The global biofuels production market was valued at nearly 120 billion U.S. dollars in 2023. Figures are projected to continuously increase until 2030 when the biofuels market is forecast to amount to more than 175 billion U.S. dollars. More information on the global biofuels production market can be found here. Largest biofuel producers Biofuels are especially prevalent in the transportation sector and have been marketed as a renewable alternative to petroleum-based motor fuels such as gasoline and diesel. Ethanol and biodiesel are the most common biofuel types, which are won from distilling and refining feedstocks such as crops, vegetable oils, and cooking fats. Although biofuel adoption has increased, they are usually blended with gasoline and diesel in order for them to work in regular combustion engines. The United States is the leading biofuel producing country in the world, followed by Brazil and Indonesia. Biofuels production to exceed 200bn liters Both ethanol and biodiesel production is forecast to increase in the coming years. In 2024, a biofuel production forecast suggests worldwide output could edge close to 200 billion liters per annum.

The Biofuels Market Report is Segmented by Fuel Type (Bioethanol, Biodiesel, Renewable Diesel, and More), Generation (First-Generation, Third-Generation, and More), Feedstock (Sugar Crops, Starch Crops, Algae, and More), Technology (Fermentation, Trans-Esterification, Hydrotreatmen, and More), End-Use (Road Transport, Aviation, Marine, and Power Generation and Heating), and Geography (North America, Europe, Asia-Pacific, and More).

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Biofuels Market Size 2025-2029

The biofuels market size is forecast to increase by USD 32.6 billion at a CAGR of 3.8% between 2024 and 2029.

The market is experiencing significant growth due to the increasing adoption of renewable energy sources as a response to reducing greenhouse gas emissions. Key biofuels include those derived from corn, sugarcane, vegetable oil, and biomass. This shift towards sustainable energy solutions is being fueled by both environmental concerns and regulatory mandates. However, market expansion is not without challenges. Fluctuations in oil prices pose a significant threat to the competitiveness of biofuels, as they can impact the cost-effectiveness of production. Additionally, regulatory hurdles impact adoption, particularly in regards to the approval and implementation of new biofuel technologies and standards.
Supply chain inconsistencies, including the availability and cost of raw materials, also temper growth potential. Companies seeking to capitalize on market opportunities must navigate these challenges effectively, focusing on innovation, cost reduction, and regulatory compliance. By doing so, they can position themselves as leaders in the rapidly evolving biofuels landscape.

What will be the Size of the Biofuels Market during the forecast period?

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The market is experiencing dynamic shifts driven by environmental concerns, regulatory frameworks, and technological advancements. Biofuel environmental impact is a critical factor influencing consumer awareness and public perception. Regulatory environments, such as renewable fuel mandates, shape the market landscape and drive investment opportunities in advanced biofuels like cellulosic ethanol. Biofuel lifecycle analysis and sustainability are key considerations for biofuel certification and consumer acceptance. Sustainable aviation fuel and drop-in fuels are gaining traction due to their reduced carbon footprint and compatibility with existing infrastructure. Biomass conversion and feedstock supply chain are essential components of the biofuel industry, with innovation ecosystems fostering breakthroughs in biofuel technology and biomass utilization.
Biofuel adoption rates are influenced by cost competitiveness and blending ratios, while infrastructure development and industry consolidation shape market penetration. Biofuel standards and certification play a crucial role in ensuring transparency and trust in the market. Social impact assessments and continuous innovation are essential for addressing challenges and seizing opportunities in the evolving biofuels landscape. Biofuels are derived from renewable sources, including plants, algae, and organic waste, and are utilized to fuel various vehicles, such as cars, trucks, ships, and airplanes. The market's expansion is driven by environmental regulations, the need for GHG reductions, and energy security concerns. Key biofuels include ethanol, biodiesel, renewable diesel, hydrogenated oil, biojet, and sustainable aviation fuel. Feedstocks for biofuel production include vegetable oil, molasses, coarse grain, sugar crops, and biomass, among others.

