B5 Fuel Market – Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented By Feedstock (Vegetable Oils {Rapeseed Oil, Palm Oil}, Animal Fats {Poultry, Tallow}), By Application (Industrial Fuels, Transportation Fuels, Chemical Industry, Others), By Region, and By Competition 2021-2031F

Forecast Period	2027-2031
Market Size (2025)	USD 22.91 Billion
CAGR (2026-2031)	5.83%
Fastest Growing Segment	Industrial Fuels
Largest Market	Asia Pacific
Market Size (2031)	USD 32.19 Billion

Market Overview

The Global B5 Fuel Market will grow from USD 22.91 Billion in 2025 to USD 32.19 Billion by 2031 at a 5.83% CAGR. B5 fuel is defined as a specific biodiesel blend composed of 5% biomass-based diesel and 95% conventional petroleum diesel, utilized primarily in the transportation and industrial sectors to lower carbon footprints. The market is fundamentally supported by drivers such as stringent government mandates for greenhouse gas emission reductions and the fuel’s ability to function in existing diesel engines without mechanical modifications, which facilitates immediate adoption by fleet operators. According to Clean Fuels Alliance America, in 2025, the United States biomass-based diesel sector was reported to be on track to surpass 5 billion gallons in annual consumption, reflecting the strong demand generated by these regulatory frameworks and compliance requirements.

However, a significant challenge impeding broader market expansion is the volatility of feedstock availability and the associated price fluctuations of agricultural inputs like soybean oil and animal fats. This reliance on commodities that are also critical to the global food supply creates a vulnerability where supply chain disruptions or poor harvest yields can sharply increase production costs, thereby reducing the economic competitiveness of the fuel compared to unblended diesel. Consequently, the instability of raw material costs remains a persistent obstacle that creates uncertainty for producers and prevents more aggressive growth in the global B5 fuel sector.

Key Market Drivers

The expansion of government mandates and renewable fuel policies serves as the primary catalyst propelling the Global B5 Fuel Market. Regulatory frameworks worldwide are increasingly enforcing minimum biodiesel inclusion rates to achieve decarbonization targets, thereby securing a stable baseline demand for B5 blends. These legislative measures compel fuel suppliers to integrate biomass-based diesel into their product mix, ensuring consistent market uptake and mitigating risks associated with voluntary adoption. For instance, according to the USDA Foreign Agricultural Service, August 2025, in the 'Indonesia: Biofuels Annual' report, Indonesia raised its biodiesel blending mandate from 35% to 40% (B40), setting a high benchmark for consumption. Similarly, according to the USDA Foreign Agricultural Service, September 2025, in the 'Brazil: Biofuels Annual' report, Brazil increased its mandatory biodiesel blend to 15% (B15), reinforcing the global trend toward higher compulsory usage rates.

Concurrently, the rising global demand for low-carbon and eco-friendly energy solutions is significantly accelerating market growth. Fleet operators and industries are prioritizing fuels that offer immediate greenhouse gas reductions, leveraging the seamless compatibility of B5 with existing diesel engines. This shift towards sustainable consumption is evident in major production hubs as manufacturers scale operations to meet these needs. According to the U.S. Energy Information Administration (EIA), June 2025, total U.S. biofuels production reached a record 1.39 million barrels per day in 2024, reflecting the escalating manufacturing scale required to satisfy the growing appetite for cleaner energy alternatives across transportation and industrial sectors.

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Key Market Challenges

The primary challenge hampering the growth of the Global B5 Fuel Market is the volatility of feedstock availability and the resulting instability in raw material prices. Because the production of B5 fuel is heavily dependent on agricultural commodities like soybean oil and animal fats, the market is intrinsically linked to the dynamics of the global food supply chain. Unpredictable variables such as adverse weather conditions, harvest variations, and supply chain disruptions can cause sudden spikes in the cost of these inputs. This price instability creates a precarious economic environment for producers, who struggle to maintain competitive pricing strategies against conventional petroleum diesel, which often benefits from more established and consistent supply networks.

The magnitude of this dependency makes the market particularly sensitive to even minor fluctuations in agricultural output. According to Clean Fuels Alliance America, in 2024, the United States clean fuel production sector utilized more than one billion pounds of soybean oil per month. This massive volume of consumption indicates that a slight increase in commodity prices can disproportionately escalate operational costs. Consequently, manufacturers face uncertain profit margins and financial risks that discourage the long-term capital investment required for aggressive market expansion.

Key Market Trends

The market is undergoing a critical transition toward waste-derived and second-generation feedstocks, fundamentally altering procurement strategies to mitigate the reliance on food-based agricultural commodities. This shift is characterized by a concerted move among major producers to utilize used cooking oil (UCO), animal fats, and other residues, which offer superior greenhouse gas reduction profiles and insulation from volatile crop pricing cycles. By prioritizing these circular inputs, manufacturers are securing compliance with low-carbon fuel standards that increasingly penalize first-generation crop-based fuels. According to Neste, February 2025, in the 'Annual Report 2024', the share of waste and residue feedstocks averaged 90% of the company’s total renewable material inputs for the year, demonstrating the aggressive industry-wide realignment toward non-food resources.

