Biodiesel Market Size

Global Biodiesel Market size was valued at USD 42.69 billion in 2023 and is poised to grow from USD 44.91 billion in 2024 to USD 67.37 billion by 2032, growing at a CAGR of 5.2% during the forecast period (2025-2032).

The biodiesel industry is exhibiting strong growth fueled by a number of core drivers such as increasing environmental consciousness, stringent fuel emission laws, and the worldwide trend toward renewable energy. Governments of regions like North America, Europe, and Asia-Pacific are actively encouraging biodiesel through mandates and subsidies. For instance, the European Union's Renewable Energy Directive (RED II) obliges a minimum of 14% transport renewable energy by 2030, which is driving biodiesel demand. Likewise, the U.S. Renewable Fuel Standard (RFS) promotes blending biodiesel with conventional diesel for lowering greenhouse gas emissions. All these regulatory systems, in addition to increasing crude oil prices and demand for clean, domestically sourced fuel, are promoting biodiesel market growth.

On the restraint side, the biodiesel industry faces availability and volatility of feedstock concerns. Biodiesel is primarily derived from vegetable oils, animal fats, and recycled greases from production waste, all of which are required for consumption. This presents a food vs. fuel dilemma that creates pressure on policymakers to restrict biodiesel production. Besides, the higher price of biodiesel compared to petroleum diesel, especially where there is minimal support from subsidies, limits mass commercial acceptance.

Technology constraints on cold flow characteristics and engine compatibility in some cases also limit broader use, particularly under colder climates and older diesel engines. Against these limitations, opportunities for new growth are being fueled by technological developments and innovation in second- and third-generation biodiesel. Low-impact waste-based and algae-based biodiesel are gathering momentum since they have minimal environmental impact and do not disrupt the food chain significantly. Strategic collaborations between governments, oil majors, and biofuel start-ups are also fueling R&D efforts towards economically and operationally making biodiesel a reality. Overall, the biodiesel market will grow gradually, and the growing economies in Asia-Pacific and Latin America have untapped potential in the face of increasing energy demand and renewable uptake targets.

How AI is Transforming Biodiesel Market?

Artificial intelligence (AI) and the Internet of Things (IoT) are transforming the biodiesel sector significantly by making production more intelligent and efficient. AI models—e.g., neural networks and random forests—are utilized to predict fatty acid profiles, reaction parameters, and fuel properties (cetane number, cold filter plugging point) with high precision (R² 0.85–0.99). AI-enabled sensors are installed throughout plants to monitor temperature, pressure, and quality of feedstocks in real time, providing inputs to AI platforms that adjust process variables in real time for yields and energy savings.

Research in January 2025 in the journal Sustainable Energy Technologies and Assessments demonstrated that AI/ML-based algorithms optimized the transesterification of animal and plant fats with yields of over 90% consistently. The research emphasized the point that advanced AI algorithms are not only predictive but can actually be used to optimize process parameters such as temperature, catalyst loading, and reaction time in order to achieve maximum yield and quality of biodiesel. ANN and ANFIS models gave predictive efficiencies between R² = 0.85 to 0.99, a milestone in bringing high accuracy together with economic feasibility in commercial-scale biodiesel production.