Biodiesel Market By Feedstock (Soybean, Rapeseed, Palm, Palm, Poultry, Tallow, White Grease, and Others), Application (Power Generation, Fuel, & Others), and Region - Market Perspective, Market Intelligence, Comprehensive Analysis, Historical Data, and Forecast for 2023-2032

Market Perspective

The global Biodiesel Market is expected to reach a value of USD 87.36 billion by 2032 from USD 36.18 billion in 2022, with a compound annual growth rate of 9.22% between 2023 and 2032.

Biodiesel is a clean-burning alternative to diesel that can be used in diesel engines without modification and is made from a variety of agricultural feedstock, recycled cooking oils, and animal fats. The increasing demand for biodiesel to replace conventional fossil fuels in power generation and automotive applications is expected to drive market growth.

The automotive industry has a significant need for biodiesel, as it emits fewer greenhouse gases. As a result, demand in the United States is anticipated to increase over the projection period, as the United States is one of the major producers of soy, which is used as a feedstock for biodiesel. Additionally, the desire to replace biofuel and fossil fuels, which are associated with higher greenhouse gas emissions, with biodegradable and renewable options, is influencing demand in many nations.

Key Insights

• Based on feedstock, the palm segment held the largest market share
• Based on application, the fuel segment dominated the market
• On the basis of region, Europe accounted largest market share

Growing Preference for Replacing Fossil Fuels with Biofuel is Propelling the Market

Biodiesel is a sustainable and eco-friendly fuel alternative that is biodegradable, non-toxic, and free of aromatic and sulfur compounds. It significantly reduces greenhouse gas emissions and air pollutants, making it a suitable option for addressing the rising concerns about climate change. The use of biodiesel can decrease carbon-based toxins by up to 50% compared to traditional fossil fuels. In addition, the rising demand in developing countries is being influenced by the growing shift for replacing fossil fuels, which are linked to greater levels of greenhouse gas emissions, with biofuel, which is renewable and biodegradable.

The United States used approximately 2 billion gallons of biodiesel in 2015, which resulted in a reduction of 18.2 million metric tons of carbon emissions, according to the Environmental Protection Agency (EPA). Furthermore, biodiesel can be produced domestically, reducing dependence on foreign oil reserves, and can be used in most diesel engines without any modifications. With the shifting prices of petroleum-based products, biodiesel is becoming a more cost-effective alternative.

High Cost of Feedstock to Produce Biodiesel is a Challenge for the Market

The demand for biodiesel and clean-burning fuels is driven by the agricultural commodities market, which is a significant market in the transportation industry. The most common raw materials used for biodiesel production are vegetable oils like soybean oil, canola oil, and palm oil. However, a significant portion of the production costs of biodiesel, around 80-85%, are attributed to the cost of raw materials. The volatility of feedstock prices is a significant challenge for biodiesel producers, as it threatens their long-term financial viability. When feedstock prices increase, the prices of biodiesel also increase, which reduces profits.

Recent Development

In January 2022: ExxonMobil announced that it would hold 49.9% of Biojet AS, a Norwegian start-up company in the biofuels industry that aims to convert waste from wood-based building construction and forestry into low-emissions ethanol and biofuel components.

Segmentation Analysis

The biodiesel market is segmented based on feedstock, with major categories including soybean, rapeseed and palm, poultry, tallow, white grease, and others. In countries such as Thailand, Indonesia, France, Germany, and Colombia, palm oil is widely used as a feedstock for biodiesel production. Palm oil is expected to be a major contributor to market growth. Thailand and Indonesia are major producers of palm oil, accounting for over 80% of total output, with a significant portion of the product used for biofuel production. In contrast, Europe relies on imports of feedstock from these Asian nations.

Vegetable oils such as rapeseed and UCO also hold a significant share of the market, comprising 17% of total feedstock demand. China and India are projected to be the largest markets in the Asia Pacific for biodiesel derived from UCO (Used Cooking Oil). However, product availability uncertainty has been a major challenge for UCOME producers in these regions, hindering expansion.

On the basis of application, the market is segmented into power generation, fuel, and others. The fuel segment dominates the market as a replacement for crude oil in commercial vehicles. The demand for biodiesel, which produces fewer Volatile Organic Compounds (VOCs) than traditional fuels such as diesel, is expected to increase. With properties such as being biodegradable, free of sulfur and aromatics, and non-toxic, biodiesel has applications in the maritime industry and is expected to grow at a rapid CAGR throughout the projection period.

Additionally, the expansion of the agricultural sector, coupled with enhanced mechanization, is expected to drive demand for agricultural products over the projection period. Governments around the world are continually seeking to adopt renewable energy sources to generate electricity to reduce greenhouse gas emissions.

Europe is Dominating the Market Share Due to High Government Involvement

The European region has historically been the main market for biodiesel due to early recognition of its benefits and government emphasis on transitioning from carbon-emitting sources to bio-based ones. The most common feedstocks for biodiesel production in Europe include rapeseed oil, soybean oil, palm oil, animal fats, UCO, and sunflower oil. The demand for biodiesel in the region is primarily driven by Germany, which is the leading producer of raw materials among European nations.

The low cost of raw materials is expected to drive an increase in consumption, thereby fueling the growth of the regional market during the forecast period. Additionally, the increasing concerns about the environment and the need for sustainable energy alternatives are also expected to drive market growth in the region.

Asia-Pacific is the Fastest Growing Market as Country Aims to Reduce Carbon Footprint

The Asia-Pacific region is expected to grow at an exponential CAGR in the global biodiesel market. The projected increase in output is likely to fuel market growth throughout the forecast period. However, market expansion may be hindered by the food industry's use of palm oil as a feedstock. To address environmental concerns and reduce dependence on crude oil, government initiatives to promote green fuels are anticipated to drive market growth over the forecast period. For example, the Indian government has planned to increase the blending of biodiesel to more than 5% by 2022. In 2021, Central and South American output reached 10,960.1 million liters, driven by an increase in domestic consumption due to an increase in blending levels to utilize surplus palm oil production.

Overall, the market is expected to benefit from the increasing demand for clean energy alternatives, and the support of government policies and regulations.

Competitive Landscape

• Ag Processing Inc
• Wilmar International Ltd
• RB FUELS
• FutureFuel Corporation
• Cargill
• Manuelita
• Ecodiesel Colombia S.A.
• ADM
• Munzer Bioindustrie GmbH
• Neste

The global biodiesel market is segmented as follows:

By Feedstock

• Soybean
• Rapeseed
• Palm
• Poultry
• Tallow
• White Grease
• Others

By Application

• Power Generator
• Fuel
• Others

By Region

• North America
  • The U.S.
  • Canada
  • Mexico
• Europe
  • France
  • The UK
  • Spain
  • Germany
  • Italy
  • Nordic countries
    • Denmark
    • Finland
    • Iceland
    • Sweden
    • Norway
  • Benelux Reunion
    • Belgium
    • The Netherlands
    • Luxembourg
  • Rest of Europe
• Asia Pacific
  • China
  • Japan
  • India
  • New Zealand
  • Australia
  • South Korea
  • Southeast Asia
    • Indonesia
    • Thailand
    • Malaysia
    • Singapore
    • Rest of Southeast Asia
  • Rest of Asia Pacific
• The Middle East & Africa
  • Saudi Arabia
  • UAE
  • Egypt
  • Kuwait
  • South Africa
  • Rest of the Middle East & Africa
• Latin America
  • Brazil
  • Argentina
  • Rest of Latin America