Biodiesel Market (2026 - 2033)

Biodiesel Market Summary

The global biodiesel market size was valued at USD 47.0 billion in 2025 and is projected to grow from USD 51.7 billion in 2026 to USD 92.6 billion in 2033, at a CAGR of 8.2% from 2026 to 2033. Europe dominated the market, accounting for a revenue share of 45.0% in 2025. Biodiesel is a renewable, clean-burning diesel substitute that can be used in existing diesel engines without requiring any modifications.

Source: Grand View Research, IR Documents, Primary Interviews, Paid Databases

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It is composed of a growing variety of recycled cooking oil, agricultural feedstock, and animal fats. Increasing demand for biodiesel to replace traditional fossil fuels in power generation and automotive applications is projected to boost the market growth. On account of the existence of numerous dealers and suppliers, the market is highly fragmented.

However, the demand-supply gap caused by insufficient production capacity and a large scope for R&D in feedstock selection for product manufacturing is expected to create opportunities for new market players. The growing demand for environmentally friendly fuels that ensure complete combustion and can reduce Greenhouse Gas (GHG) emissions is a major factor driving the market. The high compatibility of biodiesel with the existing diesel engines is also driving the demand. The increasing population and the subsequent growth in the number of vehicles and other industries using biodiesel are also expected to boost the demand for biodiesel.

Biodiesel has witnessed increasing demand in the automotive industry owing to its lower greenhouse gas (GHG) emissions compared to conventional diesel. As a result, demand in the U.S. is expected to grow steadily over the forecast period. The U.S. remains one of the world's largest soybean producers, with soybean oil serving as a key feedstock for biodiesel production. Growing government support for sustainable feedstock production and low-carbon fuel initiatives is further strengthening the country's biodiesel value chain. For instance, in January 2025, the U.S. Department of Agriculture (USDA) released technical guidelines for climate-smart agriculture crops used as biofuel feedstocks, providing a framework to quantify and verify greenhouse gas emissions associated with feedstock production. The initiative is expected to support the adoption of climate-smart feedstocks and strengthen the long-term growth of the biodiesel industry. Furthermore, developing countries such as India, China, Brazil, and several European countries are increasing biodiesel blending targets to reduce dependence on fossil fuels and support the decarbonization of the transportation sector.

Furthermore, a growing preference for replacing fossil fuels, which are associated with higher GHG emissions, with biofuel, which is renewable and biodegradable, is influencing demand growth in these countries. Furthermore, the increasing demand for eco-friendly and GHG emission-reducing gas is anticipated to aid the market growth. Also, government aid like subsidies and imposing mandates indicates continued growth of the market.

Analyst Perspective

The global biodiesel market is witnessing steady growth, driven by the increasing emphasis on decarbonization, renewable energy adoption, and stringent government mandates promoting low-carbon transportation fuels. Rising concerns over greenhouse gas emissions and energy security are encouraging the use of biodiesel as a sustainable alternative to conventional diesel across the transportation, industrial, and agricultural sectors. However, fluctuations in feedstock prices, competition from renewable diesel and other biofuels, and concerns regarding feedstock availability remain key challenges for market participants. Nevertheless, ongoing technological innovations, increasing adoption of waste-based feedstocks, and global commitments to achieving net-zero emissions are expected to create significant growth opportunities for the biodiesel market over the forecast period.

Feedstock Insights

Based on feedstock, the market has been further categorized into vegetable oils and animal fats. The vegetable oils feedstock segment is further sub-segmented into canola oil, soybean oil, palm oil, corn oil, and others. Simultaneously, the animal fats segment is sub-segmented into poultry, tallow, white grease, and others. In 2025, the vegetable oil segment accounted for the largest share of more than 95.0% of the global revenue. However, raw material selection varies by region, based on the availability and feedstock cost. Palm oil is expected to be a major feedstock for the market and has been widely used in the production of biodiesel in countries, such as Indonesia, Thailand, Germany, France, and Colombia.

Indonesia and Thailand dominated palm oil production, accounting for more than 80.0% of total output, with a large portion of the product used for biofuel production. Whereas the European countries were reliant on imports of feedstock from these Asian countries for biofuel production. Other vegetable oils, such as UCO and rapeseed, accounted for a significant portion of the industry, accounting for more than 15.0% of total feedstock demand. China and India are expected to be the most important markets for UCO-based biodiesel in Asia Pacific (UCOME). However, uncertainty about product availability has been a major concern for UCOME manufacturers in these regions, weighing on growth.

Application Insights

Based on application, the global market has been further divided into fuel, power generation, and others. In 2025, the fuel application segment dominated the global market and accounted for the largest share of more than 75.0% of the overall revenue. The automotive fuel segment dominated the demand for the product in 2025. The industry is expected to benefit from increased demand for fuel in commercial vehicles as a replacement for crude oil as it emits fewer Volatile Organic Compounds (VOCs) than traditional fuels, such as diesel.

The increasing adoption of biodiesel and other renewable fuels by commercial fleet operators is further supporting the growth of the fuel application segment. For instance, according to the 2025 Global Reporting Initiative (GRI) Report published by UPS in March 2026, the company reported the use of biomass-based fuels, including ethanol and biodiesel, in its transportation operations as part of its sustainability initiatives. The report highlights the continued integration of renewable fuels into commercial fleet operations, reflecting the growing role of biodiesel and other biofuels in supporting lower-carbon transportation.

