U.S. BIOFUELS MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2025-2032)

Market Size and Forecast – 2025 to 2032

U.S. Biofuels Market is estimated to be valued at USD 38.32 Bn in 2025 and is expected to reach USD 65.25 Bn in 2032, exhibiting a compound annual growth rate (CAGR) of 7.9% from 2025 to 2032.

Key Takeaways

• Based on Type, the Ethanol segment leads the market holding an estimated largest share in 2025, driven by widespread adoption and supportive policies.
• Based on Feedstock, the Corn segment is projected to dominate with the highest share in the market in 2025, due to its extensive use in ethanol production.
• Based on Application, the Transportation segment leads the market holding an estimated share of 35% in 2025, owing to decarbonizing property and sustainable alternative to fossil fuels.
• Based on End-Use Industry, the Power Generation segment is expected to hold the largest share of the U.S. biofuel market in 2025, owing to rising demand for cleaner energy.

Market Overview

Biofuels are fuels that are produced directly or indirectly from organic matter including plant materials and animal waste. The most common types of biofuels are ethanol and biodiesel that are used as alternatives or supplements to petroleum-based transportation fuels. Biofuels help to reduce dependence on imported petroleum, decrease greenhouse gas emissions, and stimulate rural economic development.

The U.S. is the largest producer and consumer of biofuels globally. The production and use of biofuels in the U.S. is driven by the renewable fuel standard (RFS) program and various federal and state policies supporting renewable energy goals and greenhouse gas (GHG) emissions reductions.

Current Events and Its Impact

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Import Export of Biofuels in U.S.

In 2022, the United States produced approximately 18.7 billion gallons of biofuels and consumed around 17.6 billion gallons. The country was a net exporter of biofuels, with exports exceeding imports by about 1.0 billion gallons. Fuel ethanol made up the majority of both the total and net biofuel exports.

End User Feedback on Biofuels

• Performance and Compatibility
• Many users report that certain biofuels, especially higher blends, can cause engine performance issues or require vehicle modifications.
• Compatibility with existing engines and infrastructure remains a concern.
• Energy Content and Efficiency
• Some biofuels have lower energy content per gallon compared to gasoline or diesel, leading to reduced fuel efficiency.
• Users notice a decrease in mileage with certain biofuel blends.

Unmet Needs in Biofuels

• Improved Engine Compatibility
• Development of biofuels that can seamlessly work with current vehicles without requiring modifications.
• Enhanced Distribution Infrastructure
• Better logistics and infrastructure to ensure consistent availability nationwide.
• Higher Energy Density Biofuels
• Biofuels with energy content closer to or exceeding that of traditional fuels to improve fuel efficiency.

Segmental Insights

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U.S. Biofuels Market Insights, By Application -  Transportation Dominates the Overall Market

In terms of application, the transportation segment is projected to contribute 35% share of the market in 2025, owing to decarbonizing and sustainable alternative to fossil fuel. An advanced biofuels can reduce greenhouse gas emission from road, air, and maritime transport. They also allow for the use of existing vehicle infrastructure, making them a complementary solution to electric vehicles. Biodiesel in its pure, unblended form causes far less damage than petroleum diesel if spilled or released to the environment. It is safer than petroleum diesel because it is less combustible. The flashpoint for biodiesel is higher than 130°C, compared with about 52°C for petroleum diesel. Transportation fuels are made from biomass through biochemical or thermochemical processes. Known as biofuels, these include ethanol, methanol, biodiesel, biocrude, and methane. Ethanol is the most widely used biofuel today.

In 2023, biofuels made up about 7% of U.S. transportation fuel demand, which totaled 791 billion liters. By 2030, biofuel demand is projected to rise to 8%, while total fuel demand is expected to drop to around 688 billion liters. This is further propelling the biofuels market growth.

U.S. Biofuels Market Insights, By Type -  Ethanol Acquires the Largest Market Share Owing to Its Widespread Adoption and Supportive Policies

In terms of type, the ethanol segment is projected to contribute largest share of the market in 2025, driven by widespread adoption and supportive policies. Ethanol has a crucial role to play in biofuel due to its renewable nature, ability to reduce emissions, and positive impacts on engine performance. It's produced from biomass, offering a sustainable alternative to fossil fuels, and it can be blended with gasoline to increase octane, improve engine efficiency, and reduce greenhouse gas emissions. Ethanol Plants have created more than 55,810 U.S. jobs were directly associated with the ethanol industry, with an additional 258,089 indirect and induced jobs supported across all sectors of the economy. The industry created USD 28.3 billion in household income and contributed USD 53 billion to the nation’s gross domestic product.  This is further propelling the U.S. Biofuel market demand.

