Biofuels Market size is set to grow by USD 26.6 billion from 2024-2028, increased adoption of renewable sources of energy boost the market- Technavio

NEW YORK, Jan. 28, 2025 /PRNewswire/ -- The global biofuels market size is estimated to grow by USD 26.6 billion from 2024-2028, according to Technavio. The market is estimated to grow at a CAGR of 3.23% during the forecast period. increased adoption of renewable sources of energy is driving market growth, with a trend towards research on third-generation biofuel called algae fuel However, fluctuations in oil prices poses a challenge.Key market players include 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 Driver

The biofuels market is experiencing significant growth as renewable sources become increasingly important in the transport fuel sector. Policy design plays a crucial role, with blending mandates driving biofuel production from feedstocks like vegetable oil, Jatropha, molasses, coarse grain, and sugar crops. Ethanol and biodiesel are common biofuels, with ethanol often blended with gasoline and biodiesel used as a cleaner alternative to petroleum oil in diesel engines. Renewable diesel, hydrogenated oil, and sustainable aviation fuel are also gaining popularity. The aviation industry is embracing biojet fuel for GHG reductions, while the maritime sector is exploring FuelEU Maritime. Biofuel production from renewable sources offers energy security and reduces greenhouse gas emissions, making it an attractive alternative to fossil fuels. Prominent companies like Valero and Eco Energy are investing in biofuels, while bioethanol and biomass are key areas of research. The Renewable Fuel Standard and RenovaBio scheme are key policies driving the market, with inflation rate and oil imports also influencing demand. The transportation sector's shift to cleaner fuels continues, with electric vehicles complementing liquid biofuels and algae-based biofuels under development. Cyanobacterial development and genetically modified yields offer exciting possibilities for the future. 

Biofuels are alternative fuels produced from renewable biomass sources, including vegetable oil, starch, sugar, animal fats, non-food crops like wood, corn stover, jatropha, camelina, and switchgrass. First-generation biofuels are derived from edible feedstocks, while second-generation biofuels, also known as advanced biofuels, are produced from non-food sources. Third-generation biofuels represent the latest advancement in this field, utilizing algae as the feedstock. Algae offer numerous advantages, including the ability to produce diverse and high-quantity biofuels, such as biodiesel, butanol, gasoline, methane, ethanol, vegetable oil, and jet fuels. Algae-derived biofuels are a promising solution for reducing greenhouse gas emissions and decreasing reliance on fossil fuels. 

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Market Challenges

• The biofuels market is a significant part of the transport fuel industry, with renewable diesel and biodiesel being key players. Policy design poses challenges in balancing biofuel production from feedstocks like vegetable oil, Jatropha, molasses, coarse grain, and sugar crops, with blending mandates for ethanol in gasoline and sustainable aviation fuel in jet fuel. Renewable sources like biojets and hydrogenated oil from algae-based biofuels offer potential solutions. However, policy on biofuels faces hurdles due to inflation rate, oil imports, and environmental regulations. Prominent companies like Valero and Eco Energy invest in biofuels, focusing on ethanol and biodiesel production. The transportation sector aims for energy efficiency and cleaner fuels, with electric vehicles and sustainable aviation gaining traction. The Renewable Fuel Standard and RenovaBio scheme drive demand for liquid biofuels. Biofuel researchers explore genetically modified yields and cyanobacterial development for increased production and GHG reductions. The fossil fuel industry's oilfield discoveries and inflation rate impact biofuel prices. Overall, the biofuels market requires a balanced approach to meet energy security needs while reducing greenhouse gas emissions from renewable sources.
• The biofuels market faces significant competition from conventional fossil fuels, with the global oil and gas industry heavily reliant on crude oil prices. Volatility in crude oil prices, which have seen numerous highs and lows in recent years, poses a challenge to the petroleum industry's growth. This instability in the crude oil market is expected to impact the alternate fuels sector, which holds a small market share in global fuel consumption during the forecast period. The unpredictable nature of crude oil prices adds uncertainty to the growth trajectory of the biofuels industry.

