Biofuel Market Forecasts from 2023 to 2028

The global biofuel market is estimated to grow at a CAGR of 9.72% to reach US$295.069 billion in 2028 from US$154.187 billion in 2021.

The need for cleaner fuel and tightening government rules for the desulfurization of petroleum products are expected to boost the biofuel market. In addition, the world is under pressure to switch to various alternative energy sources due to the declining supply of fossil fuels, which has increased interest in the use of biofuels. When using biofuel instead of diesel, the particulate matter is decreased by 10% and the carbon monoxide is lowered by 11%. According to an Environmental Protection Agency assessment, one of the most crucial aspects in the development of biofuel is its capacity to minimize air pollution.

According to OECD-FAO Agricultural Outlook, 2021-2030, by 2030, it is anticipated that worldwide ethanol output will reach 132 billion litres, while global biodiesel production will rise to 50 billion litres, mostly due to an increase in Indonesia's mandate over the early projection years. Different countries have different feedstocks for their biofuel products. Even if the sustainability aspect of biofuel production is becoming more and more sensitive in many nations, conventional feedstocks will still dominate global biofuel production.

Growth Drivers of the Market

The US Environmental Protection Agency launched a new project in January 2022 to streamline the evaluation of chemicals and biofuels that may considerably replace fossil fuels with greater GHG emissions, giving the biofuels business a considerable boost. Like this, the US Department of Energy announced a 30% Alternative Fuel Infrastructure Tax Credit for fuelling infrastructure constructed on or after December 2022 that uses natural gas, propane, liquefied hydrogen, electricity, E85, or diesel fuel mixes containing at least 20% biodiesel. Such financial incentives would probably help the biofuel sector grow. Additionally, the Canadian government planned to boost carbon taxes by CAD 10 to CAD 50 per ton of emissions starting in April 2022, encouraging broader use of biofuels that produce fewer greenhouse gases.

Governments throughout the world are putting sustainable development plans into action, and as a result, they are helping to create biofuels, which may be profitable for producers. In the United States, there have been different schemes and subsidies, including biomass crop support programs, federal crop insurance subsidies, and commodities credit businesses. The Investment Plan for Europe, the European Structural and Investment (ESI) Funds, the EU Horizon 2020 research and innovation framework program, Mission Innovation (MI), the Innovfin Energy Demo Projects (EDP) facility, and the Innovation Fund are just a few of the funding initiatives that the European Union has established.

Initiatives and strategies to boost the market growth.

Countries all around the globe have set standards to encourage the use of renewable energy sources to reduce greenhouse gas emissions. The affirmation of biofuels like ethanol as a greener energy source for transportation might eventually result in the development of a biofuel market. For instance, the United States generated 15, 4 billion gallons of fuel ethanol in 2022, making it the world's top producer of biofuel, according to the Renewable Fuels Association (RFA). In North America, India, Brazil, Europe, Indonesia, Malaysia, and other places, primary blending requirements are established that drive the world's need for biofuels.

For instance, according to the NITI Aayog report, by 2025, 20% ethanol must be blended into petrol in India. In Brazil, the current order for ethanol blending is 27%, while a commission of 35% biodiesel blending is anticipated to begin in 2023 in Indonesia. Such actions draw attention to the rising usage of biofuels globally. To further reduce inflationary pressures, Brazil's Ministry of Economy announced in March 2022 the removal of import duties on ethanol as well as other items. The ethanol blend in petrol is anticipated to increase as a result, driving the biofuel market.

Additionally, in partnership with the Panamanian government, SGP BioEnergy stated in 2022 that build the largest biofuel production and distribution hub in the world in Panama, with a daily capacity of 180, 000 barrels. In a similar vein, the US Department of Energy awarded USD 118 million for 17 projects in 2023 that aim to grow ethanol and other biofuels to support the country's transportation and manufacturing needs. Such patterns are anticipated to boost the demand for biofuels. As a result of the reasons, the ethanol sector is anticipated to expand significantly in the biofuels market over the projected year.

The United States in North America is an Expected Dominant Market

The USA biofuels market is projected to grow. This growth is primarily attributed due to the rising demand for biofuels in different sectors, including transportation and energy consumption, the USA biofuel industry is expected to grow over the next years. The US Energy Information Administration estimated that by the end of 2020, the US has the capacity to produce 38, 000 barrels of renewable diesel per day, or close to 0.6 billion gallons per year (gal/y). This capacity increased by 2.4 billion gal/yr by several ongoing projects; another 1.8 billion gal/yr would be added by proposed and announced projects by 2024. By the end of 2024, the US would produce 5.1 billion gal/yr (330, 000 b/d) of renewable diesel. Additionally, the U.S. Energy Information Administration estimates that the country produced 17.55 billion gallons of biofuel in 2021.

Further, the US Environmental Protection Agency launched a new project in January 2022 to streamline the evaluation of chemicals and biofuels that can considerably replace fossil fuels with greater GHG emissions, giving the biofuels business a considerable boost. Like this, the US Department of Energy announced a 30% Alternative Fuel Infrastructure Tax Credit for fueling infrastructure constructed on or after December 2022 that uses natural gas, propane, liquefied hydrogen, electricity, E85, or diesel fuel mixes containing at least 20% biodiesel. Such financial incentives would probably help the biofuel sector grow in the United States.

Key Developments

• In April 2023, Técnicas Reunidas was given a contract by Cepsa for the engineering, procurement, and construction management assistance of the second-generation (2G) biofuels facility in southern Europe. Used cooking oils and agricultural waste will serve as the feedstock for this new facility. It is equipped with two pre-treatment facilities and has a flexible production capacity of about 500, 000 tons of sustainable aviation fuel (SAF) and renewable diesel for use in land, sea, and air transportation.
• In January 2021, The B20 palm oil biofuel was implemented nationally by the end of 2022, the Malaysian Palm Oil Board declared. The need to produce B20 biofuel for the transportation sector, which contains 20% palm oil, was initially implemented in January 2021 but had delays because of the pandemic.
• In January 2023, Zagros Petrochemical Company and China's Dalian Petrochemical Company signed a contract to build Iran's first ethanol plant, a methanol-to-synthetic ethanol conversion facility. The factory would be operational in three years and have a 300, 000-tonne annual output capacity.

Segmentation:

By Production Technology

• First Generation
• Second Generation
• Third Generation
• Fourth Generation

By Biomass Source

• Wood fuels
• Agrofuels
• Municipal by-products

By State

• Solid
• Liquid
• Gas

By Geography

• North America
• United States
• Canada
• Mexico
• South America
• Brazil
• Argentina
• Others
• Europe
• United Kingdom
• Germany
• France
• Spain
• Italy
• Others
• Middle East and Africa
• Saudi Arabia
• UAE
• Israel
• Others
• Asia Pacific
• Japan
• China
• India
• South Korea
• Indonesia
• Thailand
• Others