United States Biodiesel Market Trends & Summary (2025–2033)

The United States biodiesel market is entering a period of strong transformation, driven by aggressive climate goals, federal renewable fuel standards, and rising interest in sustainable alternatives to petroleum-based diesel. According to Renub Research, the U.S. biodiesel market is expected to grow from US$ 12.23 billion in 2024 to US$ 20.29 billion in 2033, expanding at a CAGR of 5.79% from 2025 to 2033. This growth reflects not only increased demand for low-carbon fuels but also the expansion of feedstock production, technology upgrades, and deeper integration of biodiesel across transportation, agriculture, industry, and home heating applications.

As the U.S. accelerates its transition towards renewable fuels, biodiesel remains a crucial component of the nation’s clean energy strategy—both as a near-term solution for emissions reduction and as a scalable, economically viable alternative to fossil fuels.

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Biodiesel in the United States: A Market Overview

Biodiesel is a biodegradable, renewable fuel produced from vegetable oils, animal fats, or recycled cooking grease. It stands out as one of the few sustainable fuels that can be used directly in existing diesel engines with minimal modifications. It is commonly blended into petroleum diesel in ratios such as B5, B20, or used as B100 (pure biodiesel), depending on emission goals and engine compatibility.

Across the United States, biodiesel is widely used in:

Transportation (trucks, buses, marine vessels)

Agriculture (tractors, harvesters, farm machinery)

Commercial and municipal fleets

Industrial applications

Home heating systems through Bioheat®

Power generation in backup and distributed energy systems

As states and industries commit to renewable energy targets, biodiesel continues to gain traction as a scalable and proven low-carbon solution, especially in sectors where electrification is difficult or economically unfeasible.

Key Market Growth Drivers

1. Government Policies and the Renewable Fuel Standard (RFS)

Government incentives remain a dominant force behind biodiesel adoption. The Renewable Fuel Standard (RFS) requires fuel refiners to blend increasing amounts of renewable fuels—including biodiesel—into the national fuel mix.

One of the most influential incentives is the Biodiesel Tax Credit (BTC), which helps reduce costs for producers and end users, making biodiesel more competitive with petroleum diesel.

In December 2023, the EPA established volume requirements for the RFS program for 2023–2025, including categories such as:

Biomass-based diesel

Cellulosic biofuel

Advanced biofuel

Total renewable fuel

This update also introduced regulatory improvements across the RFS program, streamlining compliance and strengthening incentives for producers. Although the EPA has not yet finalized renewable electricity provisions for RIN generation, the broader regulatory updates signal ongoing commitment to expanding renewable fuel use nationwide.

These policies collectively support industry profitability, feedstock investment, and long-term growth.

2. Surge in Demand for Low-Carbon and Sustainable Fuels

As climate priorities intensify, American industries, states, and large fleet operators are aggressively adopting low-carbon fuels. Biodiesel reduces lifecycle greenhouse gas emissions significantly compared to petroleum diesel, making it an essential tool for meeting sustainability commitments.

States with stringent climate targets—such as California, Washington, and New York—are accelerating biodiesel adoption through mandates, incentives, and carbon reduction programs.

The U.S. Department of Energy’s Pathways to Commercial Liftoff report highlighted the potential of Sustainable Aviation Fuel (SAF) to dramatically reduce aviation emissions. As biodiesel technologies advance, synergies between biodiesel production and SAF pathways further strengthen the overall renewable fuels ecosystem.

Corporate fleets, public transportation agencies, and agricultural operations are also incorporating biodiesel into daily operations, driven by:

Sustainability reporting requirements

Corporate ESG goals

Pressure to reduce carbon footprints

Lower sulfur emissions and engine benefits

With both environmental and economic appeal growing stronger, biodiesel’s demand trajectory continues to rise across industries.

3. Technological Advancements in Biodiesel Production

Innovation across biofuel production technologies is making biodiesel more efficient, cost-effective, and environmentally competitive. New processing methods—including improved transesterification and hydrotreated vegetable oil (HVO) technologies—are enhancing fuel quality and increasing output yield.

Researchers are also exploring next-generation feedstocks such as:

Algae-based biofuels

Waste-derived feedstocks

Advanced grease and fat recycling technologies

These advancements reduce dependence on traditional vegetable oils and help producers diversify supply chains.

In 2023, Be8, a global bioenergy company, expanded into the U.S. market by investing in both biofuel technology and cereal-based ethanol ventures—demonstrating increasing foreign investment in U.S. biofuels and the broader potential for technology-led expansion.

As technology improves and production costs fall, biodiesel becomes even more competitive with petroleum diesel and other renewable alternatives.

