Biodiesel Procurement Intelligence Report, 2024 - 2030 (Revenue Forecast, Supplier Ranking & Matrix, Emerging Technologies, Pricing Models, Cost Structure, Engagement & Operating Model, Competitive Landscape)

Biodiesel Category Overview

The biodiesel market is anticipated to grow at a CAGR of 11.1% from 2024 to 2030. The market size was estimated to be around USD 36.34 billion in 2023. In 2023, Europe dominated the market with a total share of 46.55% followed by North America. This is because the region is motivated by incentives, policies and programs, and different trade benefits to reduce carbon footprint and adopt sustainable or bio-based fuels. Biodiesel can be blended and utilized in different concentrations. The most common blends are B5, B20, and B100. B5 blends contain 5% biodiesel, while B20 blends contain biodiesel between 6 and 20%, and B100 blends are pure biodiesel that is rarely used for transportation purposes. B20 blends must fulfill the quality guidelines outlined in ASTM D7467 as these are mostly used in automotive engines without many alterations. As per U.S. EPA 2024 reports, most of the vehicles in the country built after 2000 are allowed to use gasoline-ethanol blends which contain 15% ethanol by volume. In 2024, there are around 3,500 fueling stations in the U.S. that provide E-85 fuel. The increasing demand globally to replace fossil fuels with biodiesels and biofuels to mitigate the negative environmental impacts of fossil extraction and reduce GHG emissions is driving market growth.

The Biden administration has mandated the use of biofuels over the next three years, as per July 2023 announcements. The U.S. EPA has increased the amount of biofuel that oil refiners must utilize from 20.94 billion gallons in 2023 to 21.54 billion gallons in 2024. Further, the U.S. government support programs and policies like “Advanced Biofuel Feedstock Incentives”, “Advanced Biofuel Production Payments”, “Alternative Fuel Vehicle Research and Development Grants”, “Biodiesel Income Tax Credit”, “Biodiesel Mixture Excise Tax Credit”, and “Biodiesel and Ethanol Infrastructure Grants”, and many others are boosting the industry growth.

Improved processing techniques, such as transesterification, have made biodiesel production using vegetable oil, animal oil, and used cooking oil more efficient and cost-effective increasing the competitiveness of biodiesel in the fuel market. Algal biomass and waste oil are being used to make third-generation biofuels due to their faster growth and production, lack of need for land, and higher oil content. An emerging market of biodiesel is Sustainable Aviation Fuel (SAF) which reduces emissions by 80% compared to fossil jet fuel. It is fully compatible with existing jet engines and requires zero additional investment. As per the U.S. IEA June 2024 estimates, SAF production will increase by three times to reach 1.9 billion liters by the end of 2024. This would account for 0.53% of aviation fuel demand in 2024. The sustainable aviation fuels will contribute approximately 65% of the mitigation required for airlines to achieve net zero carbon emissions by 2050. Then, in May 2024, Neste partnered with VTTI to expand its SAF to its clients in Europe. The former has commissioned terminal capacity at the latter’s VTTI ETT terminal in the Netherlands to store and blend Neste’s proprietary “Sustainable Aviation Fuel”.

The biodiesel category is a niche market within the larger renewable energy and alternative fuel sectors.  It varies in size and characteristics depending on regional and national targets. In countries such as Brazil, effective programs are underway to promote Jatropha and Castor production for biodiesel production. Asia Pacific is the fastest growing market due to the easy availability of raw materials and increasing environmental concern, followed by North America and Europe. The availability of several dealers and suppliers makes the category highly fragmented. Along with key players like ADM and Renewable Energy Group, small-scale players also contribute to the category expansion. This category also faces competition from alternative fuels, such as ethanol and hydrogen for market share and consumer attention. Suppliers entering the market need to develop a comprehensive understanding of the industry, regulatory landscape, customer needs, and market dynamics to navigate effectively.

The cost of the category is volatile as it is influenced by factors such as feedstock costs, production volumes, supply, and demand. Additional costs include labor, equipment (tanks, pumps, and distillation units), quality assurance, transportation, and operational costs. In Q4 2023, crude oil prices skyrocketed and reached USD 100 - 150 per barrel due to the Israel-Hamas war crisis. The spike in prices was mainly attributed to a choke in a key transit route for seaborne cargo oil and gas from the Middle East region to the global markets. Further, factors such as the Red Sea crisis and increased ethanol demand pushed up biodiesel prices. As a result, biodiesel prices increased by 4 - 5% between November and March 2024. In March 2024, biodiesel FOB Busan prices rose by 1 - 2%, rising from USD 1,510 to 1,530 per MT.

Sourcing in this category involves the procurement and acquisition from multiple suppliers to meet the increasing demand. Strategies such as diversified feedstock availability, quality standards, sustainability criteria, pricing, and transportation play a crucial role. Developing a strong relationship with suppliers, engaging smallholders, and ensuring the consistency and traceability of the supply chain is key. Indonesia and Malaysia are the major producers of palm oil which is an important raw material. Algae are potential sources of biofuel. Used cooking oil is one of the economical sources for production.            

Biodiesel Procurement Intelligence Report Scope