U.S. Biofuels Market Insights, By Feedstock -  Corn Holds the Largest Market Share Ethanol Production

In terms of feedstock, the corn segment is projected to contribute the highest share in the market in 2025, due to extensive use in ethanol production in the U.S. where corn-based ethanol benefits from supportive policies such as the Renewable Fuel Standard (RFS) and established agricultural infrastructure. Corn as feedstock is used for biofuel production due to its high starch content which can easily be converted into ethanol through fermentation. Corn-based biofuels are popular due to their potential to reduce greenhouse gas emissions, their biodegradability, and clean ignition, enhancing energy security. 

In October 2024, BASF launched xarvio BIOENERGY, a program that reduces, monitors, and records carbon intensity in U.S. corn used for ethanol production. It provides growers, agronomists, and biorefineries with a reliable, comprehensive end-to-end solution.

U.S. Biofuels Market Insights, By End-use Industry -  Power Generation Holds the Dominant Market Share

In terms of end use industry, the power generation segment is projected to contribute the largest share of the U.S. biofuels market in 2025, owing to the demand foe cleaner energy sources. The rising demand for decarbonization, rising energy needs in emerging economies, supportive policies and incentives, technological advancements, and corporate sustainability initiatives. Biofuels are seen as a sustainable and low-emission alternative to fossil fuels, contributing to a cleaner energy future. Over 84% of global biomethane is already committed to electricity generation, with an additional 10% allocated to road transport. This is further adding to the U.S. biofuels market share.

Northeast Region

1. Biodiesel Production: The Northeast region has witnessed significant growth in biodiesel production due to state policies and incentives promoting renewable fuels. Several biodiesel plants are operating in this region, producing biodiesel primarily from soybean oil and waste cooking oil.
2. Ethanol Production: Ethanol production in the Northeast, particularly in states like New York and Pennsylvania, has been steadily increasing. Government initiatives and mandates have encouraged the use of ethanol-blended gasoline.
3. Feedstock: In the Northeast, feedstock for biofuel production primarily comes from agricultural crops such as soybeans, corn, and switchgrass, as well as recycled cooking oil and animal fats

Midwest Region

1. Corn Ethanol: The Midwest is often referred to as the "Corn Belt" due to its significant corn production. As a result, the region is a major hub for corn ethanol production, with states like Iowa, Illinois, and Nebraska.
2. Cellulosic Ethanol: In addition to corn ethanol, the Midwest has been investing in cellulosic ethanol production, utilizing non-food crops like switchgrass and agricultural residues
3. Biodiesel: Some states in the Midwest also have a substantial biodiesel production industry, using soybean oil and other feedstocks

South Region

1. Biodiesel and Bioenergy Crops: The South has been a hotspot for bioenergy crop production, such as sugarcane and energy crops like miscanthus. States like Louisiana and Florida have biodiesel production facilities that use various feedstocks including palm oil.
2. Cellulosic Ethanol: The South has also been exploring cellulosic ethanol production, particularly using woody biomass
3. Regulations: The South has diverse state-level regulations and incentives that impact the biofuels market, and it has been influenced by the renewable fuel standard (RFS) at the federal level

Western Region

1. Biodiesel and Renewable Diesel: The Western region, including California, has been a significant market for biodiesel and renewable diesel due to its focus on reducing carbon emissions and promoting clean transportation fuels
2. Algal Biofuels: Research and development of algal biofuels have been prominent in the Western region, especially in states with favorable climate conditions for algae growth
3. Government Policies: California, in particular, has aggressive policies and targets for renewable fuels, including the low carbon fuel standard (LCFS) that boosts innovation in the biofuels sector

