Liquid Biofuels Market – Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented By Product (Biodiesel, Bioethanol, Others), By Feedstock (Sugar Crops, Starch Crops, Vegetable Oils, Animal Fats, Others), By Process (Fermentation, Transesterification, and Others), By Application (Transportation, Power Generation, Heat), By Region, and By Competition 2021-2031F

Forecast Period	2027-2031
Market Size (2025)	USD 90.08 Billion
CAGR (2026-2031)	6.95%
Fastest Growing Segment	Transesterification
Largest Market	North America
Market Size (2031)	USD 134.81 Billion

Market Overview

The Global Liquid Biofuels Market will grow from USD 90.08 Billion in 2025 to USD 134.81 Billion by 2031 at a 6.95% CAGR. Liquid biofuels are renewable transportation fuels derived principally from biomass resources such as agricultural crops and organic waste that function as substitutes or additives for fossil-based gasoline and diesel. The expansion of this global industry is fundamentally driven by government mandates for carbon reduction and strategic initiatives to enhance energy security through domestic fuel production. These regulatory frameworks create a stable demand baseline while high crude oil prices further incentivize the adoption of alternative energy sources to diversify national fuel mixes. According to the Renewable Fuels Association, in 2024, the United States ethanol industry exported a record 1.91 billion gallons to international partners, demonstrating the robust demand within the global trading landscape.

However, a primary challenge impeding broader market growth is the volatility and availability of feedstock supplies. The sector relies heavily on agricultural commodities like corn and vegetable oils which places fuel production in direct competition with food markets and leads to fluctuating input costs. This economic instability creates investment risks and regulatory hesitation regarding land usage which can ultimately restrict the necessary capacity expansion required to meet future global energy targets.

Key Market Drivers

Implementation of stringent government blending mandates serves as the foundational pillar for the Global Liquid Biofuels Market, compelling distributors to integrate renewable components into transportation mixes. Regulatory bodies are increasingly enforcing higher incorporation rates to meet decarbonization pledges, effectively guaranteeing stable consumption volumes regardless of fossil fuel price fluctuations. Brazil’s RenovaBio policy exemplifies this mechanism by establishing aggressive decarbonization goals to secure domestic market growth. According to the Brazilian National Energy Policy Council, December 2024, in the approved RenovaBio targets, the government set a mandatory acquisition goal of 40.39 million Decarbonization Credits for 2025 to align with long-term reduction paths. This regulatory certainty incentivizes massive production scale-up across major producing regions. According to the Renewable Fuels Association, November 2025, in the '2025 Ethanol Industry Outlook', U.S. ethanol production was projected to reach a record 16.3 billion gallons in 2025, underscoring the direct correlation between legislative support and industrial output capacity.

Growing commercial adoption of Sustainable Aviation Fuel (SAF) represents the second critical driver, expanding the industry beyond road transport. As the aviation sector faces intense pressure to reduce its carbon footprint, airlines are accelerating the procurement of bio-based jet fuels derived from feedstocks like used cooking oil. This shift creates a high-value demand segment that complements traditional biodiesel and ethanol markets. According to the International Air Transport Association, December 2024, in its year-end production estimates, global SAF production volumes reached 1 million tonnes in 2024, representing a twofold increase from the previous year. This rapid expansion highlights how the aviation industry's strategic pivot toward liquid biofuels is driving new infrastructure investment and diversifying revenue streams for producers worldwide.

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Key Market Challenges

The volatility and availability of feedstock supplies stands as a primary obstacle directly hampering the expansion of the global liquid biofuels market. Because the industry depends heavily on agricultural commodities such as corn and vegetable oils, fuel production costs are inextricably linked to the fluctuating dynamics of the food market. When supply tightens or competition for food resources intensifies, input prices spike unpredictably. This economic instability erodes profit margins and creates a high-risk environment that deters the long-term capital investment necessary for building new processing infrastructure.

Furthermore, this reliance on arable crops triggers significant regulatory hesitation regarding land usage, which further restricts capacity development. Policymakers often delay or limit support for biofuel projects due to concerns that energy crop cultivation will displace food production. This constraint directly stifles output growth in key regions. For instance, according to the European Biodiesel Board, in 2024, the production of FAME biodiesel in the region stagnated at 9.8 million tonnes, a plateau attributed to the regulatory uncertainty and political scrutiny surrounding crop-based feedstocks. Such stagnation demonstrates how feedstock limitations physically cap the industry's ability to scale up to meet global demand.

Key Market Trends

The rising adoption of Hydrotreated Vegetable Oil (HVO) is fundamentally altering the market landscape by offering a superior "drop-in" alternative to traditional fatty acid methyl ester (FAME) biodiesel. Unlike FAME, which faces technical blending limits due to engine compatibility issues, HVO is chemically identical to petroleum diesel, allowing for 100% substitution in existing heavy-duty fleets without infrastructure modification. This technical advantage is driving a significant shift in production strategies as producers pivot towards hydrogenation technologies to capture high-margin demand segments. According to the European Biodiesel Board, January 2025, in its '2024 Statistical Report', HVO production volumes in the European region reached approximately 5.6 million tonnes in 2024, highlighting the consistent growth of this advanced fuel category amidst broader market stagnation.