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Segment Overview 

This biofuels market report extensively covers market segmentation by

1. Application 
• 1.1 Transportation
• 1.2 Aviation
• 1.3 Heating
• 1.4 Energy generation
• 1.5 Others
2. Product 
• 2.1 Ethanol
• 2.2 Biodiesel
3. Geography 
• 3.1 North America
• 3.2 Europe
• 3.3 APAC
• 3.4 South America
• 3.5 Middle East and Africa

1.1 Transportation- The global biofuels market in the transportation sector refers to the production, distribution, and consumption of biofuels as an alternative to traditional fossil fuels, primarily in the transportation industry. Biofuels are derived from renewable sources such as plants, algae, and organic waste. The market has experienced substantial growth over the past decade due to rising concerns about climate change, the need to reduce greenhouse gas emissions, and the pursuit of energy security. Key biofuels include ethanol, derived from crops like corn and sugarcane, and biodiesel, produced from vegetable oils, animal fats, and recycled cooking oil. Advanced biofuels, such as cellulosic ethanol and algae-based fuels, are also emerging. Market dynamics are influenced by government policies, feedstock availability and prices, technological advancements, and consumer demand. Fluctuations in crude oil prices can also impact biofuels' competitiveness. With growing importance placed on renewable energy sources, biofuels are expected to significantly contribute to a more sustainable transportation system in the forecast period.

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Research Analysis

Biofuels are renewable transport fuels derived from biomass sources, including ethanol produced from sugar crops, corn, and molasses, and biodiesel made from vegetable oil, animal fats, and waste greases. Renewable diesel, a hydrogenated oil, is another type of biofuel. Biofuel production is influenced by policy design, with blending mandates in many countries requiring a certain percentage of biofuels to be used in gasoline and diesel. Biofuels offer energy security by reducing reliance on oil imports and decreasing greenhouse gas emissions compared to fossil fuels. Feedstocks for biofuel production include a variety of renewable sources, such as biomass, Jatropha, and algae-based biofuels. Environmental regulations and policy on biofuels continue to evolve, driving innovation in the production of cleaner fuels, including genetically modified yields and cyanobacterial development.

Market Research Overview

Biofuels have emerged as a promising alternative to transport fuels derived from fossil sources, with biofuel production from renewable sources becoming increasingly important in reducing greenhouse gas (GHG) emissions and enhancing energy security. Biofuels, including ethanol, biodiesel, renewable diesel, hydrogenated oil, biojet, and sustainable aviation fuel (SAF), are produced from various feedstocks such as vegetable oil, molasses, coarse grain, sugar crops, biomass, algae, and jatropha. Policy design plays a crucial role in the biofuels market, with blending mandates and incentives driving demand for biofuels in the transportation sector. Biofuels offer significant GHG reductions compared to fossil fuels, making them a key component of the transition to cleaner fuels. The European Union's ReFuelEU Aviation and FuelEU Maritime initiatives aim to increase the use of sustainable fuels in the aviation and maritime sectors. Biofuel production from renewable sources is subject to environmental regulations and inflation rates, while oil imports and oilfield discoveries impact the market dynamics of petroleum oil. Biofuels are an essential step towards a low-carbon transportation sector, with electric vehicles complementing the role of biofuels in reducing GHG emissions. Researchers are exploring new technologies, such as genetically modified yields, cyanobacterial development, and algae-based biofuels, to enhance the sustainability and efficiency of biofuel production.

Table of Contents:

1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation

• Application
• Transportation
• Aviation
• Heating
• Energy Generation
• Others
• Product
• Ethanol
• Biodiesel
• Geography
• North America
• Europe
• APAC
• South America
• Middle East And Africa

7 Customer Landscape
8 Geographic Landscape
9 Drivers, Challenges, and Trends
10 Company Landscape
11 Company Analysis
12 Appendix

About Technavio

Technavio is a leading global technology research and advisory company. Their research and analysis focuses on emerging market trends and provides actionable insights to help businesses identify market opportunities and develop effective strategies to optimize their market positions.

With over 500 specialized analysts, Technavio's report library consists of more than 17,000 reports and counting, covering 800 technologies, spanning across 50 countries. Their client base consists of enterprises of all sizes, including more than 100 Fortune 500 companies. This growing client base relies on Technavio's comprehensive coverage, extensive research, and actionable market insights to identify opportunities in existing and potential markets and assess their competitive positions within changing market scenarios.

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SOURCE Technavio