U.S. Biofuels Market Trends

• Consolidation and Vertical Integration: Major industry consolidation has occurred recently as a result of mergers between major food processing, renewable fuel, and agribusiness businesses seeking to achieve vertical integration. Companies are acquiring biofuel producers to secure supply and distribution channels. Consolidation improves economies of scale in production and market share but can also reduce competitiveness between players. This is an important market structural trend as federal policies come up for renewal over the next decade.
• Next-Generation Biofuels: Research, development and commercialization efforts on next-generation biofuels are accelerating. These fuels derived from cellulosic biomass and biological processing aim to further improve sustainability and emissions benefits as compared to first-generation biofuels. Emerging technologies include converting biomass to hydrocarbons through gasification and pyrolysis or using biochemical, fermentation and metabolic engineering approaches The Energy Independence and Security Act (EISA) of 2007 mandates a tripling in U.S. biofuel use to 36 billion gallons by 2022.
• Biofuels Industry Digitization: The biofuels industry is increasingly adopting digital technologies to improve operational efficiency, productivity and profitability. For example, agriculture biotech firms provide digital analytics to farmers to optimize crop yields and land-use for biofuels feedstock cultivation. Biorefineries are leveraging automation, sensors and predictive modeling to improve process controls and reliability. Supply chain management software connects feedstock suppliers, biofuel producers and distribution partners. Overall data utilization along the value chain is increasing. In 2022, with the help of digital transformation initiatives, the biofuel industry is projected to produce 175 billion liters of fuel with a projected annual growth rate of 7%.
• Circular Economy Transition: There is growing focus on integrating biofuels into a broader circular economy transition across agriculture, chemical manufacturing, plastics recycling and the automotive industry. This aims to establish more sustainable production and consumption systems by reusing waste and residue resources. Public-private partnerships are focused on creating regional bioeconomy clusters anchored around biorefineries that can serve as hubs for circular processes. Policy measures also incentivize circular biofuels approaches.

U.S. Biofuels Market Drivers

Supportive Government Policies and Incentives

: The major driver for U.S. biofuels market growth is supportive federal and state level government policies and incentives. The key policy is the renewable fuel standard (RFS) program that mandates minimum volumes for renewable fuels to replace or reduce petroleum-based transportation fuel consumption. The RFS has spurred significant investment in biofuels production infrastructure and provides long-term market certainty for the industry. Many states have additional biofuel mandates, tax incentives and grant programs, further supporting market expansion. On July 12, 2023, the EPA established the applicable volumes and percentage standards for 2023 through 2025 for cellulosic biofuel, biomass-based diesel, advanced biofuel, and renewable fuel

Energy Security and Environmental Goals

: Another major factor driving biofuels adoption is their ability to enhance U.S. energy security and meet environmental goals. Biofuels reduce reliance on imported petroleum which is a key strategic objective. Domestically produced biofuels also support national energy independence and rural economic development. Most biofuels burn cleaner than gasoline and diesel that assists in meeting federal and state-level emissions reduction and carbon intensity targets. Life cycle assessments show biofuels can significantly lower greenhouse gas emissions as compared to fossil fuels.

Advances in Biofuels Production Technologies

: Ongoing advances in biofuels production technologies and yield improvements are decreasing costs and improving efficiency makes biofuels more competitive. For example, corn ethanol yields per acre have increased around 

50%

 over the last decade through agricultural biotech innovations like drought-tolerant and pest-resistant seeds. Process innovations at biorefineries like corn fractionation, metal catalysts and cogeneration are also reducing energy and water use. For advanced cellulosic biofuels, enzyme and pretreatment innovations are improving conversion yields from lignocellulose biomass feedstocks. Renewable Energy group (REG) is the leading biodiesel producer by production capacity in the U.S. As of January 2023, REG had an annual capacity of 432 million gallons. REG operates eight biodiesel plants, the largest of which is located in Washington State.

Growth of Renewable Diesel and Sustainable Aviation Fuel

: Renewable diesel can serve as a drop-in replacement for petroleum diesel, and is increasingly being used for ground transportation. SAF has the potential to substantially reduce lifecycle greenhouse gas emissions from aviation but requires further technological improvements and policy support to scale up. Major market players are actively investing in SAF.

U.S. Biofuels Market Opportunities

Leveraging Advanced Feedstocks: There is significant opportunity to leverage advanced biofuels feedstocks beyond conventional crops like corn and soybean. Cellulosic feedstocks like agricultural residues, forestry materials and energy crops like switchgrass can expand production without impacting food supplies. Waste-based feedstocks like municipal solid waste, plastics, and used cooking oil are another attractive option as these provide additional waste management benefits.