Market Challenges

1. Feedstock Price Volatility

Feedstock accounts for the majority of biodiesel production costs. Prices for key feedstocks—including soybean oil, corn oil, canola oil, and animal fats—can fluctuate sharply due to:

Weather disruptions

Global supply chain instability

Agricultural policy changes

International trade dynamics

When feedstock prices rise, biodiesel becomes less price-competitive compared to fossil diesel, challenging producers and squeezing profit margins.

2. Competition from Other Renewable Fuels

While biodiesel is a major renewable fuel, it faces growing competition from:

Renewable diesel (RD)

Electric vehicles (EVs)

Hydrogen fuel cells

Renewable diesel, in particular, poses a strong challenge because it is chemically identical to petroleum diesel, requiring no modifications to existing infrastructure.

The expansion of EV incentives and charging infrastructure also risks shifting demand away from liquid biofuels in the long term.

For biodiesel to maintain market share, ongoing innovation, cost reduction, and feedstock diversification will be essential.

United States Biodiesel Market Breakdown by Key Segments

1. Biodiesel for Fuel Applications

The fuel segment remains the largest and fastest-growing application in the U.S. Commercial trucking fleets, transit systems, shipping operators, and government agencies increasingly use biodiesel blends such as B20 to reduce emissions and extend engine life.

Federal and state renewable fuel policies continue to bolster demand, positioning the fuel segment for robust long-term expansion.

2. Biodiesel from Vegetable Oils

Vegetable oils—primarily soybean, canola, and corn oil—account for the largest share of biodiesel feedstock.

Growth in this segment is supported by:

Expanded domestic crop production

Advances in oil extraction technology

Federal support for U.S. agriculture

However, this category remains vulnerable to global commodity market fluctuations.

3. Biodiesel from Animal Fats

Animal fats, tallow, and used cooking grease offer a cost-efficient alternative to vegetable oils. Their increasing availability from rendering plants and food processing facilities supports growing biodiesel output.

This segment benefits from:

Waste-to-energy sustainability initiatives

Lower feedstock costs

High energy return compared to vegetable oils

Environmental policies encouraging recycled feedstocks are expected to accelerate growth in this category.

Key State Markets

California

A national leader in renewable fuel adoption, California’s Low Carbon Fuel Standard (LCFS) drives significant biodiesel usage. The state’s vast trucking and public transportation networks rely heavily on biodiesel blends such as B20.

In April 2022, BDI-BioEnergy International commissioned a new biodiesel facility in Bakersfield, underscoring growing investment in the region.

New York

New York’s ambitions for clean heating and transportation fuel its biodiesel growth. The state mandates biodiesel blends in Bioheat® heating oil, boosting demand for residential and commercial heating.

Municipal fleets and public transit systems also rely heavily on biodiesel to meet emission reduction targets.

Washington

Washington’s Clean Fuel Standard encourages renewable fuel use statewide. The state’s strong agricultural base provides a steady supply of canola and soybean oil, while its global shipping sector increasingly incorporates biodiesel to comply with emissions regulations.

New Jersey

New Jersey’s biodiesel demand is rising, supported by:

Clean energy policies

Use of biodiesel in trucking and municipal fleets

Bioheat use in residential buildings

Proximity to ports and distribution hubs

Air-quality improvement initiatives also strengthen biodiesel consumption across the state.

Market Segmentation Overview

Applications

Fuel

Power Generation

Others

Feedstock

Vegetable Oil

Animal Fats

State Coverage

Includes major and emerging markets such as California, Texas, New York, Florida, Illinois, Washington, New Jersey, Georgia, Ohio, and more (full list included in your brief).

Key Players Covered

The market features major companies strategically expanding production capacity, investing in advanced technologies, and securing feedstock supplies.

Archer Daniels Midland Company

FutureFuel

Neste

Renewable Energy Group, Inc.

Bunge Global SA

Wilmar

Shell

Each company is evaluated across three dimensions: Overview, Recent Developments, and Revenue.

Final Thoughts

The United States biodiesel market is moving into a decade defined by policy-driven acceleration, technological innovation, and rising corporate sustainability commitments. With a projected value of US$ 20.29 billion by 2033, biodiesel is positioned to remain an essential component of America’s renewable fuel strategy—especially in hard-to-electrify sectors like trucking, agriculture, maritime, and industrial operations.

Although challenges such as feedstock price volatility and competition from renewable diesel and electric mobility persist, the biodiesel sector continues to evolve. Expanding feedstock sources, adopting new processing technologies, and strengthening state-level renewable fuel policies will be key to ensuring long-term growth and energy resilience.

As the U.S. moves towards a cleaner, more sustainable fuel economy, biodiesel stands out as a practical, scalable, and economically viable solution—fueling a greener future while strengthening domestic energy independence.