Simultaneously, the market is experiencing a significant expansion through the increasing utilization of bio-blends in the maritime and off-highway sectors. As shipping companies and heavy industrial operators face mounting pressure to decarbonize operations immediately, they are adopting biodiesel blends as a drop-in solution that requires no retrofitting of existing engines. This trend is effectively diversifying demand centers beyond traditional on-road transportation, creating robust new revenue streams in global logistics hubs. According to the Maritime and Port Authority of Singapore (MPA), January 2025, in the '2024 Bunker Sales' report, the sales of biofuel blends in the Port of Singapore surged to 0.88 million tonnes in 2024, reflecting the maritime industry's rapid uptake of these sustainable fuel alternatives.

Segmental Insights

The Industrial Fuels segment is currently the fastest-growing component of the Global B5 Fuel Market. This trend is largely propelled by the industrial sector’s increasing adoption of decarbonization strategies to comply with stringent environmental standards. B5 fuel offers a critical advantage for heavy industry as it functions as a drop-in replacement for conventional diesel in power generators and construction machinery without requiring engine modifications. This compatibility allows industrial operators to seamlessly integrate renewable energy into their supply chains, reducing particulate emissions and carbon impact while maintaining operational continuity.

Regional Insights

Asia Pacific leads the Global B5 Fuel Market due to robust government mandates and the abundant availability of raw materials. The region benefits from substantial palm oil production in Indonesia and Malaysia, which secures a consistent feedstock supply for biodiesel blending. Regulatory bodies such as the Indonesian Ministry of Energy and Mineral Resources have implemented policies requiring minimum bio-content in diesel to reduce reliance on fossil fuel imports. This strong legislative support, combined with established agricultural infrastructure, drives the widespread adoption and distribution of blended fuels throughout the region.

Recent Developments

• In October 2025, the ENOC Group announced the progress of its new biodiesel production plant in the United Arab Emirates, which was scheduled to commence operations in the fourth quarter of the year. The Acting Chief Executive Officer of the company highlighted that the facility would possess an annual production capacity of 20 million litres of B5 fuel. This development was part of the group's strategy to support national sustainability goals and serve government and private sector clients. The plant was designed with the flexibility to scale up production to higher blends, such as B7 and B20, to meet future demand for environmentally friendly fuel.
• In November 2024, Sinanen Co., Ltd., a subsidiary of Sinanen Holdings Co., Ltd., launched the trade of "B5 diesel," a biodiesel fuel blend, in Japan. The company began this new business initiative at a facility in Chiba Prefecture, with plans to expand sales to other kerosene centers and oil squares across the Kanto region and eventually nationwide. The B5 diesel, which mixes 5% biodiesel derived from plants with standard diesel, was introduced to help customers reduce carbon dioxide emissions while complying with quality control standards. This launch aligned with the company's commitment to promoting renewable energy solutions and realizing a decarbonized society.
• In August 2024, Petro National Pty Ltd, in collaboration with ENEOS Australia Pty Ltd, launched a trial of B5 biodiesel blends in the Australian market. The two subsidiaries of ENEOS Corporation commenced sales of the fuel, composed of 5% biodiesel and 95% petroleum diesel, to commercial customers including a major bus fleet operator in New South Wales. This strategic move was designed to establish a reliable biodiesel distribution network and support the decarbonization of the commercial transport sector. The trial utilized locally sourced feedstock to produce a cleaner-burning fuel that remained compatible with existing diesel engines without requiring modifications.
• In June 2024, Idemitsu Kosan Co., Ltd. and Air Water Inc. initiated a collaborative project to supply B5 biodiesel fuel to the Kashima construction company in Hokkaido, Japan. This partnership involved blending Air Water's biodiesel, produced from locally collected used cooking oil, with Idemitsu's conventional diesel to create the B5 fuel. The initiative aimed to reduce carbon dioxide emissions from construction machinery and generators at Kashima's worksites by approximately 5% compared to standard diesel. This project marked a significant step in Idemitsu's broader strategy to establish supply chains for sustainable fuels and achieve carbon neutrality by utilizing regionally produced renewable energy sources.

Key Market Players

• Neste Oyj
• POET, LLC.
• ADM (Group) Limited
• Cosan S.A.
• Petróleo Brasileiro SA
• Exxon Mobil Corporation
• Shell plc
• BP p.l.c.
• ECB Group
• Chevron Corporation

By Feedstock	By Application	By Region
Vegetable Oils {Rapeseed Oil Palm Oil} Animal Fats {Poultry Tallow}	Industrial Fuels Transportation Fuels Chemical Industry Others	North America Europe Asia Pacific South America Middle East & Africa

Report Scope:

In this report, the Global B5 Fuel Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• B5 Fuel Market, By Feedstock:

• Vegetable Oils {Rapeseed Oil
• Palm Oil}
• Animal Fats {Poultry
• Tallow}

• B5 Fuel Market, By Application:

• Industrial Fuels
• Transportation Fuels
• Chemical Industry
• Others

• B5 Fuel Market, By Region:

• North America
• United States
• Canada
• Mexico
• Europe
• France
• United Kingdom
• Italy
• Germany
• Spain
• Asia Pacific
• China
• India
• Japan
• Australia
• South Korea
• South America
• Brazil
• Argentina
• Colombia
• Middle East & Africa
• South Africa
• Saudi Arabia
• UAE