Biodiesel Market Size and Forecast 2025–2033: A Global Shift Toward Cleaner Energy

The global race toward decarbonization is picking up speed—and biodiesel has emerged as one of the most promising players in this shift. As countries intensify efforts to reduce carbon footprints and transition to cleaner fuels, biodiesel is becoming a critical component in the world’s energy mix. According to Renub Research, the global biodiesel market will reach US$ 70.61 billion by 2033, rising from US$ 41.62 billion in 2024 at a steady CAGR of 6.05% between 2025 and 2033.

This growth reflects not only strong policy support but also a deepening commitment from industries and consumers to adopt renewable energy alternatives. From transportation and power generation to agriculture and marine applications, biodiesel is redefining how economies fuel their future.

Understanding the Global Biodiesel Market

Biodiesel is a renewable, biodegradable fuel produced from natural feedstocks—including vegetable oils, animal fats, and recycled cooking grease. Through a chemical process known as transesterification, these oils are converted into fatty acid methyl esters (FAME), which form the base of biodiesel.

The flexibility of biodiesel makes it especially attractive. It can be used as:

B100 – 100% biodiesel, or

Blended fuels, such as B20 (20% biodiesel blended with 80% petroleum diesel)

Its compatibility with existing diesel engines means adoption can happen quickly, without costly infrastructure upgrades.

Market Snapshot

Report Features Details

Base Year 2024

Forecast Years 2025–2033

Historical Years 2020–2024

Market Size 2024 US$ 41.62 Billion

Forecast 2033 US$ 70.61 Billion

Growth Rate (CAGR) 6.05%

Why Biodiesel Matters

The transportation sector accounts for nearly one-fourth of global carbon emissions. Biodiesel offers a cleaner-burning alternative to fossil diesel, reducing greenhouse gas emissions by up to 80%.

Beyond transportation, biodiesel is gaining ground in:

Agricultural machinery

Marine engines

Rail systems

Industrial boilers

Off-grid power generation

As economies work toward carbon-neutral pathways, biodiesel is supporting a circular economy, utilizing waste fats and oils that would otherwise contribute to environmental pollution.

Key Growth Drivers Fueling the Biodiesel Market

1. Rising Demand for Sustainable Energy

The global energy landscape is undergoing a profound transformation. Climate change concerns, combined with intensifying pressure to reduce emissions, have led governments and corporations to embrace cleaner fuels.

Biodiesel’s lower carbon intensity makes it a star player in sustainable energy goals.

India, for instance, expects its primary energy demand to double by 2040, with biofuels playing a major role in meeting new consumption patterns.

As a fuel that is nearly 95% carbon-free, biodiesel aligns with global decarbonization strategies.

2. Strong Government Policies and Regulatory Support

Policies remain central to biodiesel adoption. Blending mandates, subsidies, and R&D incentives encourage both supply and demand.

Examples include:

United States: Renewable Fuel Standard (RFS) mandates blend requirements

Brazil: Long-standing national biodiesel blending mandate

ASEAN & East Asia: Biodiesel demand projected to reach 37 million tons by 2035, driven by policy-backed integration

These initiatives not only accelerate adoption but also strengthen local economies by creating demand for agricultural feedstocks.

3. Expanding Applications Across Industries

While transportation remains the biggest consumer, other sectors are catching up:

Power generation: Biodiesel is used in backup generators and off-grid applications

Heating systems: Replacing heating oil in residential and industrial use

Marine industry: Cleaner alternatives for shipping

Agriculture: Reduces emissions from tractors and harvesters

The EU, meanwhile, plans to decarbonize its transport sector by 15% by 2025 and 30% by 2030, giving biodiesel more room to scale.

Key Challenges Slowing Market Adoption

1. Feedstock Availability and Pricing Pressures

A major bottleneck is the volatility of feedstock sources.

Weather disruptions affect soybean, palm, and rapeseed supplies

Competition with the food industry drives edible oil prices higher

Sustainability concerns—especially related to palm oil—remain part of global debates

High feedstock costs directly impact production economics, challenging the cost competitiveness of biodiesel against fossil fuels.