How is this Biofuels Industry segmented?

The biofuels industry research report provides comprehensive data (region-wise segment analysis), with forecasts and estimates in 'USD billion' for the period 2025-2029, as well as historical data from 2019-2023 for the following segments.

Application

  Transportation
  Aviation
  Heating
  Energy generation
  Others


Product

  Ethanol
  Biodiesel


Material

  Starch crops and sugar crops
  Agricultural residues
  Oil crops
  Waste oils and fats
  Algae and non-food crops


Geography

  North America

    US
    Canada


  Europe

    France
    Germany
    UK


  APAC

    China
    India
    Indonesia


  South America

    Argentina
    Brazil


  Rest of World (ROW)

By Application Insights

The transportation segment is estimated to witness significant growth during the forecast period.

The transportation market has witnessed substantial expansion in the last decade, fueled by growing concerns over climate change, the imperative to decrease greenhouse gas emissions, and the pursuit of energy security. Governments worldwide have enacted regulations and policies to encourage biofuel adoption, contributing to market growth. Biofuels, derived from renewable sources such as plants, algae, and organic waste, are used to power various vehicles, including automobiles, heavy-duty trucks, ships, and aircraft. These alternative fuels offer improved fuel efficiency, reduced carbon emissions, and contribute to a low-carbon economy and circular economy. Biofuel production processes include the conversion of waste biomass into bioethanol, biodiesel, renewable diesel, biojet fuel, and other advanced biofuels.

The industrial sector and agricultural sector are significant con

The Biofuel Market will grow from USD 123.23 Billion in 2025 to USD 215.47 Billion by 2031 at a 9.76% CAGR.

According to Cognitive Market Research, the global biofuel market size is USD 167.4 billion in 2024 and will expand at a compound annual growth rate (CAGR) of 6.2% from 2024 to 2031. Market Dynamics of Biofuel Market

Key Drivers for Biofuel Market

Government policies and regulatory mandates

One of the strongest drivers fueling growth in the biofuel market is the increasing adoption of government policies aimed at reducing greenhouse gas emissions and achieving energy security. For instance, India’s ambitious plan to implement E20 ethanol blending by 2025 exemplifies this driver in action. This policy mandates that petrol sold in the country must contain 20% ethanol, up from the previous 10%, significantly boosting demand for bioethanol. The Indian government is also supporting the expansion of ethanol production capacity through subsidies and incentives for sugar mills and new bio-refineries. This regulatory push not only encourages domestic production but also attracts investments into the biofuel sector, enabling rural economic growth and helping reduce reliance on imported fossil fuels. By mandating higher blending targets, governments create a guaranteed market for biofuels, which is critical for scaling production and improving the economics of biofuel projects.

(Source:https://www.pib.gov.in/PressReleasePage.aspx?PRID=2113234)

Global Transition to Renewable Energy Sources: Increasing apprehensions regarding climate change and energy security are driving both governments and industries to embrace biofuels as a viable alternative to fossil fuels.

Supportive Government Initiatives and Financial Aid: Regulatory requirements such as blending mandates and financial support are enhancing the production and utilization of biofuels in both transportation and power generation.

Abundant Supply of Feedstock: Agricultural residues, used cooking oil, and energy crops offer a readily accessible feedstock for biofuel production, particularly in rural and agricultural areas.

Progress in Biofuel Production Technologies: Advancements in second- and third-generation biofuels are enhancing efficiency, minimizing land use conflicts, and facilitating the utilization of non-food biomass.

Key Restraints for Biofuel Market

High Production Expenses Relative to Fossil Fuels: In spite of advancements, biofuels frequently remain pricier than petroleum-based options, hindering their competitiveness in the absence of subsidies.

Food versus Fuel Controversy: The utilization of food crops such as corn and sugarcane for fuel production raises ethical dilemmas and exerts pressure on the global food supply and pricing.

Infrastructure Challenges for Distribution and Blending: Numerous regions are deficient in the necessary pipelines, storage facilities, and vehicles capable of managing biofuel blends, which hampers market penetration.

