The global biodiesel market size was estimated at USD 28.04 billion in 2016. Growing demand for biodiesel to replace traditional fossil fuel in automotive and power generation application is expected to drive industry growth.
Capital investment and technology know-how are expected to be the key parameters for the industry players to establish themselves in the industry. The market is highly fragmented owing to the presence of many suppliers. However, the demand-supply gap owing to inadequate production capacities and wide scope for R&D in the feedstock selection for the product manufacturing is expected open opportunities for new industry players.
U.S. vegetable oil biodiesel market revenue by product 2014 - 2025 (USD Million)
Vegetable oil was the most preferable source for biodiesel production in the U.S., wherein soybean dominated the industry owing to high production volumes in the region. Initiatives taken by the U.S. government to promote biofuel in order to lower VOC emissions and dependency on crude oil is likely to drive growth.
The product has ability to support the existing engine designs in automobiles which is expected to have positive impact on the product demand. Furthermore, biofuel mandates given by the governments across the world are expected to fuel industry growth. However, fluctuating raw material prices are expected to impact product pricing over the projected period.
The increasing threat of fossil fuel depletion and need to include renewable sources of energy in energy mix for a sustainable growth is anticipated to drive the demand for biodiesel. The product can be manufactured in the existing diesel manufacturing facility unlike other biofuels, which is expected to impact the industry on a positive note.
The processing cost of vegetable oils based biodiesel is relatively lowers as compared to animal fat owing to easy manufacturing process, abundant raw material availability and high oil yield. However, the biodiesel prices do not vary significantly across the globe, as the manufacturers in different region, use different feedstock, which is easily available in the market.
The demand for the product was dominated by the automotive fuel segment, which accounted for over 75% of the overall market. Increasing demand for the fuel in commercial cars to replace crude oil is expected to have a positive impact on the industry. The fuel is beneficial to the environment as it reduces the effect of greenhouse gas by emitting lower VOC contents as compared to traditional diesel.
Rising in sale of electric vehicles is anticipated to hamper the growth of the market over the forecast period. For example, in 2017, Tesla is planning to enter the Indian market with electric vehicles as the country is the fourth-largest automotive market and electric vehicles would reduce the pollution level significantly. This innovation is expected to hamper product demand in fuel application.
The product finds application in marine industry and is expected to grow at a CAGR of 8.4% from 2017 to 2025 as it is biodegradable, free of aromatics & sulfur, and non-toxic. Furthermore, Growth of agricultural sector coupled with increasing mechanization of the sector is expected to drive the product demand in agricultural applications over the projected period.
The governments across the various countries in the world are continuously trying to adopt renewable source of energy to generate power so as to reduce greenhouse gas emission. As a result, the demand for the product in power generation application is expected to grow at a CAGR of 4.6% from 2017 to 2025.
Vegetable oil dominated the industry accounting for 90.9% of the overall feedstock consumption for biodiesel production owing to technology know how by majority of the manufacturers and high oil yields offered by these products. Soybean oil, canola oil, and corn oil are the major feedstock used for the production of biofuel. However, the selection of raw material varies dramatically from region to region based on the raw material availability and cost associated with this feedstock.
Biodiesel market revenue, by feedstock, 2016 (%)
Palm oil is expected to be a major feedstock for the market and was extensively used for biodiesel production in the countries including Indonesia, Thailand, Germany, France and Colombia. Indonesia and Thailand dominated the palm oil production accounting over 80% of the overall production, with a major share of the product was utilized for biofuel production. Whereas the European countries were dependent on the imports of feedstock from these Asian countries for the production of biofuel.
Other vegetable oils including UCO, and rapeseed accounted for a major share in the industry accounting over 35% of the overall feedstock demand. In Asia Pacific, China, and India are expected to be the key markets for UCO based biodiesel (UCOME). However, uncertainty regarding the product availability has been a key concern for the UCOME manufacturers in these regions, thus impacting the growth.
