Biofuels Market is Expected to Reach USD 197.72 Billion by 2032 | SkyQuest Technology Consulting

The biofuels market is anticipated to increase due to the policies such as the U.S. Renewable Fuel Standard, and the European Union's RED II directive encourage biofuel usage, offering financial and regulatory incentives that stimulate investment and production across the value chain.

WESTFORD, Mass., Aug. 13, 2025 /PRNewswire/ -- SkyQuest Technology Consulting published a report, titled, Biofuels Market - Global Opportunity Analysis and Industry Forecast, 2025-2032", valued at USD 117.69 Billion in 2024. With a projected CAGR of 6.7% from 2025 to 2032, the market is expected to reach USD 197.72 Billion by the end of 2032. Climate change and greenhouse gas emissions are becoming increasingly recognized. This recognition is resulting in the use of biofuels as a cleaner substitute for fossil fuels. There is a global trend with governments implementing strict emissions regulations, as they promote renewable energy sources, such as biofuels to limit one's carbon footprint particularly in transportation and in the industrial sector.

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Biofuels Market Key Growth Drivers

The biofuels market has experienced significant growth owing to ongoing innovations in biofuel technologies, such as second-generation and advanced biofuels are enhancing efficiency, yield, and feedstock flexibility. Developments like algae-based fuels and cellulosic ethanol make biofuels more viable and scalable, reducing reliance on food-based crops, and improving the overall sustainability of biofuel production.

Another key factor driving the market growth is the transportation sector, especially aviation, and road freight, is increasingly seeking sustainable fuel alternatives to meet decarbonization goals. Biofuels, specifically biodiesel and bioethanol, have an immediacy in use since they fit straight to the engines and existing infrastructure. With their ability to reduce lifecycle emissions, they are a preferred option by environmentally conscious fleet operators and logistics companies.

Recent Developments in Biofuels Market

• In May 2025, UK‑based HutanBio released a lifecycle assessment confirming its proprietary HBx microalgal biofuel achieves net‑negative emissions—removing up to 1.48 t CO₂e per tonne in Morocco, the Middle East, and Australia. This milestone marks a scalable, transparent benchmark for algal biofuel sustainability.
• In May 2025, Zhejiang Jiaao Enprotech shipped its first cargo of SAF (13,400 tonnes) from its east‑China plant to Europe. This follows the award of a 2025 export license and marks the company's entry into international low‑carbon aviation fuel exports.
• In April 2025, Repsol and Bunge partnered to integrate camelina and safflower crops into Europe's renewable fuel supply. Hydrotreated vegetable oils (HVOs) and sustainable aviation fuels (SAFs) are derived from these intermediates, which have reduced lifecycle emissions by up to 90% and increased low-carbon crop use.

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Major Challenges in Biofuels Industry

Increasing biofuel crop agriculture relates to deforestation, conversion of natural habitat into farmland, and losses of biodiversity, which compromises the environmental assumptions of biofuels. Agricultural use of land raises environmental issues that attract scrutiny from environmental groups, which provide rationale for stricter regulations that slow biofuels project approvals and investment.

The absence of harmonised biofuels policies and certification standards across countries creates market, and investment uncertainty. Different sustainability criteria, blending requirements and import/export regulations hinder international trade and investment decisions. These differences also discourage reliable long-term commitments from producers and investment sectors required for the long-term growth of a coherent global biofuels market.

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Competitive Landscape

The biofuels market worldwide is intensely competitive and includes innovators like POET LLC, Neste, ADM, Chevron Corporation, and BP. Neste is focused on renewable diesel and sustainable aviation fuel and is expanding its capacity on a global scale. BP is investing in advanced biofuels with a focus on partnerships and acquisitions, POET LLC is dedicated to increasing production of corn-based ethanol. The competitive landscape of biofuels is influenced by the strategies of competing companies, and three fundamental strategies are prominent in shaping competition collaboration and cooperation, feedstock diversification, and geographical expansion.

The major players in the biofuels industry include,

• Archer Daniels Midland Company (USA)
• Cargill Inc. (USA)
• Royal Dutch Shell plc (Netherlands)
• Neste Corporation (Finland)
• Bunge Limited (Switzerland)
• Wilmar International Ltd. (Singapore)
• Louis Dreyfus Company BV (Netherlands)
• POET LLC (USA)
• Green Plains Inc. (USA)
• The Andersons Inc. (USA)
• Raizen Energia SA (Brazil)
• Delta Air Lines, Inc. (USA)
• Marathon Petroleum Corporation (USA)
• Total Energies SE (France)
• Exxon Mobil Corporation (USA)
• BP plc (UK)
• CROPENERGIES AG (Germany)
• ALGENOL (United States)

Biofuels Market Segmental Analysis

The biofuels market is segmented based on fuel type, feedstock, form, and region.

• By fuel type, bioethanol, primarily produced from corn, sugarcane, and wheat, is extensively used as a gasoline additive to reduce emissions. It maintains the highest market share, particularly in the U.S. and Brazil, because of established infrastructure and government mandates. It dominates the market because of high blend mandates and capacity to produce and deliver developed in terms of sustainability.
• By feedstock, starch sources like corn and wheat dominate ethanol production, particularly in the United States. This segment currently holds the largest market share due to large-scale corn cultivation, established supply chains, and government support through renewable fuel mandates.
• By form, solid biofuels include wood pellets, briquettes, and agricultural residues. These are primarily used for heating and power generation in residential and industrial applications. While widely used in some regions (like Europe), they have limitations in transportation use and lower energy density compared to liquid biofuels. Their growth is moderate and mostly tied to biomass heating markets.

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Regional Outlook

• North America dominates the global biofuels market, led by the United States due to strong ethanol production from corn and favorable government mandates like the Renewable Fuel Standard (RFS). Advancements in biodiesel and renewable diesel, along with increasing investment in sustainable aviation fuel (SAF), continue to drive regional market growth.
• Asia Pacific is witnessing rapid growth in the biofuels market, driven by rising energy demand, supportive government policies, and agricultural feedstock availability. Countries like India, China, and Indonesia are investing in ethanol blending programs and biodiesel initiatives to reduce fossil fuel dependence and lower emissions, fostering strong regional market expansion.
• Europe is a key player in the global biofuels market, driven by stringent emission regulations and the EU's Renewable Energy Directive (RED II). Countries like Germany, France, and Sweden are leading in biodiesel and advanced biofuel adoption, with growing focus on sustainable aviation fuel (SAF) and waste-derived bioenergy solutions.
• The Middle East and Africa are emerging markets in the global biofuels sector, driven by growing interest in energy diversification and sustainability. Countries like South Africa and the UAE are exploring bioethanol and biodiesel production, leveraging agricultural and waste resources to reduce fossil fuel reliance and support long-term clean energy goals.
• Latin America plays a significant role in the global biofuels market, with Brazil leading in sugarcane-based ethanol production and widespread ethanol-blended fuel usage. Favourable policies, abundant feedstock, and export potential drive growth across the region. Countries like Argentina and Colombia are also expanding biodiesel production from soybean and palm oil.

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