Advanced Biofuel Market size is estimated to be valued at USD 178.97 Bn in 2025 and is expected to reach USD 2,000.75 Bn in 2032, exhibiting a compound annual growth rate (CAGR) of 41.18% from 2025 to 2032.
The global demand for energy is increasing with the increasing consumption owing to the rising population. The growing consumption has increased the need for more renewable and sustainable sources of energy. Advanced biofuel, which are known as second-generation biofuel, are used as a substitute for gasoline and diesel in the automotive industry. The low carbon emission has been the driving factor for the utilization of advanced biofuel in the automotive sector. The advanced biofuel mostly utilize the lignocellulose mass for their production.
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Description and Impact |
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US Inflation Reduction Act Biofuels Funding |
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European Union Renewable Energy Directive III (RED III) Implementation |
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Brazil’s Fuels of the Future Law |
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The emergence of artificial intelligence is changing the advanced biofuel industry by enhancing efficiency, scalability, and sustainability throughout the entire production lifecycle. From feedstock cultivation to conversion processes, AI technologies are adressing key challenges and innovating across the entire value chain.
In the US, government entities like the Department of Energy (DOE) is facilitating the adoption of AI and machine learning in bioenergy research, targeting genomics, automated experimentation, as well as other streamlined processes. With this kind of focus, he next generation biofuels are developed faster thanks to Artificial Intelligence and high performance computing models. Enhancing critical production stages such as bioreactor optimizationAI algorithms improves yield.
Real-time data like temperature and pH readings alongside enzyme concentration are dynamically polled for conditional operation adjustments resulting in maximized yield with reduced energy consumption and waste during maintenance intervals artificially intelligent sensor networks provide real time monitoring feeding predictive models allowing for up 30% reduction in predicted downtime improving operational reliability.
A notable industry example is Datavault AI’s use of supercomputing to optimize rapeseed (Brassica napus) feedstock through comparative genomics and multi-omics data. By refining metabolic pathways with AI, the company improves biomass consistency and yield, lowering production costs and helping advanced biofuels better compete against fossil fuels.
Overall, AI is a key enabler of enhanced efficiency, cost reduction, and environmental sustainability in the advanced biofuel market, driving the sector closer to a renewable energy future.
In terms of raw material, the algae segment is projected to hold the largest market share of 30.0% in 2025, owing to its high oil yield potential, rapid growth rate, and non-dependence on arable land. Algae biofuels has the potential to achieve environmental benefits by cultivating algae in saline, wastewater, or non-arable lands which would not compete with other food crops. This is why they are famous for scalable and eco-friendly biofuel production technologies. The camelia segment follows closely with a projected share of 25% due to high oil content and ability to grow in marginal soils.
Camelia based biofuels are gaining favor because of their lower greenhouse gas emissions as compared to fuels produced from other plants along with low cost of cultivation in subtropical regions. As jatropha is expected to contribute 15% of the market share, its long standing use in biodiesel diversification along with development of influence over semi-arid climates helps fulfill prediction.
Though there is tempered wide spread adoption due to issues regarding seed yield consistency and land use. Simple lignocellulose and complex lignocellulose parts are estimated to capture 12% and 13% of the market respectively due feeding off agricultural wastes, forestry waste or other biomass materials. While these have strong sustainability benefits, their conversion technologies still require significant capital investment along with process innovation making them far from commercial viability.
The others segment, which consists of less common feedstocks, is expected to contribute the remaining 5%. Even though they have less market share, niche feedstocks are being investigated for local and specialized uses in biofuel development. With growing attention on achieving carbon neutrality and securing energy resources around the world, biofuel producers are broadening their range of feedstocks. Algae and lignocellulosic feedstocks are receiving more investment due to advances in bioconversion technology as well as policies supporting next-generation biofuels.
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North America is projected to dominate the global advanced biofuel market with a market share of 35.00% in 2025, driven by robust regulatory frameworks, advanced biorefinery infrastructure, and widespread adoption of algae and lignocellulosic-based biofuels. The U.S. Renewable Fuel Standard (RFS) and California's Low Carbon Fuel Standard (LCFS) have accelerated investment in second-generation biofuel technologies, positioning the region at the forefront of global biofuel innovation.
