Second Generation Biofuels Market Report 2026

The second generation biofuels market size has grown exponentially in recent years. It will grow from $13.42 billion in 2025 to $16.75 billion in 2026 at a compound annual growth rate (CAGR) of 24.8%. The growth in the historic period can be attributed to concerns over food based biofuels, environmental regulations, government biofuel mandates, availability of agricultural residues, research in biofuel technologies.

The second generation biofuels market size is expected to see exponential growth in the next few years. It will grow to $41.59 billion in 2030 at a compound annual growth rate (CAGR) of 25.5%. The growth in the forecast period can be attributed to net zero emission targets, demand for sustainable fuels, advancements in conversion efficiency, expansion of renewable energy policies, investments in bio-refineries. Major trends in the forecast period include rising use of non food feedstocks, growth in cellulosic ethanol production, expansion of advanced biodiesel technologies, increasing focus on low carbon fuels, scaling of thermochemical conversion processes.

The growing use of biofuels for their environmental benefits is expected to drive the expansion of the second-generation biofuels market in the coming years. Biofuels are liquid fuels derived from biological materials such as trees, agricultural residues, crops, or grasses. Their increasing adoption is attributed to their ability to substantially lower greenhouse gas emissions compared to fossil fuels, helping governments and industries achieve climate change mitigation and carbon reduction goals more effectively. The second-generation biofuels market facilitates this growth by producing fuels from non-food biomass and waste materials, which reduces lifecycle carbon emissions and environmental impact without competing with food resources. For example, in October 2025, the U.S. Energy Information Administration (EIA) reported that renewable diesel and other biofuels production capacity in the United States grew by just 391 million gallons per year in 2024. Consequently, the rising use of biofuels for environmental reasons is fueling the growth of the second-generation biofuels market.

Leading companies in the second-generation biofuels market are prioritizing strategic partnerships and collaborations, including joint ventures, to strengthen their competitive position. Joint ventures involve two or more companies forming a separate, jointly owned entity to pool resources, expertise, and investments to achieve common business or technological goals. For example, in April 2023, Compañía Española de Petróleos S.A. (CEPSA), a Spain-based oil and gas company, collaborated with Bio-Oils Huelva S.L.U., a Spain-based biodiesel producer, to create a joint venture focused on developing advanced second-generation biofuels. This initiative includes building the largest 2G biofuel production facility in southern Europe, featuring high-capacity processing, the use of non-food feedstocks, and substantially reduced lifecycle carbon emissions.

In September 2025, BTG Bioliquids BV, a Netherlands-based technology company specializing in fast pyrolysis systems for renewable fuels, partnered with NanosTech Technology & Innovations Ltd. to provide a comprehensive advanced biofuels solution. Through this collaboration, the companies aim to integrate their complementary technologies to scale the production of advanced, drop-in biofuels - enhancing capabilities for converting sustainable biomass into refinery-ready fuels such as sustainable aviation fuel (SAF), renewable diesel, and marine fuels, while expanding their joint presence in modular biorefinery deployment. NanosTech Technology & Innovations Ltd., a Canada-based technology company, specializes in proprietary Aquaprocessing (AQP) catalytic platforms that upgrade pyrolysis bio-oils into drop-in renewable fuel feedstocks.

Major companies operating in the second generation biofuels market are TotalEnergies SE, Reliance Industries Limited, INEOS Group Limited, The Andersons Inc., International Flavors & Fragrances Inc., Darling Ingredients Inc, DuPont Nutrition Biosciences ApS, Green Plains Inc, Flint Hills Resources LLC, Gevo Inc., Abengoa S.A., POET LLC, ICM Inc., Enerkem Inc., Advanced Enzyme Technologies Limited, Fulcrum BioEnergy Inc., LanzaTech Inc, Virent Energy Systems Inc., GranBio LLC, Algenol Biofuels Inc., Novamont S.p.A., Edeniq Inc., Mascoma Corporation, BlueFire Renewables Inc, Fiberight LLC., Clariant AG, Raizen S.A., Copersucar SA, Beta Renewables S.p.A., EcoCeres Inc.

North America was the largest region in the second-generation biofuels market in 2025. Asia-Pacific is expected to be the fastest-growing region in the forecast period. The regions covered in the second generation biofuels market report are Asia-Pacific, South East Asia, Western Europe, Eastern Europe, North America, South America, Middle East, Africa. The countries covered in the second generation biofuels market report are Australia, Brazil, China, France, Germany, India, Indonesia, Japan, Taiwan, Russia, South Korea, UK, USA, Canada, Italy, Spain.

The second generation biofuels market consists of sales of bio-synthetic natural gas, bioethanol, and bio methanol. Values in this market are ‘factory gate’ values, that is the value of goods sold by the manufacturers or creators of the goods, whether to other entities (including downstream manufacturers, wholesalers, distributors, and retailers) or directly to end customers. The value of goods in this market includes related services sold by the creators of the goods.

The market value is defined as the revenues that enterprises gain from the sale of goods and/or services within the specified market and geography through sales, grants, or donations in terms of the currency (in USD unless otherwise specified).

The revenues for a specified geography are consumption values that are revenues generated by organizations in the specified geography within the market, irrespective of where they are produced. It does not include revenues from resales along the supply chain, either further along the supply chain or as part of other products.

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