

Logistics and freight transport

Public transit systems

Blends like B20 have become popular as they balance emissions reduction without requiring engine modification. With increasing private-sector sustainability mandates, the fuel application segment dominates U.S. biodiesel demand.

🌾 By Feedstock: Vegetable Oil vs. Animal Fats

🟩 Vegetable Oil Biodiesel

Soybean, canola, and corn oils lead feedstock volume due to:

Strong domestic agriculture output

Established supply chains

Government-backed agri-biofuel incentives

However, price fluctuations tied to crop cycles remain an ongoing challenge.

🟧 Animal Fats Biodiesel

Tallow and used cooking grease are emerging as high-demand, low-cost feedstocks. This waste-to-energy approach:

Reduces landfill burden

Cuts production costs

Offers superior energy return

The animal fats segment is expected to grow rapidly as circular economy policies expand.

State-Level Biodiesel Market Highlights

🌟 California — The Undisputed Leader

Driven by:

Low Carbon Fuel Standard (LCFS)

Massive transportation and agricultural demand

Leadership in emissions goals

California remains the largest biodiesel consumption hub. In April 2022, BDI-BioEnergy International launched a state-of-the-art biodiesel plant in Bakersfield, further strengthening supply capacity.

🗽 New York — Bioheat® and Public Transit Adoption

With high population density and strong clean energy agendas, New York leads in:

Municipal fleet biodiesel adoption

Home heating biodiesel blends (Bioheat®)

Commercial and residential decarbonization initiatives

🌲 Washington — Renewable Fuel & Feedstock Growth

Washington benefits from:

Clean Fuel Standard (CFS)

Local feedstock availability (soybean, canola)

Strong seaport and logistics biodiesel demand

🚛 New Jersey — Strategic Logistics Advantage

Due to:

Proximity to major ports

Urban transportation demand

Supportive state policies for alternative fuels

New Jersey continues to expand biodiesel usage in municipal fleets and freight networks.

Market Segmentation Snapshot

By Application

Fuel

Power Generation

Others

By Feedstock

Vegetable Oil

Animal Fats

By Key States

California, Texas, New York, Florida, Illinois, Pennsylvania, Ohio, Georgia, New Jersey, Washington, North Carolina, Massachusetts, Virginia, Michigan, Maryland, Colorado, Tennessee, Indiana, Arizona, Minnesota, Wisconsin, Missouri, Connecticut, South Carolina, Oregon, Louisiana, Alabama, Kentucky + Rest of U.S.

Competitive Landscape

Major companies shaping market innovation and supply scalability include:

Company Market Edge

Archer Daniels Midland Company Feedstock supply strength & biofuel processing scale

FutureFuel Diversified biofuel refining solutions

Neste’s Global leadership in renewable diesel & biodiesel

Renewable Energy Group, Inc. One of the largest biodiesel producers in the U.S.

Bunge Global SA Strong agri-commodity integration

Wilmar Feedstock sourcing and processing scale

Shell Strategic energy transition investments

The Road Ahead: What’s Next for U.S. Biodiesel?

America’s biodiesel sector is evolving into a long-game infrastructure play driven by:

Climate targets and regulatory support

Expansion of sustainable feedstocks

Cost-competitive production technology

Corporate and industrial decarbonization strategies

As renewable fuels become mission-critical for national energy security and corporate ESG goals, biodiesel is emerging not just as a fuel alternative, but as a long-term energy mandate.

Final Thoughts

Biodiesel is no longer a niche energy solution—it is a strategic fuel powering America’s transportation, agriculture, and industrial future. With a forecasted market of US$ 20.29 billion by 2033, the U.S. is laying the foundation for a cleaner, carbon-responsible, and fuel-independent future.

For investors, policymakers, and ESG-driven enterprises, the biodiesel boom isn't coming—it's already here.