Asia Pacific is anticipated to be the fastest growing region, capturing 17% of the market in 2025, fueled by rising energy demand, government-led biofuel initiatives, and abundant availability of biomass feedstocks. Countries like India, China, and Indonesia are actively developing infrastructure for lignocellulosic and algae-based fuel production to reduce fossil fuel dependency and meet clean energy targets.
The United States leads the North American market, backed by strong policy support, a mature biofuel industry, and active R&D in next-generation technologies. The country is home to several large-scale algae and lignocellulosic fuel projects, with major industry players collaborating with government and research institutions to drive commercialization and scalability.
India stands out in the Asia Pacific region as a rapidly growing market, driven by national bioenergy policies such as the National Bio-Energy Mission and SATAT initiative. Government incentives, public-private partnerships, and investments in agricultural residue-based biofuel production are accelerating the country's transition to sustainable energy.
| Report Coverage | Details | ||
|---|---|---|---|
| Base Year: | 2024 | Market Size in 2025: | USD 178.97 Bn |
| Historical Data for: | 2020 To 2024 | Forecast Period: | 2025 To 2032 |
| Forecast Period 2025 to 2032 CAGR: | 41.18% | 2032 Value Projection: | USD 2,000.75 Bn |
| Geographies covered: |
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| Segments covered: |
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| Companies covered: |
Abengoa Bioenergy, S.A., A2BE Carbon Capture, LLC, Algenol Biofuel, Chemtex group, Bankchak Petroleum, Clariant Produkte GmbH, Fiberight LLC, DuPont Industrial Biosciences, Fujian Zhongde Energy Co., Ltd, Inbicon, GranBio, INEOS Bio, POET-DSM Advanced Biofuel LLC, KiOR Inc., ZeaChem Inc., and Sundrop Fuels, Inc. |
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The key market drivers for the global advanced biofuel market is the rise in demand for cleaner Energy sources to reduce the carbon emissions. The initiatives taken by various governments have further helped the market of advanced biofuel to grow. The application of biofuel in the automotive industry has also impacted the growth of the advanced biofuel market.
Global advanced biofuel market is driven by factors such as supportive government regulations promoting the usage of second-generation biofuel in different end- use sectors, including manufacturing and energy sectors, and growing concern regarding sustainability of first-generation biofuel among stakeholders. Moreover, depleting carbon based fossil fuel is also promoting the usage of second generation biofuel among users.
Globally, the transportation industry is the largest emitter of green gases, due to the combustion of fossil fuels used in internal combustion engines. The transportation industry has a large proportion of private vehicles, such as four- and two-wheelers, as well as commercial vehicles.
Personal vehicles are mainly light vehicles and uses gasoline as a fuel. To limit greenhouse gas emissions, countries around the world have adopted standards, and more countries are mandated to blend gasoline with ethanol to reduce emissions and reduce dependency on fossil fuels.
Key blending missions driving global biofuel demand are established in North America, India, Brazil, Europe, and more. For example, the Indian government and petroleum marketing companies are actively promoting the blending of 10% ethanol in motor gasoline with the aim of gradually increasing the blending ratio to 20% by 2028. Similarly, Canada is likely to issue final regulations to announce its clean fuel standards program in the spring of 2022. The Clean Fuel Standards Program includes a national target of ethanol blends of an average of 15% by 2030.
In addition, in March 2022, the Brazilian Ministry of Economy announced that it would exempt ethanol imports from taxes, including other products, until the end of 2022 to alleviate inflationary pressures. This will promote the blending of ethanol into gasoline and will stimulate the market growth.
Lack of awareness regarding benefits of second-generation biofuel in Asian countries has negatively affected the growth of the advanced biofuel market in this region. Issues from alternative products such as fall of crude oil prices and limitation in processes are some of the major factors that are expected to hamper growth of the market over the forecast period.
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About Author
Vidyesh Swar is a seasoned Consultant with a diverse background in market research and business consulting. With over 6 years of experience, Vidyesh has established a strong reputation for his proficiency in market estimations, supplier landscape analysis, and market share assessments for tailored research solution. Using his deep industry knowledge and analytical skills, he provides valuable insights and strategic recommendations, enabling clients to make informed decisions and navigate complex business landscapes.
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