Europe Biofuel Market 2025 – 2034

Reports Description

The Europe Biofuel Market was valued at USD 26.75 Billion in 2025 and is expected to reach USD 46.3 Billion by 2034 at a CAGR of 5.73% during the forecast period 2025 to 2034.

Overview

Europe’s biofuel supply still comes from conventional feedstocks such as vegetable oils, sugar crops, and coarse grains, advanced biofuels and sustainable aviation fuels (SAF) are rapidly emerging as important growth areas. As the top country in Europe for biofuels, both in terms of production and consumption, Germany shows the way, followed by key contributors France, the Netherlands, Sweden, and the UK.

The governments of all these countries are continuing to bolster blending mandates and intensify decarbonization targets, leading fuel suppliers to increase the amount of biofuel used in conventional fuel blends. Moreover, both private and public sectors are increasing capital investments to upgrade existing facilities, develop new feedstock pre-treatment technology, and expand advanced biofuel production. With this combination of regulatory and policy support, ambitious climate goals, and technological advancement, Europe’s biofuel market should continue to grow steadily in the years ahead.

Key Trends & Drivers

The European Biofuel Market Trends have tremendous growth opportunities due to several reasons:

• Environmental Commitments: The European Union has created legally binding climate neutrality targets for 2050, which include intermediate targets through the Fit-for-55 package, which requires at least a 55% reduction in greenhouse gas (GHG) emissions by 2030, compared to 1990 levels. These ambitious commitments encourage nations and industries alike to ramp up their biofuels use as part of a more comprehensive approach with decarbonisation of transport, aviation, and heavy industry, and replacing fossil fuels.

• Energy Security: In light of greater geopolitical uncertainty that may affect supply, the REPowerEU plan has been established to reduce levels of regional dependence on Russian fossil fuels. The objectives in the plan focus on accelerating the deployment of all renewable energy sources, including biofuels and biomethane, to meaningfully enhance energy security, diversify supply chains, and reduce the exposure of Member States development pathways to supply shocks of fossil fuels. In addition, increasing domestic production of biofuels decreases reliance on and need for imported crude oil and, in turn, fossil natural gas, decreasing unpredictability and overall stabilizing fuel supply.

• Decarbonizing Industries: Sectors such as trucking, maritime shipping, and aviation will start looking to drop-in fuels like biodiesel, bioethanol, sustainable aviation fuel (SAF), and biomethane to reduce emissions. Time will tell if biofuels can provide cleaner energy and high-grade emissions savings; however, one advantage is that they are clean energy options that can be used in existing engines and distribution networks without significant changes. They provide an instant and cost-effective option to lower carbon emissions without experiencing the long lead time to replace entire fleets when avoiding full electrification.

• Technological Development: Many companies in Europe are rapidly scaling production of advanced biofuels from next-generation feedstocks. These advanced feedstocks offer a more acceptable sustainable practice and have less indirect land use change (ILUC) risk than more common food and feed crops. The commercial viability of advanced biofuels is being helped by advances in feedstock pre-treatment, bioconversion technologies, and integrated biorefinery processes and will be essential for Europe’s future low-carbon fuel mix.

Restraints

• Higher Initial Costs: The cost of biofuel production is also higher than the cost of fossil fuel refineries. This is because feedstock prices, technological processes, sustainability certification requirements, and other factors increase costs. Without government subsidies and mandatory blending quotas, producers see little profit, and fuel buyers often opt for cheaper fossil fuel sources. Developing new biorefineries or feedstock pre-treatment facilities requires large capital expenditures that burden most biofuel producers, especially small- to medium-sized members.

• Feedstock availability risk: Today, almost 50% of biodiesel in the EU market is produced from rapeseed oil. With nearly 40% of vegetable oils delivered to biodiesel producers, the biofuels market is a major outlet for the vegetable oils industry. The production of biofuels is particularly susceptible to the feedstock availability risk, such as sunflower oil, rapeseed, used cooking oil, etc. Transportation and geopolitical disruptions have effectively blocked exports of key feedstock, resulting in uncertainty, shortages, and price shocks affecting biofuel producers. Further, overreliance on food or feed crops raises issues of sustainability and food security and further underlines the need to develop more diverse, resilient supply chains as biofuel production gains a larger scale and becomes more stable.

