The global biofuel market is projected to reach USD 225.9 billion by 2028 from an estimated USD 167.4 billion in 2023, at a CAGR of 6.2% during the forecast period. The growing demand for cleaner fuels is one of the major factors driving the biofuels market.
Global biofuel demand has been increasing gradually due to goals set to achieve net zero emissions in recent years. According to Statistical Review of World Energy 2022, the total global consumption of biofuel in 2021 was 1,837 thousand barrels of oil equivalent per day. Governments of various countries across the world are focused on reducing greenhouse emissions. With the help of biofuel, greenhouse emissions can be reduced by up to 65%. Expansion of the biofuel business will result in increased employment opportunities, ensuring the stability of an economy. The demand for suitable biofuel crops, as a result of biofuel production, will support the agricultural industry. Many governments have implemented policies to promote the use of biofuels, such as blending mandates and tax credits. These policies have helped create a demand for biofuels and drive down costs. Governments worldwide have implemented a number of favorable policies to promote the use of biofuels. The high depletion of fossil fuels presents promising opportunities for the biofuel market. However, the risks associated with high initial investment for setting up biorefineries and uncertain global economic conditions have hindered the growth of the market in recent years and are expected to restrain the market’s growth during the forecast period.
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The ethanol, by fuel type, is expected to be the largest segment during the forecast period.
Based on fuel type, the biofuel market has been split into ethanol, biodiesel, renewable diesel, and biojets. The biofuel market for ethanol is anticipated to have the biggest market share over the forecast period. Due to its extensive history of production, use, and versatility as a gasoline addition, ethanol is frequently more in demand. Corn and sugarcane are two examples of the agricultural feedstocks used to make ethanol. The vast accessibility of these feedstocks and the presence of supply channels facilitate the uptake of ethanol.
The aviation segment, by end-use, is expected to grow at the highest CAGR during the forecast period.
This report segments the biofuel market based on end use into three segments: transportation, aviation, and others. The aviation segment is expected to grow at the highest CAGR during the forecasted period, owing to the extensive decarbonization efforts in the aviation sector in North America and Europe. One of the major drivers is the usage of biofuels in military aircraft on a commercial scale. Additionally, the rising demand for air cargo transport in terms of volume is one of the drivers for the growth of aviation. The Bioenergy Technologies Office (BETO) of the US Department of Energy empowers energy firms and aviation stakeholders by advancing research, development, and demonstration to overcome barriers to widespread deployment of low-carbon sustainable aviation fuel (SAF).
Europe is expected to be the fastest-growing region in the biofuel market.
Europe is expected to be the fastest growing region in the biofuel market during the forecast period. The European region comprises major economies such as France, UK, Germany, and Poland. The biofuel market in Europe is primarily fueled by the three main types of biofuels, namely ethanol, biodiesel, and renewable diesel. Europe has actively fostered the use of biofuel through various policies and initiatives. The European Union (EU) has established targets for member states to enhance the utilization of renewable energy in transportation, including biofuels like biofuel. The Renewable Energy Directive (RED) and its subsequent revisions have played a pivotal role in shaping biofuel production and consumption in Europe.
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Key Market Players
Some of the major players in the biofuel market are ADM (US), Chevron (US), Valero (US), Neste (Finland), and Cargill, Incorporated (US). The major strategies adopted by these players include new product launches, acquisitions, contracts, agreements, partnerships, joint ventures, collaborations, investments, and expansions.