2. Technology and Infrastructure Gaps

Smaller producers face hurdles due to:

Expensive quality assurance systems

Limited refueling and distribution networks in developing countries

Engine compatibility issues in older vehicles

Cold-weather challenges, where biodiesel can thicken

Strengthening logistics and upgrading technologies will be crucial for long-term adoption.

Market by Application

1. Fuel

The largest application segment, biodiesel significantly reduces emissions and requires minimal changes to existing diesel engines. Its ease of integration makes it the preferred choice for transportation fleets.

2. Power Generation

Used in generators and rural electrification, biodiesel strengthens energy reliability—especially in remote and off-grid areas.

3. Others

Includes heating oil substitution, industrial applications, and specialty chemical uses.

Market by Feedstock

1. Vegetable Oil

Soybean, palm, and rapeseed oils dominate this category. Their high oil yield and availability make vegetable oils the most widely used feedstock globally.

2. Animal Fats

Rendered fats, tallow, and used cooking oil (UCO) are cost-effective, sustainable inputs that support waste-to-fuel models.

Country-Level Market Insights

United States

The U.S. remains one of the strongest biodiesel markets, fueled by:

Renewable Fuel Standards

Tax incentives

A strong soybean oil supply chain

Advanced production technologies

In 2023, the U.S. Department of Energy committed $118 million to accelerate domestic biofuel development.

Germany

Germany leads Europe with ambitious climate targets and advanced infrastructure. Rapeseed oil remains a primary feedstock, and investment in sustainable production continues to grow.

India

India’s market is expanding rapidly due to:

Rising energy demand

National Biofuels Policy

Government support for non-edible oilseeds and UCO collection

The National Bioenergy Programme (extended until 2025–26) underscores the government’s commitment to renewable fuels.

Saudi Arabia

Saudi Arabia’s diversification strategy includes strong investments in renewable fuels. Government-backed initiatives and an expanding agricultural sector are enabling growth in biodiesel capacity.

Competitive Landscape

Major global players include:

Archer Daniels Midland Company

FutureFuel

Nestlé

Renewable Energy Group, Inc.

Bunge Global SA

Wilmar

Shell

Recent Industry Developments

Oct 2024: ORLEN Group launched HVO100, a next-gen biofuel usable in most diesel vehicles

Sep 2024: Indian Oil Corporation recorded a biodiesel blending ratio of 0.49%

Nov 2023: Eni & Saipem partnered to expand renewable diesel and SAF production

Jul 2023: BP invested $10 million in WasteFuel to convert global waste into bio-methanol

Mar 2023: Cargill announced a new Belgian biodiesel production facility

These moves indicate growing investments across the entire biodiesel value chain—from feedstock sourcing to large-scale production.

Market Segmentation Covered in the Report

Application (3 Viewpoints)

Fuel

Power Generation

Others

Feedstock (2 Viewpoints)

Vegetable Oil

Animal Fats

Countries (25 Covered)

North America: United States, Canada

Europe: France, Germany, Italy, Spain, UK, Belgium, Netherlands, Turkey

Asia Pacific: China, Japan, India, South Korea, Thailand, Malaysia, Indonesia, Australia, New Zealand

Latin America: Brazil, Mexico, Argentina

Middle East & Africa: Saudi Arabia, UAE, South Africa

Final Thoughts: A Cleaner, Smarter Future Runs on Biodiesel

The global energy shift is not a distant dream—it is unfolding now. Biodiesel stands at the intersection of sustainability, economic opportunity, and technological advancement. As governments tighten emission norms and industries embrace greener alternatives, biodiesel is set to play a defining role in the world’s low-carbon transition.

With a projected market size of US$ 70.61 billion by 2033, biodiesel is more than a trend—it is a critical pillar of the global clean energy future.

If the world is serious about tackling climate change, improving energy security, and promoting circular economic models, biodiesel will remain an essential part of the solution.