Key Threat

The European Biofuel Market has several primary threats that will influence its profitability and future development. Some of the threats are:

• Complexity of regulation: The EU renewable energy directives include multiple sustainability criteria, restrictions on indirect land use change (ILUC), and regulatory requirements that clarify which feedstock can be counted towards renewable energy obligations. Producers are required to provide traceability for all raw materials utilized in the production of our fuels and show verified greenhouse gas savings and report into the Union Database. While the regulations are meant to improve sustainability, reduce fraud, and protect our environment, they create an overly cumbersome administrative burden, and in instances in which feedstock suppliers or producers cannot meet the requisite criteria, they hinder the scale of production.

Opportunities

• Pure Biodiesel Blending: Along with Germany, the UK, the Netherlands, & Sweden, several other countries in the EU continue to expand higher rate biodiesel blending mandates and allow pure biodiesel or B100 blending for road transport. This growth supports emissions reduction targets in similar ways while providing a reliable demand for sustainable biodiesel producers. Increased interest from consumers & fleet operators for cleaner diesel options is also spurring investment in light of investment in domestic biodiesel production capacity and improvements in supply chain processes.

• Sustainable Aviation Fuel (SAF): The aviation industry is responsible for a significant share of EU transport emissions. To achieve climate neutrality objectives, the EU is requiring that airlines steadily increase the share of SAF in jet fuel. SAF is made from advanced feedstocks including waste oils and algae, resulting in significant GHG savings relative to conventional kerosene. This will therefore create sizable opportunities for biofuel producers to fulfil the rapidly expanding SAF market in Europe.

• Feedstock Innovation: The next wave of growth in Europe’s biofuel market will likely come from innovative and sustainable feedstocks like lignocellulosic biomass, municipal solid waste, and microalgae. These sources directly compete with no food production and take up land with little impact. Accordingly, investment in R&D and integrated biorefineries without food production feedstocks is now flourishing, primarily due to several EU grants and private industrial partnerships. Even so, feedstock diversification when it comes to biofuels keeps risk low while still enabling economies of scale to support sustainable biofuels.

• Growing mergers & acquisitions and expansions: The key players operating in the market are increasingly adopting the new growth strategies, such as mergers & acquisitions, collaborations, expansions, joint ventures, new alliances, and strategic alliances, to increase their business operations and revenues. For instance, in June BP plc decided to scale expansion for new European sustainable aviation fuel and renewable diesel plants across the European Union. Through this new expansion, BP is aiming to enhance its market presence and business operations across the European Union. Thus, such aggressive growth strategies by the key players operating in the market are expected to create lucrative opportunities for the market during the forecast period.

Category Wise Insights

By Type

• Biodiesel (Largest share): Biodiesel has the largest share of Europe’s biofuels market because there is demand for it from heavy-duty vehicles, agriculture, and construction, and there is strong policy support, such as blending mandates and capacity for domestic production.

• Ethanol: Ethanol is produced from sugar crops or grains and is mostly produced in mid-Q1. It can be blended with gasoline for passenger vehicles via a flex-fuel car. Ethanol is a relatively small share, and in Europe, fossil diesel has a bigger role in transport. Therefore, ethanol plays a smaller role.

• Other Types: Includes emerging fuels like biomethanol, bio-butanol, and renewable diesel. These fuels are still niche but are gaining ground in specific applications, including aviation, shipping, and the supply of chemical feedstocks.

By Feedstock

• Vegetable Oil (maximum share): Vegetable oils are Europe’s leading biodiesel feedstock with strong home agriculture systems and mature processing industries that utilize existing domestic supply chains for oil seeds, primarily rapeseed oil, and processing oil products.

• Coarse Grain: Coarse-grain feedstocks such as corn and wheat are used in the ethanol production process. Ethanol has historically enjoyed wide adoption for blending in countries with strong grain farming, but its broader acceptance has been stalled by indirect land use change and sustainability issues.

• Sugar Crop: Sugar crops, consisting of sugar beets and sugar cane, are processed to produce bioethanol. There is relatively little global growth opportunity as the sugar crops face geographic growing situation limitations and other competitive food crops. Therefore, they are recognized for their potential role in biofuels, yet they will not be a dominant biofuels feedstock category.