Inconsistent Policy and Regulatory Environments: Variations in global regulations, a lack of long-term policy stability, and frequent alterations in mandates generate investment risks within the biofuel industry.

Key Trends for Biofuel Market

Shift toward advanced (second- and third-generation) biofuels

A significant trend reshaping the biofuel landscape is the growing focus on advanced biofuels produced from non-food biomass, such as agricultural residues, waste oils, and algae. This shift is driven by concerns over food security and the environmental impact of first-generation biofuels made from food crops like corn and sugarcane. Second-generation biofuels utilize lignocellulosic biomass, which does not compete with food supply, while third-generation biofuels tap into algae, offering higher yields with less land use. Technological advancements have made these biofuels more commercially viable, supported by increased R&D investments and pilot projects worldwide. For example, the European Union and the U.S. are funding projects to scale up sustainable aviation fuels (SAF) derived from advanced feedstocks, which have the potential to significantly reduce lifecycle carbon emissions compared to traditional jet fuels. This trend points to a more sustainable and diversified biofuel future, emphasizing innovation and environmental stewardship.

(Source:https://www.sciencedirect.com/science/article/abs/pii/S0961953425001680)

Expansion of Second- and Third-Generation Biofuels: The emphasis i...

The report covers Biofuel Companies in Brazil and it is segmented by Type (Biodiesel, Ethanol, and Other Types) and Feedstock (Coarse Grain, Sugar Crop, Vegetable Oil, and Other Feedstocks). The report offers the production forecasts in million cubic meters (MCM) for all the above segments.

North America is the largest biofuels production market in the world. In 2023, the North American biofuels market was worth some 44.76 billions U.S. dollars and is forecast to exceed 60 billion U.S. dollars by 2030. More information on the biofuels production market can be found here.

The global biofuels market size was worth over USD 158.88 billion in 2025 and is poised to witness a CAGR of around 7.4%, crossing USD 324.42 billion revenue by 2035, attributed to government regulatory standards to support the expansion of the market.

The Middle East and Africa is forecast to see the greatest growth in the biofuel market worldwide between 2021 to 2030, at 9.6 percent. By comparison, the biofuels market CAGR in Europe is projected to stand at four percent. The global biofuels market size stood at 110 billion U.S. dollars in 2021.

Biofuels Market size is expected to be worth around USD 307.3 Billion by 2033 from USD 131.0 Billion in 2023, growing at a CAGR of 8.9%

• The global industry was valued at US$ 165.9 Bn in 2022
• It is estimated to advance at a CAGR of 11.3% from 2023 to 2031 and reach US$ 434.8 Bn by the end of 2031

Market Introduction

Regional Outlook of Liquid Biofuel Industry

Liquid Biofuel Market Snapshot

The Advanced Biofuel Market Report is Segmented by Raw Material (Lignocellulosic Residues, Energy Crops, Algae, and More), Biofuel Type (Renewable Diesel, Biogas/Biomethane, and More), Technology (Biochemical Conversion, Thermochemical Conversion, and Hybrid and Emerging Pathways), End-Use (Road Transport Fuel, Aviation Fuel, Marine Fuel, and Industrial Heat and Power), and Geography (North America, Europe, Asia-Pacific, and More).

The global biofuels market size was USD 132.68 billion in 2024 & is projected to grow from USD 142 billion in 2025 to USD 244.34 billion by 2033.
Report Scope:

The Biofuels Market size is expected to reach a valuation of USD 277.2 billion in 2033 growing at a CAGR of 11.80%. The Biofuels Market research report classifies market by share, trend, demand, forecast and based on segmentation.

The European biofuel market is segmented by type (Biodiesel, Ethanol, and Other Types), feedstock (coarse grain, sugar cane, vegetable oil, and other feedstock), and geography (Germany, the United Kingdom, France, and the Rest of Europe). The report offers the market size and forecasts for biofuel in volume (million liters) for all the above segments.

