Second Generation Bio-Fuels

Global Second Generation Bio-Fuels Market to Reach US$30.0 Billion by 2030

The global market for Second Generation Bio-Fuels estimated at US$21.3 Billion in the year 2024, is expected to reach US$30.0 Billion by 2030, growing at a CAGR of 5.9% over the analysis period 2024-2030. Lignocellulosic Biomass Feedstock, one of the segments analyzed in the report, is expected to record a 6.9% CAGR and reach US$11.6 Billion by the end of the analysis period. Growth in the Agricultural Residues Feedstock segment is estimated at 6.7% CAGR over the analysis period.

The U.S. Market is Estimated at US$5.8 Billion While China is Forecast to Grow at 9.4% CAGR

The Second Generation Bio-Fuels market in the U.S. is estimated at US$5.8 Billion in the year 2024. China, the world`s second largest economy, is forecast to reach a projected market size of US$6.1 Billion by the year 2030 trailing a CAGR of 9.4% over the analysis period 2024-2030. Among the other noteworthy geographic markets are Japan and Canada, each forecast to grow at a CAGR of 2.8% and 5.8% respectively over the analysis period. Within Europe, Germany is forecast to grow at approximately 3.8% CAGR.

Global Second Generation Bio-Fuels Market - Key Trends & Drivers Summarized

Why Are Second Generation Bio-Fuels Considered Central to Decarbonization Goals?
Second generation (2G) bio-fuels represent a transformative evolution from conventional (1G) bio-fuels by leveraging non-food biomass-such as agricultural residues, lignocellulosic waste, and forestry byproducts-as feedstocks. Unlike 1G bio-fuels which rely on sugarcane, corn, or palm oil, 2G bio-fuels are designed to avoid the food-vs-fuel conflict while offering improved greenhouse gas (GHG) reduction potential. They are seen as critical to achieving national and international carbon neutrality goals, particularly in hard-to-abate sectors such as aviation, marine, and heavy-duty transportation. By valorizing waste biomass and creating circular fuel production loops, 2G bio-fuels align closely with sustainable energy transition mandates under frameworks such as the Paris Agreement and EU Green Deal.

Advanced conversion technologies, including enzymatic hydrolysis, gasification, and pyrolysis, enable the breakdown of tough lignin and cellulose structures into fermentable sugars or syngas for subsequent conversion into ethanol, biodiesel, or drop-in fuels like Fischer-Tropsch diesel. These fuels can be integrated into existing combustion engines or fuel infrastructures with minimal modification. As a result, they are emerging as a near-term, scalable solution to reduce fossil fuel dependency and decarbonize legacy transport systems without requiring major overhauls in vehicle technology or distribution networks.

How Are Technological Breakthroughs Accelerating Commercial Viability of 2G Bio-Fuels?
Technological innovation in biomass pretreatment, microbial engineering, and catalytic upgrading is rapidly bridging the gap between pilot-scale feasibility and commercial deployment. New biological pretreatment techniques are enabling more efficient deconstruction of lignocellulosic biomass at lower energy inputs, while engineered enzymes and microbial strains are improving fermentation efficiency and yield. Thermochemical pathways such as gasification and hydrothermal liquefaction are gaining traction for producing advanced fuels like bio-syngas and bio-crude that can be refined into jet fuel, diesel, or naphtha.

Hybrid biorefineries are now being designed to process a wide range of feedstocks and co-produce multiple products, including fuels, bio-based chemicals, and power. This multi-product approach enhances economic viability and risk mitigation. Process intensification techniques-such as integrated hydrolysis and fermentation (IHF), in-situ product recovery, and membrane separation-are also improving process economics and environmental performance. Governments and energy agencies are increasingly supporting demonstration-scale facilities and commercialization roadmaps through grants, carbon credits, and blending mandates. These advances are fostering investor confidence and enabling 2G bio-fuels to enter mainstream energy portfolios.