Expanding Availability of Biofuels: While ethanol is widely available at fueling stations nationwide, growth opportunities exist in expanding infrastructure and distribution for biodiesel and newer fuels like renewable diesel and sustainable aviation fuel (SAF). This requires further build-out of biofuel storage capacity at transportation hubs and multimodal facilities. Partnerships with petroleum companies and fuel providers will increase availability at retail fueling sites. Broader distribution infrastructure will support increased consumer adoption and fleet utilization. In March 2025, USDA Allocates $537 Million to Expand Biofuel Infrastructure Across 29 States under the Higher Blends Infrastructure Incentive Program (HBIIP), funding 543 projects across 29 states. This initiative aims to enhance access to higher ethanol and biodiesel blends, such as E15, E85, and B20, by assisting fuel retailers in upgrading storage tanks and dispensers.

Market Report Scope

U.S. Biofuels Market Report Coverage

Analyst opinion (Expert Opinion)

• In early 2025, the expiration of the $1-per-gallon Biodiesel Tax Credit (BTC) led to a sharp decline in renewable diesel production, with output plummeting to approximately 130,000 barrels per day in February—a substantial drop from previous levels. This downturn forced facilities like Braya Renewable Fuels to halt operations, underscoring the sector's vulnerability to policy shifts.
• Simultaneously, the backlog of over 160 small refinery exemption (SRE) requests under the Renewable Fuel Standard (RFS) has created market uncertainty. The potential approval of these waivers could disrupt Renewable Identification Number (RIN) markets, affecting compliance costs and investment decisions.
• Despite these challenges, the sector exhibits resilience. Ethanol production remains robust, averaging 1.026 million barrels per day over a four-week period ending May 23, 2025, bolstered by strong exports to countries like Canada, the UK, and India. Moreover, the EPA's approval of year-round E15 sales in eight Midwestern states, effective April 2025, is poised to enhance domestic ethanol consumption.
• However, the sector's future hinges on policy clarity. The transition from the BTC to the 45Z Clean Fuel Production Tax Credit has introduced uncertainty, particularly for producers relying on soybean and canola oils, as the new credit structure may offer lower incentives. Additionally, the influx of imported feedstocks, such as used cooking oil from China, has sparked protests from U.S. farmers, who argue that these imports undermine domestic biofuel crop markets.

Recent Developments

• In June 2025, Aggreko, a global leader in energy solutions, has announced the successful transition of four of its U.S. Facilities to HVO Biofuel, Achieving Up to 60% CO₂ Emissions Reduction. This initiative is part of Aggreko's broader "Energizing Change" sustainability campaign, which also includes plans for rooftop solar installations to achieve 100% renewable electricity at service centers.
• In May 2025, Argus Media expanded its Argus Open Markets (AOM) platform to include U.S. biodiesel, enhancing real-time price transparency in the New York Harbor market. This initiative is marking the platform's first U.S. biodiesel transaction, highlighting the growing U.S. biofuels demand and emphasized the platform's role in supporting market transparency and compliance.
• In March 2025, U.S. biofuel production capacity experienced a modest increase, reaching 25 billion gallons per year, according to the U.S. Energy Information Administration (EIA). This marks a 10 million gallon per year (MMgy) rise from February and a 1.274-billion-gallon increase compared to March 2024. Ethanol capacity grew to 18.436 billion gallons, up by 10 MMgy from the previous month and 551 MMgy year-over-year.

Market Segmentation

• By Type
  • Ethanol
  • Biodiesel
  • Biogas
  • Green Diesel
  • Others
• By Feedstock
  • Corn
  • Soybean
  • Vegetable Oils
  • Animal Fats
  • Agricultural Residues
  • Food Wastes
  • Others
• By Application
  • Transportation
  • Power Generation
  • Heating
  • Others
• By End-use Industry
  • Transportation
  • Power Generation
  • Agriculture
  • Commercial
  • Residential
  • Others
• Company Profiles
  • Archer Daniels Midland
  • Renewable Energy Group
  • ValerEnergy Corp.
  • Darling Ingredients Inc.
  • Cargill Inc.
  • POET LLC
  • Green Plains Inc.
  • Flint Hills Resources
  • Marathon Petroleum Corporation
  • HollyFrontier Corporation
  • Bunge Limited
  • Crimson Renewable Energy LP
  • Aemetis Inc.
  • AltIngredients, Inc.
  • REG Life Sciences LLC
  • Louis Dreyfus Company
  • Pacific Ethanol, Inc.
  • CHS Inc.
  • Orochem Technologies Inc.
  • HerBX

Sources

Primary Research Interviews from the following stakeholders

Stakeholders

• Interviews with biofuel producers, refining engineers, sustainability heads, policy makers, energy distribution managers, procurement leads, and agricultural co-operative managers across key biofuel regions in the U.S.