Because it is biodegradable, free of aromatics and sulfur, and non-toxic, the product finds application in the marine industry and is expected to grow at a significant CAGR over the forecast period. Furthermore, the agricultural sector’s growth, combined with increased mechanization, is expected to drive product demand in agricultural applications over the forecast period. Governments around the world are constantly attempting to adopt renewable energy sources to generate power to reduce GHG emissions. As a result, the demand for the product in power generation applications is expected to grow at a significant CAGR from 2026 to 2033.

Regional Insights

Europe dominated the market, accounting for a revenue share of 45.0% of the global market in 2025 and is expected to grow at a steady CAGR from 2026 to 2033. It has historically been the largest market for the product due to early acceptance of the product in the region as well as government emphasis on replacing carbon-emitting sources with bio-based sources. Rapeseed oil, UCO, palm oil, soybean oil, animal fats, and sunflower oil are the most common feedstocks used to produce biodiesel in Europe. The product demand in the region is primarily driven by Germany, which accounts for the highest share of feedstock production among the European countries.

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The low-interest rate on raw materials is expected to lead to a rise in consumption, thereby propelling the overall regional market growth over the forecast period. The region is also witnessing increasing investments in sustainable feedstock supply chains to support the growing production of renewable fuels. For instance, in June 2025, TotalEnergies signed a 15-year agreement with Quatra to secure the annual supply of 60,000 tonnes of European used cooking oil for its biorefineries, strengthening the availability of sustainable feedstocks for biodiesel and other advanced biofuels across Europe.

Asia Pacific Biodiesel Market Trends

Asia Pacific is also projected to register a significant CAGR from 2026 to 2033. Thailand is likely to be one of the fastest-growing markets, as demand for diesel-powered automobiles in the region is increasing rapidly. Malaysia and Indonesia produce more than 80% of palm oil, creating significant opportunities for biodiesel manufacturing. The production is expected to increase, which, in turn, is expected to propel market growth over the forecast period. However, palm oil is also used in the food industry, which may affect its availability for biodiesel production. Government initiatives promoting biofuel production are expected to support market growth across the region.

Central & South America Biodiesel Market Trends

Central & South America is a crucial market for biodiesel, supported by favorable agricultural conditions, availability of feedstocks, and increasing efforts to promote renewable fuels. Countries such as Brazil, Argentina, and Colombia are contributing to regional market growth through expanding biodiesel production and supportive blending policies. Brazil remains one of the key markets in the region due to its strong agricultural base and increasing adoption of biodiesel in the transportation sector.

The government’s initiatives to promote green fuels, reduce emissions, and lower dependence on crude oil are expected to drive market growth over the forecast period. For instance, under Brazil’s updated fuel policy framework, the country implemented a 15% biodiesel blend rate by volume in diesel starting in 2025. The policy allows the biodiesel blend level to vary between 13% and 25% and includes a provision to increase the mandatory blend rate by 1 percentage point annually, reaching 20% by 2030. These measures are expected to support the expansion of biodiesel consumption and strengthen the regional renewable fuel market.

Key Biodiesel Company Insights

The industry is highly competitive on account of the strong presence of major manufacturers. The companies’ production facilities are located near port areas, allowing for efficient fuel delivery. As a result, the cost of transportation falls, which is expected to boost participants’ profit margins over the projected period. Existing producers are expected to finance the expansion of their production capacities and geographical reach to support their market presence.

Key Biodiesel Companies

The following key companies have been profiled for this study on the biodiesel market:

• Ag Processing, Inc.

• ADM

• Bunge

• Cargill, Incorporated

• Ecodiesel Colombia S.A.

• FutureFuel Corporation

• Manuelita

• Renewable Biofuels

• IN RE TERRAVIA HOLDINGS, INC.

• Wilmar International Ltd.

Recent Developments

• In August 2025, the U.S. Department of Agriculture (USDA) Foreign Agricultural Service published its Biofuels Annual report on Indonesia, highlighting that the country increased its biodiesel blending mandate from B35 to B40 in early 2025. The higher blending requirement has increased domestic biodiesel consumption, with the report noting that Indonesia recorded no biodiesel exports due to limited production capacity.

• In November 2024, Researchers at the University of California, Santa Cruz developed a simplified biodiesel production process using sodium tetramethoxyborate, enabling biodiesel production from waste oil at lower temperatures and reducing purification complexity. The innovation could support more efficient production of waste-oil-based biodiesel.

Global Biodiesel Market Report Segmentation

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2021 to 2033. For this study, Grand View Research has segmented the global biodiesel market report based on feedstock, application, and region:

• Feedstock Outlook (Volume, Million Liters; Revenue, USD Million, 2021 - 2033)

  • Vegetable Oil

    • Canola Oil

    • Soybean Oil

    • Palm Oil

    • Corn Oil

    • Others

  • Animal Fats

    • Poultry

    • Tallow

    • White Grease

    • Others

• Application Outlook (Volume, Million Liters; Revenue, USD Million, 2021 - 2033)

  • Fuel

    • Automotive

    • Marine

    • Agriculture

  • Power Generation

  • Others

• Regional Outlook (Volume, Million Liters; Revenue, USD Million, 2021 - 2033)

  • North America

    • U.S.

  • Europe

    • Germany

    • UK

    • France

  • Asia Pacific

    • China

    • India

    • Indonesia

    • Thailand

  • Central and South America

    • Brazil

    • Colombia

    • Argentina

  • Middle East & Africa