Biodiesel Market Size, Share, Growth, Trends, and Global Industry Analysis: By Feedstock (Animal Fat, Vegetable Oil, and Other Feedstocks), By Application (Transportation, Power Generation, and Other Applications), and Region Forecast 2020-2031

Biodiesel Market size was valued at US$ 4,200 million in 2024 and is expected to reach US$ 5,800 million by 2031, growing at a significant CAGR of 3.5% from 2025-2031. Moreover, the U.S. Biodiesel Market is projected to grow significantly, reaching an estimated value of US$ 2,100 million by 2031. The biodiesel industry is transforming from a niche alternative fuel sector to a worldwide strategic element of decarbonization. While governments are moving in line with net-zero agendas, biodiesel is unique in that it can be integrated into existing installed diesel infrastructure. It is highly compatible with existing engines and supply chains, and this gives it a huge head start over more technologically advanced substitutes. But it’s worth is not just technical, it is a sign of the transition towards circular economies in which agricultural by-products and spent oil become commercial fuels. Demand is not policy-driven but also by industries, shipping, transport, and logistics, actively looking for scalable, lower-carbon fuel alternatives that advance ESG objectives without disrupting operations.

Mature economies and emerging markets are converging on the use of biodiesel from opposite directions but in either case, the trend is accelerating. In the emerging world, the pressure is to substitute crude oil importation with domestic feedstocks, namely palm, soybean, and jatropha. On the other hand, in North America and Europe, regulations such as RED II and RFS are encouraging fleet operators and refiners to blend biodiesel at increasing rates. The industry is also experiencing the shift in the production methodology, away from traditional first-generation feedstocks towards superior-tier inputs such as algae, used cooking oil, and animal fats. This is helping manufacturers minimize land-use footprints and deliver upon sustainability requirements. As demand becomes more diversified, biodiesel's function is evolving away from compliance into an operational climate resilience strategy.

Facts & Figures

• Policy Mandates Are the Market's Anchor: National blending targets like Malaysia's B20 and planned B40 in Indonesia remain the strongest drivers of biodiesel use, particularly in transport and government fleets.
• Waste-to-Fuel Routes Are Scaling Fast: Used cooking oil and animal fat biodiesel are increasingly receiving institutional support as circular economy ambitions encourage industries to base fuels on low-carbon, waste-derived feedstocks.
• Marine and Aviation Industry Develop New Pools of Demand: With shipping and aviation subject to regulatory incentives to reduce emissions, biodiesel and higher bio-blends are being investigated as scalable transition fuels
• Refiners Wager on Hydrogenated Biodiesel (HVO): Large refiners are investing in HVO production because it has high performance, complete diesel engine compatibility, and increasing demand in colder and industrious territories.                       

Key Developments:

• In October 2024, ORLEN Group began retail sale of HVO100, a waste-based second-generation biodiesel, on two German filling stations. The fuel is entirely compatible with standard diesel engines and requires no vehicle adaptation.
• In September 2024, Indian Oil Corporation achieved a country-high biodiesel blending level of 0.49%, mixing over 23 crore litres with ordinary diesel, higher than its rival oil marketing companies.

Biodiesel Market Segmentation:

Based on the feedstock:

• Animal Fat
• Vegetable Oil
• Others

Vegetable oil is a foremost biodiesel feedstock due to its regular availability, high yield capacity, and sophisticated processing facilities. Bilateral demand by food and fuel markets in North America is led by soybean oil, Europe by rapeseed oil, and Southeast Asia by palm oil, which are regionally preferred choices based on well-established agricultural production systems. Among these, global production is dominated by soybean oil, which is fueled by bilateral demand from food and fuel markets.

Despite land use sustainability controversy, vegetable oil remains cost-effective and expandable, offering stable supply chains for large-volume biodiesel blending operations. Crop genetic improvement and co-product use are also underpinning lifecycle economics and emissions. Vegetable oil remains the most bankable and technologically adaptable feedstock for refiners concerned mostly with blend stability and fuel quality.

Based on the application:

• Transportation
• Power Generation
• Others

Transport is the largest and most important application segment for biodiesel, particularly where fleets remain cost- or infrastructure-restricted to electrification. Heavy-duty transport trucks, public transit buses, agricultural equipment, and rail systems have diesel engines that are already biodiesel-blend compatible, making integration straightforward. Fleet managers are transitioning to B20 and higher blends to reduce Scope 1 emissions without having to sacrifice performance or re-engineer engine systems.

In addition, country biofuel policies and road transport fuel emissions regulations are pressurizing transport authorities to prefer biodiesel to fossil diesel. Growing interest from logistic operators and e-commerce champions in using bio-based fuels further drives demand. For this segment, biodiesel is not just a substitute, it's a compliance-friendly transition platform for deeper decarbonization in the longer term.