Ethanol has by far the highest production market value of any biofuel worldwide. In 2023, ethanol production had a market value of nearly 80 billion U.S. dollars. This compared to a little over 25 billion U.S. dollars for biodiesel. More information on the biofuels production market can be found here.

According to Cognitive Market Research, the global advanced biofuel market size was USD 20514.5 million in 2024. It will expand at a compound annual growth rate (CAGR) of 8.80% from 2024 to 2031.

North America held the major market share for more than 40% of the global revenue with a market size of USD 8205.80 million in 2024 and will grow at a compound annual growth rate (CAGR) of 7.0% from 2024 to 2031.
Europe accounted for a market share of over 30% of the global revenue with a market size of USD 6154.35 million.
Asia Pacific held a market share of around 23% of the global revenue with a market size of USD 4718.34 million in 2024 and will grow at a compound annual growth rate (CAGR) of 10.8% from 2024 to 2031.
Latin America had a market share of more than 5% of the global revenue with a market size of USD 1025.73 million in 2024 and will grow at a compound annual growth rate (CAGR) of 8.2% from 2024 to 2031.
Middle East and Africa had a market share of around 2% of the global revenue and was estimated at a market size of USD 410.29 million in 2024 and will grow at a compound annual growth rate (CAGR) of 8.5% from 2024 to 2031.
The thermochemical category is the fastest growing segment of the advanced biofuel industry

Market Dynamics of Advanced Biofuel Market

Key Drivers for Advanced Biofuel Market

Technological Advancements in Biofuel Production Processes to Boost Market Growth

Technological developments in biofuel production techniques are driving growth in the advanced biofuel industry by increasing efficiency and diversifying feedstock sources. Non-food biomass, such as agricultural leftovers, is being converted into biofuels more efficiently because of advances in enzyme engineering and synthetic biology. Advanced fermentation processes are also improving bioethanol and biodiesel production. Thermochemical methods such as gasification and pyrolysis have enabled the conversion of waste materials into biofuels such as syngas and biodiesel. These innovations lower production costs and increase scalability, making biofuels more competitive with fossil fuels. Neste and Chevron are setting the standard by aggressively investing in new technologies and growing their production capacity. In addition, the market is anticipated to grow during the projected period as a result of players in the industry adopting Advanced Biofuels. For instance, according to the International Energy Agency (IEA), biofuel production is expected to increase by 28% between 2021 and 2026, driven by innovations in enzymatic hydrolysis and fermentation processes.

Rising Government Mandates and Policies Encouraging Renewable Energy Adoption to Drive Market Growth

Rising government regulations and policies are important drivers of the advanced biofuel business, boosting renewable energy use to minimize carbon emissions. Governments around the world, particularly in the United States, the European Union, and Brazil, have introduced policies like as blending mandates and subsidies to encourage biofuel use in the transportation and industrial sectors. For example, the United States Renewable Fuel Standard (RFS) and the European Union's Renewable Energy Directive (RED II) set lofty goals for boosting biofuel blends in fuel supplies. These policies provide financial incentives and tax benefits to biofuel producers, encouraging research and investment in advanced biofuels and ultimately hastening the transition to cleaner energy sources.

Restraint Factor for the Advanced Biofuel Market

High Production Costs Compared to Conventional Fossil Fuels Will Limit Market Growth

The advanced biofuel sector is hampered by high production costs when compared to conventional fossil fuels. Producing biofuels, particularly second-generation variations, necessitates sophisticated procedures and expensive technology such as enzymatic hydrolysis and gasification, which raises operational expenses. Furthermore, finding renewable feedstocks such as agricultural leftovers or algae can be more expensive and unpredictable than extracting fossil fuels. The necessity for specialized infrastructure for biofuel production, storage, and transport raises the cost even further. As a result, despite their environmental benefits, biofuels frequently struggle to compete with cheaper fossil fuels, restricting their broad use in cost-sensitive industries such as transportation and electricity.

Impact of Covid-19 on the Advance...

Next generation biofuels Market was valued at $191.82 B in 2023, and is projected to $USD 1591.13 B by 2032, at a CAGR of 26.50% from 2023 to 2032.

