Biodiesel and ethanol are the two most common types of biofuels available in the market. Biodiesel can be used as an alternative to petroleum diesel and is made from vegetable oils, animal fats, or recycled cooking oils through a chemical process known as transesterification. Ethanol is used as an alternative fuel for gasoline vehicles and is typically made from corn or sugarcane through a fermentation process. The global biofuels market has been gaining momentum in the recent years due to increasing environmental concerns regarding depleting fossil fuels and growing government initiatives to promote renewable and clean energy sources.
The global biofuels market is estimated to be valued at US$ 101.02 Bn in 2023 and is expected to exhibit a CAGR of 29.% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
Market Dynamics
Growing environmental concerns regarding depleting fossil fuels and increasing carbon emissions are expected to drive the growth of the biofuels market over the forecast period. According to the Intergovernmental Panel on Climate Change (IPCC), global carbon emissions need to be reduced by nearly 50% of the 2010 levels by 2030 to curb climate change and keep global warming under 1.5°C. Fossil fuels such as coal, oil, and natural gas account for around 80-90% of the total carbon emissions globally. Biofuels produce 70-90% less carbon emissions than gasoline or diesel and their widespread adoption can significantly reduce dependence on fossil fuels.
Furthermore, stringent government policies and regulations in various countries mandating the use of blended fuel containing certain percentage of biofuels is also expected to boost the demand for biofuels. For instance, the U.S. Renewable Fuel Standard requires fuel producers to blend increasing volumes of advanced and cellulosic biofuels into the nation’s gasoline and diesel supply each year. Brazil has made blending ethanol mandatory in gasoline. Certain countries in the European Union have also established minimum targets for blending biofuels in gasoline and diesel.
Segment Analysis
The biofuels market has three dominant segments – bioethanol, biodiesel and others. Among these, bioethanol segment dominates the market and holds around 55% share, driven by the extensive usage of ethanol in the automotive industry. Bioethanol can be directly used in vehicles with gasoline engines or prescribed blends such as E10 and more. The United States is one of the leading producers of bioethanol which is increasingly being used across transportation and energy sectors.
PEST Analysis
Political: Governments across countries are extensively supporting the biofuels industry through various policies and incentives. For instance, renewable fuel standards and biofuel blending mandates by US, EU, Brazil etc. are positively impacting the market growth.
Economic: Rising crude oil prices and need to cut-down dependence on fossil fuels are driving investments in biofuels. The total market size for 2024 is estimated to be US$ 101.02 Bn presenting lucrative opportunities.
Social: Growing awareness about environmental protection and sustainability has increased adoption of biofuels across end-use sectors. Organizations are also supporting social causes through carbon offset programs involving biofuels.
Technological: New technologies in feedstock processing and production methods are helping improve yields and reduce costs. Advancements in cellulosic ethanol and algae-based biofuels also hold promising growth prospects.
Key Takeaways
The Global Biofuels Market Size is expected to witness high growth during the forecast period of 2023 to 2030, supported by conducive government policies.
Regionally, the market in North America dominated in 2021 led by strong production and consumption of ethanol in the US. However, the Asia Pacific region is anticipated to emerge as the fastest growing market during the coming years led by China.
Key players operating in the biofuels market are Climate Finance Partners (United States), Carbon Credit Capital (United States), ClimateCare (United Kingdom), South Pole Group (Switzerland), Climate Trust Capital (United States), Carbon Clear (United Kingdom), EcoAct (France), First Climate (Germany), ClimatePartner (Germany), Ecosphere+ (United Kingdom), Verra (United States), Gold Standard (Switzerland), Natural Capital Partners (United Kingdom), Climate Friendly (Australia), Forest Carbon (United Kingdom). These companies are focusing on strategic collaborations and partnerships to strengthen their market positions globally.
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1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it