• Other Feedstocks: Other feedstocks refer to advanced biofuel inputs, such as lignocellulosic biomass, municipal waste, algae, and animal fats. More likely to see large-scale expansion as sustainability benefits grow, and among EU targets is to dramatically increase advanced biofuels by 2030.

Impact of Latest Tariff Policies

The European biofuel industry is rapidly evolving. Tariff policies have serious implications for international markets and trade, and prices. The increasing tariff on feedstocks and biofuels is distorting the agriculture markets increasing the overall production cost, which in turn is affecting the location and development of the global industry. International policy disciplines are needed to prevent a repeat of global policy failure.

The EU is particularly moving on some material policy drivers that have changed the market, including the Renewable Energy Directives (RED II & III). The Fit-for-55 package and the national legislation have set greater blending mandates for biodiesel and bioethanol. Lastly, the supply chain changes caused by Russia’s invasion of Ukraine have changed the feedstock supply chains and accelerated the transition to advanced and secondary biofuels.

Report Scope

Regional Perspective

The European Biofuel Market can be divided across different regions such as the UK, France, Germany, Spain, Italy, Sweden, Russia, and the Rest of Europe:

• Germany – The Market Leader: Germany is the uncontested leader for biofuels production in Europe, particularly through biodiesel and blending mandates. There are some ongoing policy changes to ultimately phase out food crop biofuels by the end of 2030 to help improve sustainability as well as energy security.

• France – Significant Biodiesel Market: France is ranked second, almost solely because of its biodiesel production. While an abundance of domestic capacity using rapeseed oil exists (which is offered considerable support in energy policy), and some is made up of ethanol, biofuels remain a significant source for coveted markets. National energy policies will increase bioethanol blending, as well as promote next-generation biofuels as an essential component to decarbonising transport.

• Sweden – Leading the Charge with Green Transport: Sweden has led the world in high biodiesel and ethanol blending rates while promoting advanced biofuels, biogas, biodiesel, and HVO fuels through supportive policy measures to prioritize decarbonization and address climate change’s impact in the transport sector.

• United Kingdom – SAF and Biodiesel Growth: In the UK, blending mandates under the Renewable Transport Fuel Obligation are implemented as they shift policy support away from biofuels and into sustainable aviation fuels (SAF) as well as waste-derived biodiesel policy support, while working to implement net-zero targets by 2050.

Key Developments

• In June 2025, Neste reached an agreement with Amazon to provide 7,500 metric tons of neat Neste MY Sustainable Aviation Fuel™ for its Amazon Air cargo operations at San Francisco International Airport and Ontario International Airport through the end of 2025.

• In December 2024, Portugal’s Galp Energia started a new production facility for biodiesel and biojet fuel from waste in an industrial-scale unit. Through this new production facility, the company aims to enhance its market presence across Europe and adjoining regions.

• In July 2023, Equilon Enterprises LLC and Green Plains Inc. made a technological collaboration to leverage the Fiber Conversion Technology (SFCT) with Fluid Quip Technologies’ precision separation and processing technology. This strategic partnership is expected to add significant value to Green Plains Inc.’s biorefinery platform.

Leading Players

The European Biofuel Market is highly competitive, with a large number of product providers in Europe. Some of the key players in the market include:

• UPM-Kymmene Oyj
• Neste Oyj
• Preem AB
• SunPine AB
• Svenska Cellulosa AB (SCA)
• Galp Energia SGPS SA
• Green Fuel Nordic Oy
• Beta Renewables SpA
• Biomethanol Chemie Nederland BV
• Borregaard ASA
• Others

These firms apply a sequence of strategies to enter the market, including innovations, mergers, and acquisitions, as well as collaboration.

The Europe Biofuel Market is segmented as follows:

By Type

• Biodiesel
• Ethanol
• Other Types

By Feedstock

• Coarse Grain
• Sugar Crop
• Vegetable Oil
• Other Feedstocks

Regional Coverage:

Europe

• Germany
• France
• U.K.
• Russia
• Italy
• Spain
• Netherlands
• Rest of Europe