Concurrently, the transition to advanced second-generation lignocellulosic feedstocks is gaining momentum as a direct strategic response to the volatility and ethical concerns associated with food-based crops. Industry leaders are increasingly commercializing technologies that convert agricultural residues, such as sugarcane bagasse, into high-yield biofuels, thereby decoupling energy production from global food commodity cycles. This shift not only mitigates feedstock price risks but also unlocks vast new raw material supply chains that were previously considered waste. According to Bioenergy International, July 2024, in the article 'Brazil's Raízen launches second-generation ethanol plant', the company inaugurated a new industrial-scale facility with a production capacity of 82 million liters of cellulosic ethanol annually, validating the commercial viability of processing waste biomass at scale.

Segmental Insights

The Transesterification segment is projected to experience the fastest growth in the Global Liquid Biofuels Market, driven by its essential role in producing biodiesel. This chemical process efficiently converts renewable feedstocks, such as vegetable oils and animal fats, into fatty acid methyl esters. The segment’s expansion is heavily supported by regulatory incentives from bodies like the Environmental Protection Agency, which mandate the integration of low-carbon fuels into the transportation sector. Additionally, the process's adaptability to diverse raw materials makes it the preferred technology for addressing the surging global demand for sustainable diesel alternatives.

Regional Insights

North America dominates the Global Liquid Biofuels Market, supported by strong regulatory frameworks and established production capabilities. The region's leadership is anchored by the Renewable Fuel Standard (RFS), overseen by the Environmental Protection Agency (EPA), which mandates the blending of renewable fuels into the national transportation supply. This policy creates stable demand, fostering significant investment in refining infrastructure. Additionally, the United States leverages its extensive agricultural output, particularly corn and soy, to secure a reliable feedstock supply, cementing its status as the primary hub for liquid biofuel production and consumption.

Recent Developments

• In October 2024, A.P. Moller-Maersk and Danone announced a partnership to decarbonize the global shipping of food products through the utilization of low-emission liquid biofuels. Under this collaboration, the logistics company transports the multinational food corporation's cargo using its specialized service that relies on biodiesel or bio-methanol derived exclusively from waste feedstocks. This initiative is projected to reduce greenhouse gas emissions by more than 40% compared to conventional fossil fuels. The agreement aligns with both companies' commitments to science-based targets and net-zero emissions, highlighting the increasing adoption of sustainable liquid biofuels in managing global maritime logistics chains.
• In August 2024, TotalEnergies Marine Fuels achieved a commercial milestone by completing its first refueling operation using 100% bio-based fuel (B100) in Singapore. The operation involved supplying 700 metric tons of Used Cooking Oil Methyl Ester-based biofuel to a vehicle carrier owned by Hyundai Glovis. This development represented the company's strategic expansion of its low-carbon marine fuel solutions beyond blended options, demonstrating the viability of using neat biofuels in existing vessel engines to significantly reduce greenhouse gas emissions. The fuel transfer was facilitated by a specialized chemical bunker tanker to ensure efficient and safe delivery to the customer.
• In May 2024, Neste entered into a supply agreement with the Singapore Airlines Group to provide 1,000 tonnes of neat sustainable aviation fuel. This collaboration marked a significant operational milestone as it involved the first direct delivery of the renewable fuel to the fuel hydrant system at Changi Airport. The fuel, produced at the company's local refinery, was blended with conventional jet fuel to meet safety specifications before being uploaded onto aircraft. This initiative directly supports the airline group's sustainability target to incorporate a minimum of 5% renewable fuel in its total fuel uplift by the year 2030.
• In March 2024, TotalEnergies and China Petroleum and Chemical Corporation (SINOPEC) established a strategic partnership to co-develop a sustainable aviation fuel production unit in China. The collaboration involves constructing a facility with an annual capacity of 230,000 tons at a refinery owned by the Chinese energy giant. The joint venture aims to process circular economy feedstocks, including local waste cooking oils and animal fats, to manufacture sustainable aviation fuel. This project leverages SINOPEC’s proprietary production technology alongside the European major’s technical and operational expertise to build a robust supply chain and serve the growing Asian demand for renewable aviation solutions.

Key Market Players

• Archer Daniels Midland Company
• Bangchak Corporation Public Company Limited
• Renewable Energy Group, Inc.
• CropEnergies AG
• Green Plains Inc.
• Valero Energy Corporation
• POET, LLC
• Algenol Biofuels, Inc.
• Fulcrum BioEnergy, Inc.
• Emami Agrotech Limited

By Product	By Feedstock	By Process	By Application	By Region
Biodiesel Bioethanol Others	Sugar Crops Starch Crops Vegetable Oils Animal Fats Others	Fermentation Transesterification and Others	Transportation Power Generation Heat	North America Europe Asia Pacific South America Middle East & Africa

Report Scope:

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

• Liquid Biofuels Market, By Product:

• Biodiesel
• Bioethanol
• Others

• Liquid Biofuels Market, By Feedstock:

• Sugar Crops
• Starch Crops
• Vegetable Oils
• Animal Fats
• Others

• Liquid Biofuels Market, By Process:

• Fermentation
• Transesterification
• and Others

• Liquid Biofuels Market, By Application:

• Transportation
• Power Generation
• Heat

• Liquid Biofuels 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