Biodiesel market projected to hit $101.35 billion by 2035

The global biodiesel market is set to grow from $56.78 billion in 2026 to $101.35 billion by 2035, according to a new market outlook. Growth is being driven by tighter blend mandates, refinery conversions and rising demand for lower-carbon fuels across Europe and Asia-Pacific.

Why it matters: - Biodiesel is becoming a bigger part of the fuel mix as governments push transport decarbonization and energy-security goals. - The market outlook points to durable demand from mandated blending, not just voluntary adoption. - Refinery conversions are also reshaping the industry by repurposing existing fossil-fuel assets for renewable fuel output.

What happened: - The global biodiesel market was valued at $53.24 billion in 2025. - The market is projected to rise to $56.78 billion in 2026 and reach $101.35 billion by 2035. - The forecast implies a 6.65% compound annual growth rate over the period. - The growth outlook is tied to blend mandates in Europe and Southeast Asia and to capital spending on refinery conversions by integrated oil companies. - Indonesia's B40 blending obligation and the European Union's Renewable Energy Directive III are key demand anchors.

The details: - Biodiesel is a renewable fuel made from fatty acid methyl esters through transesterification of vegetable oils, animal fats or recycled cooking oils with alcohol. - The fuel can replace petroleum diesel or be blended with it, and it offers lower greenhouse gas emissions, lower particulate matter and improved lubricity. - Vegetable oils accounted for 58.6% of the market in 2025, reflecting the strength of palm, soybean and rapeseed supply chains. - Trans-esterification held a 65.2% share in 2025, while hydrotreated vegetable oil is growing faster as refiners move toward drop-in renewable diesel and sustainable aviation fuel. - B5 and below led with a 44.2% share in 2025. - Transportation-road applications held a 63.2% share in 2025. - Europe held a 34.8% share of the market in 2025. - North America held a 24.2% share in 2025. - Asia-Pacific is the fastest-growing region, with a projected 10.82% CAGR through 2035. - Indonesia consumed more than 11 million kilolitres of biodiesel in 2024 under B35, and B40 took effect for 2025. - India's revised National Biofuel Policy targets 5% biodiesel blending by 2028 and 10% by 2032. - Brazil's RenovaBio programme continues to expand blending requirements. - The European Union's Deforestation Regulation took effect in June 2025 and requires full traceability for palm-oil-based biodiesel. - Germany's greenhouse-gas quota system and France's TIRIB incentive framework support Europe's lead. - The U.S. Renewable Fuel Standard and California's Low Carbon Fuel Standard support North American demand. - Neste, Shell, TotalEnergies and Eni have increased hydroprocessing investments as the market shifts toward higher-value renewable diesel and sustainable aviation fuel. - Shell, TotalEnergies and Eni collectively committed more than $6 billion from 2023 to 2025 to expand hydroprocessing capacity. - Digital feedstock traceability platforms can help producers earn GHG-quota premiums of 15% to 20%.

Between the lines: - The market is moving away from conventional biodiesel-only plants and toward flexible refinery systems that can produce multiple low-carbon fuels. - Feedstock access is becoming as important as production capacity. - Waste oils and tallow are growing faster than virgin vegetable oils because they fit circular-economy rules and lower-carbon scoring systems. - Compliance costs are rising for palm-oil-based supply chains as regulators demand tighter traceability. - The shift suggests the strongest players will be those with integrated feedstock sourcing, certification systems and refinery flexibility.

What's next: - Hydrotreated vegetable oil capacity is expected to keep expanding as refiners seek drop-in diesel and sustainable aviation fuel output. - Waste-oil collection is likely to scale further in Asia, adding low-carbon feedstock supply. - Policy alignment around carbon-intensity standards in Europe, California and Canada should continue to favor lower-emission fuels. - Marine bunkering and aviation fuel applications are expected to create additional demand channels. - The report expects feedstock diversification could supply up to 40% of global biodiesel input by 2035. - Sustainable aviation fuel demand could reach 15 billion liters by 2035.

The bottom line: - Biodiesel is shifting from a blending commodity to a multi-product low-carbon fuel platform, with policy mandates and refinery conversions driving the next decade of growth.