Animal fat based biodiesel is expected to grow at a CAGR of 7.4% from 2017 to 2025. The growth of the animal slaughtering across various parts of the world coupled with the low cost over vegetable oils are expected to have a positive impact on this feedstock segment growth. However, the low raw material availability as compared to its counterparts is expected to hamper the growth over the projected period.
Central & South America is expected to be the fastest growing market, growing at a CAGR of 11.0% from 2017 to 2025. Initiatives taken by the government of Brazil, Colombia and Argentina to promote biofuel sector in order to reduce fossil fuel imports is expected to have a positive impact on the industry growth.
India is expected to be the one of the fastest growing markets for the product as the demand for diesel driven vehicles in the region is increasing at a significant pace. The government initiative to boost green fuel to substantially reduce pollution and reduce dependency on crude oil is expected to propel the market growth over the forecast period. Furthermore, government of India also planned to blend 5% biodiesel by 2022 which is anticipated to propel the growth over the projected period.
In China, UCO is the most primary feedstock used for the manufacturing of biodiesel. The country has over 25 bio-refineries as 2017, with majority of them using UCO as their raw material. The majority of the UCOME produced in the country is used for industrial application, which accounts for over 50% of the overall consumption. Agriculture and fishing equipment is expected to be the second largest application for the product in China, accounting over 15% of the total demand.
Europe has been the largest market for the product over the past few years owing to early adoption of product in the region coupled with high government focus to replace carbon emitting sources with bio-based products. In Europe, rapeseed oil, soybean oil, palm oil, animal fats, UCO and sunflower oil are the most common feedstock used for the fuel manufacturing. The region has over 245 refineries as of 2017, which produced over 25,000 million liters of biodiesel in the same year.
Capital investment and technology know-how are expected to be the key parameters for the players to establish their business. Furthermore, the industry is expected to witness partnerships and collaborations among the manufacturers in order to produce high product volumes to meet the meet the rising demand.
The companies have their production sites close to ports enabling smooth distribution of the fuel. The distribution is carried out by sales unit or through vendors strengthening the sales network. As a result, the transportation cost reduces which is expected to increase profit margin for the company over the forecast period.
There are numerous number of biodiesel producers across the major economies, however, the production capacity is unable to meet the surging demand for the product which decreases the competitive rivalry owing to high demand-supply gap. The existing manufacturers are expected to invest to enlarge production capacities and expand geographical reach in order to strengthen their market presence.
Base year for estimation
Actual estimates/Historical data
2014 - 2016
2017 - 2025
Volume in Million Liters, revenue in USD Million and CAGR from 2017 to 2025
North America, Europe, Asia Pacific, Central & South America, Middle East & Africa
U.S., Germany, UK, France, China, India, Indonesia, Thailand, Brazil, Argentina, Colombia
Revenue forecast, company share, competitive landscape, growth factors and trends
15% free customization scope (equivalent to 5 analysts working days)
If you need specific market information, which is not currently within the scope of the report, we will provide it to you as a part of customization
Segments covered in the report
This report forecasts revenue growth at global, regional & country levels and provides an analysis on the industry trends in each of the sub-segments from 2014 to 2025. For the purpose of this study, Grand View Research has segmented the global biodiesel market on the basis of feedstock, application, and region:
Feedstock Outlook (Volume, Million Liters; Revenue, USD Million, 2014 - 2025)
Application Outlook (Volume, Million Liters; Revenue, USD Million, 2014 - 2025)
Regional Outlook (Volume, Million Liters; Revenue, USD Million, 2014 - 2025)
Central & South America
Middle East & Africa
Avail customized purchase options to meet your research needs:
Get your queries resolved from an industry expert. Request for a free product review before report purchase.
Speak to the report author to design an exclusive study to serve your research needs.
A testimonial for service excellence represented in the form of BBB "A" Accreditation.
Your personal and confidential information is safe and secure.