Market Trends of Biodiesel Industry
The Transportation Segment Expected to Dominate the Market
- The transportation segment is anticipated to lead the market during the forecast period due to increasing demand for eco-friendly fuels, such as biodiesel, to reduce carbon emissions.
- The awareness among people regarding environmental safety is increasing as the transportation sector emits carbon in the atmosphere that pollutes the air and causes breathing problems and heart diseases. Biodiesel is a renewable diesel replacement utilized in existing diesel engines without modification. It increases the demand for biodiesel in the transportation segment.
- The United States is a significant consumer of biodiesel. Some local, state, and federal government agencies use biodiesel blends (B20) in fleets of school and transit buses, snowplows, garbage trucks, mail trucks, and military vehicles. Fuelling stations that sell biodiesel blends of B20 or higher to the public are available in almost every state.
- According to the Energy Information Administration (EIA), biodiesel production in the United States was approximately 1,699 million gallons in 2023. Biodiesel can be used in standard diesel engines as a standalone fuel or in combination with petroleum.
- In January 2023, the US Department of Energy (DOE) announced that it would invest USD 118 million in 17 initiatives to accelerate the development of sustainable biofuels for America's transportation and manufacturing requirements. The selected projects will boost domestic production of biofuels and bioproducts by pushing biorefinery development from pre-pilot to demonstration to provide sustainable fuels that minimize emissions associated with fossil fuels.
- The global biodiesel consumption was around 65.86 million metric tonnes in 2023. The growing favorable policies for the production and supply of biodiesel increase biodiesel utilization in the transportation segment thus driving growth in the segment during the forecast period.
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Asia-Pacific to Witness a Significant Growth
- The Asia-Pacific region is likely to expand significantly during the forecast period. The region is one of the largest consumers of biodiesel across the world. In 2023, the region consumed around 259 thousand barrels of oil equivalent daily and produced 320 thousand barrels daily. Countries such as India, China, Indonesia, and Vietnam support using biodiesel to reduce greenhouse gas emissions.
- The governments of several countries in this region are implementing laws to support biodiesel fuel. For instance, Indonesia became the first country to mandate a B30 blend of palm-based fuel. The government allocated 9.59 million kiloliters of fatty acid methyl ester (FAME) for the B30 mandate in 2020.
- In January 2022, Malaysia planned to implement a mandate to adopt the B20 palm oil biofuel program by the year-end. The mandate involves manufacturing biofuel with a 20% palm oil component known as B20 for the transport sector.
- Increasing government support will likely boost the production and consumption of biodiesel in the region. According to the Ministry of Energy and Mineral Resources (Indonesia), Indonesia's biodiesel production reached 13.15 million kiloliters in 2023.
- The number of biodiesel plants is also increasing in the region. For instance, in July 2024, Euglena, Petronas and Eni planned to construct and operate a biofuel production plant in Malaysia. The commercial plant will be in Johor and is scheduled to begin operations by H2 of 2028. The plant is expected to produce sustainable aviation fuel and next-generation biodiesel fuel, including renewable diesel.
- Hence, with the increasing blend percentage in countries such as Indonesia, Malaysia, Thailand, and India, the Asia-Pacific region is expected to witness the highest growth rate during the forecast period.
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