Which Sectors and Regions Are Spearheading the Demand for Second Generation Bio-Fuels?
Aviation and maritime transport sectors are among the most aggressive adopters of second generation bio-fuels, given their limited short-term alternatives to liquid hydrocarbons. Sustainable aviation fuels (SAF) derived from agricultural residues or forestry waste are being actively tested and deployed by leading airlines, often in partnership with fuel producers and regulatory bodies. Likewise, marine transport operators are integrating advanced biodiesels and bio-oils into their fleets to meet International Maritime Organization (IMO) decarbonization targets. Ground transportation, especially public buses and heavy-duty trucks, is also a significant user of 2G ethanol and diesel in regions with established blending mandates.

Geographically, North America and Europe are leading in R&D and commercialization, driven by supportive policy frameworks like the U.S. Renewable Fuel Standard (RFS2), California’s Low Carbon Fuel Standard (LCFS), and the EU’s RED II directive. Major investments have been made in cellulosic ethanol facilities across the U.S. Midwest, Brazil, and Scandinavia. India and China are rapidly emerging as innovation centers and demand hubs, with strong governmental backing and abundant biomass availability. Africa and Southeast Asia, rich in agro-residues, are also being explored as feedstock sources, especially under joint development initiatives with international clean energy consortia.

What Factors Are Driving Market Growth for Second Generation Bio-Fuels Worldwide?
The growth in the second generation bio-fuels market is driven by several factors, including stringent carbon reduction targets, advances in biomass conversion technologies, and rising geopolitical and economic pressures to diversify energy sources. As global oil markets remain volatile and energy security becomes a top priority, countries are ramping up investment in indigenous, renewable, and decentralized fuel alternatives. 2G bio-fuels, with their superior lifecycle emission savings and non-reliance on edible crops, are being prioritized under national energy blueprints and climate action plans.

Blending mandates, carbon pricing mechanisms, and incentives for low-carbon fuel producers are accelerating commercialization. Private-public partnerships and cross-sector alliances are fueling capital investments into next-gen biorefineries, while carbon-conscious consumers and corporate ESG initiatives are catalyzing demand for cleaner transport fuels. The availability of abundant and underutilized biomass feedstocks globally ensures long-term scalability. As sustainability metrics become embedded in fuel procurement policies across aviation, logistics, and public transportation sectors, second generation bio-fuels are positioned to emerge as a cornerstone of the global energy transition over the next decade.

SCOPE OF STUDY:

The report analyzes the Second Generation Bio-Fuels market in terms of units by the following Segments, and Geographic Regions/Countries:

Segments:
Feedstock Type (Lignocellulosic Biomass Feedstock, Agricultural Residues Feedstock, Wood Residues Feedstock, Algae Feedstock, Industrial Waste Feedstock); Production Technology (Gasification Technology, Fermentation Technology, Transesterification Technology, Hydrothermal Liquefaction Technology); Application (Transportation Fuels Application, Electricity Generation Application, Heating Oils Application, Aviation Fuels Application); End-Use (Commercial End-Use, Industrial End-Use, Residential End-Use)

Geographic Regions/Countries:
World; United States; Canada; Japan; China; Europe (France; Germany; Italy; United Kingdom; Spain; Russia; and Rest of Europe); Asia-Pacific (Australia; India; South Korea; and Rest of Asia-Pacific); Latin America (Argentina; Brazil; Mexico; and Rest of Latin America); Middle East (Iran; Israel; Saudi Arabia; United Arab Emirates; and Rest of Middle East); and Africa.

Select Competitors (Total 32 Featured) -

• Abengoa Bioenergy
• Advanced Biofuels LLC
• Algenol Biotech LLC
• Amyris, Inc.
• Beta Renewables S.p.A.
• Clariant AG
• DuPont de Nemours, Inc.
• Enerkem Inc.
• Fiberight LLC
• Gevo, Inc.
• GranBio LLC
• Iogen Corporation
• INEOS Group
• LanzaTech, Inc.
• Neste Corporation
• POET LLC
• Raízen SA
• Renewable Energy Group (REG)
• Reliance Industries Limited
• TotalEnergies SE
• Verbio SE
• Virent Energy Systems Inc.

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