Biodiesel Market Size, Share, Trends, Industry Analysis, and Forecast (2025 – 2031)

Biodiesel Market Size

The global biodiesel market size was valued at $41.95 billion in 2025 and is projected to reach $69.19 billion by 2031, growing at a CAGR of 8.7% during the forecast period.

Biodiesel Market Overview

Biodiesel is a renewable energy source made from organic materials such as vegetable oils, animal fats, or recycled cooking grease. It serves as an alternative to conventional diesel fuel, offering a cleaner-burning option that reduces greenhouse gas emissions and reliance on fossil fuels.

Companies can benefit from biodiesel production through various avenues, including government incentives aimed at promoting renewable energy sources, which can enhance profitability and market share. The global push towards sustainability and energy independence, companies involved in biodiesel production not only contribute to environmental goals but also position themselves favorably in a growing market that is projected to generate substantial economic opportunities in the coming years.

Biodiesel Market Dynamics

The biodiesel market is expected to witness significant growth in the future due to the increasing demand for environmentally friendly fuels to reduce greenhouse gas emissions, government regulations and tax incentives promoting the use of biodiesel, and compatibility of biodiesel with existing diesel engines without requiring modifications. However, the high feedstock costs, which account for 80-85% of production expenses, Price volatility in agricultural commodities affecting profitability, and limited availability of raw materials are restraining the growth of the market.

Furthermore, rising investments in research and development for innovative biodiesel production technologies, increasing use of biodiesel in power generation applications to meet renewable energy targets, and potential for expanding biodiesel markets in emerging economies with growing energy needs are the key trends propelling the biodiesel market.

Increasing Demand for Environmentally Friendly Fuels to Reduce Greenhouse Gas Emissions is Driving the Biodiesel Market

The increasing demand for environmentally friendly fuels to reduce greenhouse gas emissions is significantly impacting the biodiesel market by driving growth through various government initiatives and corporate strategies.

• For instance, the Indian government has set a target to blend 5% biodiesel in diesel by 2030 as part of its National Policy on Biofuels, which aims to promote cleaner energy sources and reduce reliance on fossil fuels..
• In the United States, the Department of Energy announced in January 2023 an investment of $118 million in 17 initiatives to accelerate sustainable biofuel development, further boosting domestic production capabilities3.
• Moreover, in October 2024, the ORLEN Group launched HVO100, a second-generation biofuel made from waste products that can be utilized in existing diesel engines without modifications, showcasing innovation aligned with environmental goals.

These examples illustrate how both governmental support and corporate initiatives are creating a robust framework for biodiesel's growth amidst rising environmental concerns.

By Feedstock, the Vegetable OilSegment is projected to be the Largest Segment in the Biodiesel Market

Vegetable Oil is the largest segment in the biodiesel market, driven by the growing emphasis on sustainable energy sources to combat climate change and reduce greenhouse gas emissions.

• For instance, in 2022, the vegetable oils segment accounted for approximately 80% of the overall biodiesel market, with soybean oil being the predominant feedstock in the U.S. and rapeseed oil widely used in Europe.

Government initiatives play a crucial role in this growth;

• For example, the European Union's Renewable Energy Directive mandates that at least 14% of transportation fuels come from renewable sources by 2030. This has led to increased investments in biodiesel production facilities, such as those by companies like Renewable Energy Group, which expanded its production capacity in 2021 to meet rising demand.
• Additionally, in India, the government has set a target of blending 5% biodiesel into diesel by 2030, encouraging local producers like Kotyark Industries to ramp up their operations.
• In October 2024, Volvo CE India announced that select biodiesel blends would be available for their machinery, further demonstrating the integration of biodiesel into various sectors.

By Geography, North America Holds the Largest Share in the Market Revenue

North America holds the largest share of the biodiesel market, driven by environmental awareness, government regulations, and the region's agricultural resources.

• In 2022, the U.S. government has implemented the Renewable Fuel Standard (RFS), which mandates the blending of renewable fuels into the transportation fuel supply, thereby encouraging biodiesel adoption.
• For example, in 2020, biodiesel accounted for about 11% of total U.S. biofuel production, with soybean oil being the predominant feedstock due to its abundance and low cost.
• Companies like Renewable Energy Group have been pivotal in this growth, expanding their production capabilities to meet increasing demand.
• Furthermore, in January 2021, there were 75 biodiesel manufacturing plants in the U.S., with a total capacity of around 2.4 billion gallons per year, primarily located in Midwestern states.

The ongoing technological advancements in biodiesel production processes and collaborations among energy companies and agricultural stakeholders are further enhancing the market's potential. These factors collectively position North America as a key player in the biodiesel market, driven by a commitment to reducing greenhouse gas emissions and promoting sustainable energy sources.

Key Target Audience:

• Government Agencies
• Biodiesel Producers
• Agricultural Sector
• Fuel Distributors
• End-Users

List of the Key Players Profiled in the Report Includes:

• Renewable Energy Group Inc.
• Archer Daniels Midland Company
• Bangchak Corporation Public Company Limited
• Wilmar International Ltd
• Neste Oyj
• Cargill Inc.
• BIOX Corporation
• Ag Processing Inc.

Recent Developments:

• In April 2025, Renewable Energy Group (REG) partnered with Optimus Technologies to deploy B100 (100% biodiesel) infrastructure to fleets across Iowa, Washington D.C., and Massachusetts. The initiative includes storage tanks, dispensers, and logistics, enabling year-round use of B100 even in sub-zero conditions, significantly reducing carbon emissions.
• In December 2024, Neste and DB Schenker announced a collaboration to supply renewable diesel to BMW production lines in Germany. The partnership tests HVO100 in vehicle logistics and demonstrates Neste’s successful placement of biodiesel in industrial supply chains.

Market Segmentation:

The research report includes in-depth coverage of the industry analysis with size, share, and forecast for the below segments:

Market by, Feedstock:

• Vegetable Oil
• Animal Fats

Market by, Production Process:

• Alcohol Trans-Esterification
• Hydro-Heating

Market by, Application:

• Fuel
• Power Generation
• Other Applications

Market by, Geography:

The biodiesel market report also analyzes the major geographic regions and countries of the market. The regions and countries covered in the study include:

• North America (The United States, Canada, Mexico), Market Estimates, Forecast & Opportunity Analysis
• Europe (Germany, France, UK, Italy, Spain, Rest of Europe), Market Estimates, Forecast & Opportunity Analysis
• Asia Pacific (China, Japan, India, South Korea, Australia, New Zealand, Rest of Asia Pacific), Market Estimates, Forecast & Opportunity Analysis
• South America (Brazil, Argentina, Chile, Rest of South America), Market Estimates, Forecast & Opportunity Analysis
• Middle East & Africa (UAE, Saudi Arabia, Qatar, Iran, South Africa, Rest of Middle East & Africa), Market Estimates, Forecast & Opportunity Analysis

The report offers insights into the following aspects:

• Analysis of major market trends, factors driving, restraining, threatening, and providing opportunities for the market.
• Analysis of the market structure by identifying various segments and sub-segments of the market.
• Understand the revenue forecast of the market for North America, Europe, Asia-Pacific, South America, and Middle East & Africa.
• Analysis of opportunities by identification of high-growth segments/revenue pockets in the market.
• Understand major player profiles in the market and analyze their business strategies.
• Understand competitive developments such as joint ventures, alliances, mergers and acquisitions, and new product launches in the market.