Specific stakeholders

• Biofuel operations heads at ethanol and biodiesel plants (e.g., POET, Valero Renewable Fuels, Archer Daniels Midland)
• Procurement and logistics managers at fuel blending terminals and transportation companies
• Regulatory affairs and compliance lead at state-level energy departments (e.g., California Air Resources Board, Iowa Department of Natural Resources)
• Heads of R&D at universities and federal labs focused on energy (e.g., National Renewable Energy Laboratory, Argonne National Laboratory)
• Sustainability and ESG officers at major oil and energy companies (e.g., Chevron Renewable Energy Group)
• Farm association leaders and cooperative executives involved in feedstock supply (e.g., corn, soy, and cellulosic biomass producers)
• Fleet managers at logistics and commercial transport firms using B20 and E85 fuels
• Executives at renewable natural gas and advanced biofuel project developers

Databases

• U.S. Energy Information Administration (EIA) – Biofuels Production and Consumption Statistics
• U.S. Department of Agriculture (USDA) – Bioenergy and Feedstock Reports
• U.S. Environmental Protection Agency (EPA) – Renewable Fuel Standard (RFS) Data
• International Energy Agency (IEA) – Bioenergy Statistics
• U.S. Census Bureau – Trade and Export Data for Biofuels
• UN Comtrade – Global Biofuel Trade
• Bioenergy Europe Statistical Reports
• U.S. Geological Survey (USGS) – Biomass Potential Assessments
• Federal Energy Regulatory Commission (FERC) – Renewable Energy Datasets

Magazines

• Biofuels International
• Ethanol Producer Magazine
• Biodiesel Magazine
• Biomass Magazine
• Renewable Energy World
• Energy Monitor
• Green Car Reports
• Modern Farmer (for agri-biofuel cross-sector trends)
• Chemical Engineering Magazine

Journals

• Bioenergy Research (Springer)
• Bioresource Technology (Elsevier)
• Renewable Energy (Elsevier)
• Biotechnology for Biofuels
• Energy Policy
• Fuel (Elsevier)
• Journal of Cleaner Production
• Applied Energy

Newspapers

• The Wall Street Journal – Energy & Commodities Section
• The New York Times – Climate and Energy
• Financial Times – Renewable Fuels Focus
• The Washington Post – Environment and Industry
• Des Moines Register – Agriculture and Corn Belt Developments
• Houston Chronicle – Biofuel and Refining Sector
• Reuters – Energy and Commodities
• Bloomberg – Green Energy and Biofuels Reports

Associations

• Renewable Fuels Association (RFA)
• American Coalition for Ethanol (ACE)
• National Biodiesel Board (Clean Fuels Alliance America)
• U.S. Grains Council
• Advanced Biofuels Association (ABFA)
• National Renewable Energy Laboratory (NREL)
• Algae Biomass Organization
• Biomass Power Association
• U.S. Department of Energy – Bioenergy Technologies Office (BETO)

Public Domain Sources

• U.S. Energy Information Administration (EIA) – Annual Energy Outlook
• U.S. Department of Agriculture (USDA) – Economic Research Service Reports
• U.S. Environmental Protection Agency (EPA) – Renewable Identification Number (RIN) Data
• Federal Aviation Administration (FAA) – Sustainable Aviation Fuel Initiatives
• U.S. Department of Energy – Energy Efficiency and Renewable Energy (EERE)
• State Government Reports – e.g., California Low Carbon Fuel Standard Reports
• Congressional Research Service – Biofuels Legislative Briefings
• Library of Congress – Research on Agricultural-Based Fuels
• U.S. International Trade Commission – Biofuel Tariff and Import Data
• National Academies of Sciences – Reports on Renewable Liquid Fuels

Proprietary Elements

• CMI Data Analytics Tool, and Proprietary CMI Existing Repository of information for last 8 years

*Definition: U.S. biofuels market refers to the production, distribution and consumption of liquid transportation fuels derived from renewable biological sources within the U.S. The most common biofuels are ethanol and biodiesel that serve as alternatives or additives to petroleum-based gasoline and diesel fuels. Biofuels help to decrease reliance on fossil fuels, reduce lifecycle carbon emissions, and support rural economies. The U.S. is the top global producer and consumer of biofuels, led by policy incentives like the Renewable Fuel Standard. Key players in the market include agriculture companies, biotechnology firms, oil refiners and renewable fuel producers.