Global Biofuels Market size worth at USD 164.38 Billion in 2023 and projected to USD 291.7 Billion by 2032, with a CAGR of around 6.58% between 2024-2032.

According to Cognitive Market Research, the global liquid biofuels market size will be USD 176240.0 million in 2025. It will expand at a compound annual growth rate (CAGR) of 9.40% from 2025 to 2033.

North America held the major market share for more than 40% of the global revenue with a market size of USD 65208.80 million in 2025 and will grow at a compound annual growth rate (CAGR) of 7.8% from 2025 to 2033.
Europe accounted for a market share of over 30% of the global revenue with a market size of USD 51109.60 million.
APAC held a market share of around 23% of the global revenue with a market size of USD 42297.60 million in 2025 and will grow at a compound annual growth rate (CAGR) of 12.2% from 2025 to 2033.
South America has a market share of more than 5% of the global revenue with a market size of USD 6697.12 million in 2025 and will grow at a compound annual growth rate (CAGR) of 10.1% from 2025 to 2033.
The Middle East had a market share of around 2% of the global revenue and was estimated at a market size of USD 7049.60 million in 2025 and will grow at a compound annual growth rate (CAGR) of 10.7% from 2025 to 2033.
Africa had a market share of around 1% of the global revenue and was estimated at a market size of USD 3877.28 million in 2025 and will grow at a compound annual growth rate (CAGR) of 9.7% from 2025 to 2033.
Biodiesel category is the fastest-growing segment of the liquid biofuels industry.

Market Dynamics of Liquid Biofuels Market

Key Drivers for Liquid Biofuels Market

Technological Advancements in Biofuel Production Drives Market Growth

Technological advancements in biofuel production drive growth in the liquid biofuels market by enhancing efficiency, reducing costs, and expanding feedstock options. Innovations in enzymatic hydrolysis, synthetic biology, and advanced fermentation techniques improve biofuel yields while minimizing environmental impact. The development of second-generation and third-generation biofuels derived from non-food biomass and algae further strengthens market expansion. Automation and artificial intelligence optimize production processes, increasing scalability and sustainability. Additionally, advancements in bio-refining technologies enable better integration with existing fuel infrastructure. Continuous research and development efforts, supported by government initiatives and private sector investments, accelerate market adoption. As a result, technological progress plays a crucial role in shaping the future of the liquid biofuels market. For instance, in March 2024, Terragia Biofuel announced that it had raised a $6 million seed round led by Engine Ventures and Energy Impact Partners (EIP). The company used the capital to commercialize its novel biology-based approach for converting cellulosic biomass into ethanol and other products, expand its employee headcount, and initiate partnerships with major biofuel producers.

https://www.businesswire.com/news/home/20240328826446/en/Terragia-Secures-6M-to-Develop-Cost-Competitive-Low-Carbon-Biofuel-Technology

Increased Investment in Research and Development of Advanced Biofuels Propels Market Growth

Increased investment in research and development of advanced biofuels propels the growth of the liquid biofuels market by enhancing efficiency, sustainability, and scalability. Continuous innovation leads to the development of second-generation and third-generation biofuels, reducing dependence on traditional feedstocks and minimizing environmental impact. Governments and private sector players are actively funding biofuel technologies to improve production processes and lower costs. Advancements in enzymatic hydrolysis, synthetic biology, and algae-based biofuels contribute to higher yields and better fuel performance. Additionally, research initiatives focus on integrating biofuels with existing energy infrastructure for seamless adoption. As technology progresses, the market gains momentum, ensuring a reliable and sustainable alternative to fossil fuels while addressing global energy demands.

Restraint Factor for the Liquid Biofuels Market

Land-Use Competition between Biofuel Crops and Food Production Restricts Market Growth

Land-use competition between biofuel crops and food production restricts the growth of the liquid biofuels market by creating resource allocation challenges. Expanding biofuel cultivation often requires converting agricultural land that could be use...