Green Diesel Market

Green Diesel Market Size

Green Diesel Market is projected to exhibit a Compound Annual Growth Rate (CAGR) of 12.1% during the forecast span from 2024 to 2034. In 2023, the market size was assessed at USD 33.3 billion and is projected to reach USD 117.2 billion by the completion of 2034.

Green diesel, also known as renewable diesel, is a renewable-based fuel that can replace traditional petroleum diesel. Unlike biodiesel, which needs to be mixed with petroleum diesel, green diesel is chemically similar to fossil diesel and can be used in existing diesel engines without modifications. It is derived from a variety of feedstocks, including vegetable oils, animal fats, used cooking oil (UCO), and algae. Production processes include hydrotreating, which converts fats and oils into hydrocarbons similar to conventional diesel, and pyrolysis, which decomposes organic materials at high temperatures without oxygen. Green diesel significantly decreases greenhouse gas emissions by up to 80% compared to regular diesel and lowers emissions of particulates, sulfur oxides, and nitrogen oxides, improving air quality. It has the same energy content, cetane number, and cold flow characteristics as petroleum diesel, making it suitable for use in transportation, such as vehicles, trucks, buses, ships, and planes.

Market Highlights

Green Diesel Market is anticipated to grow at a robust rate, with projections indicating a 12.1% compound annual growth rate (CAGR) between 2024 and 2034

Green Diesel Market is projected to reach USD 117.2 billion in the forecast period. Environmental concerns and global efforts to reduce greenhouse gas emissions are driving the demand for green diesel, which emerges as a sustainable option with significantly lower emissions than standard diesel. Governments worldwide are promoting the shift to green diesel through tax benefits, subsidies, and blending regulations, increasing its economic value. Advancements in production efficiency technology are driving down prices, while ongoing research into innovative feedstocks ensures a reliable and sustainable supply chain, leading to a surge in the demand for green diesel. The compatibility of green diesel with existing infrastructure is also streamlining its adoption process.

Source: Fatpos Global

Green Diesel Market Segmentation

Blended Biodiesel segment is anticipated to lead due to its wider capability

Green Diesel Market is segmented based on Type into Blended Biodiesel, and Pure Biodiesel. The Blended Biodiesel segment is expected to lead the market due to its broad compatibility with existing diesel engines, enabling smooth adoption without the need for modifications. Many regions mandate blending biodiesel with conventional fuel to reduce carbon emissions, ensuring steady market demand. Its cost-effectiveness is another key factor, as it can be produced more affordably than pure biodiesel, appealing to both producers and consumers and driving market expansion. Additionally, blended biodiesel offers competitive performance and emission benefits comparable to or better than regular diesel, depending on the blend ratios and feedstocks used.

Hydro-processing segment will dominate the industry due to its ability to handle diverse feedstocks, and produce high-quality fuel.

Green Diesel Market is classified based on Production Technology into Hydro-processing, Gasification, and Pyrolysis. The Hydro-processing segment is expected to dominate the green diesel market due to its ability to handle diverse feedstocks, including vegetable oils, animal fats, and waste oils. This adaptability offers a robust and diverse supply chain, reducing dependency on specific feedstocks and increasing production consistency. Hydro-processing produces high-quality green diesel that meets strict environmental regulations by effectively decreasing sulfur, nitrogen, and other components, resulting in cleaner emissions than regular fuel. This technology is compatible with current diesel engines and infrastructure, allowing it to fit into existing fuel systems without requiring expensive modifications. Furthermore, hydro-processing technology has evolved over decades to be scalable and efficient, leading to reduced production costs and improved competitiveness.

Source: Fatpos Global

Market Dynamics

Growth Drivers

Environmental regulations are Critical to Boost the Adoption of Green Diesel

Environmental regulations play a crucial role in driving the growth of the green diesel market. Governments worldwide are implementing measures to reduce greenhouse gas emissions from transportation fuels and are encouraging the use of cleaner alternatives such as green diesel. Organizations must comply with these regulations to avoid penalties, leading to an increased demand for green diesel that meets strict emission standards. Governments also offer incentives such as tax breaks and subsidies to promote the adoption of renewable fuels, making green diesel economically attractive. International agreements like the Paris Agreement emphasize the importance of cleaner fuel options and aim to improve regulatory frameworks that support green diesel. These policies create a favorable environment for green diesel by encouraging investment, fostering innovation in cleaner technologies, and helping meet global climate change commitments, ultimately driving the growth of the green diesel market.

Technological Advancements Will Aid the Market

Technological advancements contribute significantly to the growth of the green diesel market. Improvements in production technology, such as hydro-processing and advanced biofuel refining, have greatly increased efficiency, lowered production costs, and increased yields, thus improving the economic feasibility of green diesel. New technologies have expanded the types of materials that can be used to produce green diesel, including vegetable oils, animal fats, waste oils, algae, and other plant-based materials. This variety reduces risks in the supply chain and promotes sustainability. Advanced technologies also enable the production of green diesel with high-quality fuel properties, meeting strict environmental regulations and satisfying consumer preferences for cleaner options. Overall, technological progress leads to new ideas, efficiency improvements, and more opportunities for green diesel to replace regular fossil fuels.

Restraints

Cost competitiveness can Limit the Growth of the Green Diesel Market

Cost competitiveness presents a significant challenge for the green diesel market. Producing green diesel often requires expensive technologies such as hydro-processing and advanced biofuel refining, which have higher initial and ongoing costs compared to ordinary diesel production. The economic feasibility of green diesel often depends on government subsidies, tax breaks, or laws, which can change, creating market instability. Consumers and businesses focus on fuel expenses, and the higher cost per unit of energy for green diesel might prevent widespread adoption. Moreover, the varying prices and availability of feedstocks like vegetable oils, animal fats, and waste oils influence the total production expenses, adding to the cost competitiveness challenge.

Recent Developments

• In 2023, Renewable Energy Group (REG), a prominent producer of biodiesel and renewable diesel, revealed intentions to increase its green diesel production capacity. This decision aligns with rising market demand and supportive regulations for renewable fuels.
• In 2023, Neste, a top producer of renewable diesel, unveiled enhancements in their production technology aimed at boosting efficiency and lowering carbon emissions in their green diesel products.
• TotalEnergies, a major energy firm, plans to invest in new technologies and build facilities in 2022 to increase green diesel production from a variety of feedstocks. This project intends to strengthen its position in the market for sustainable fuels.
• In 2022, Diamond Green Diesel, a partnership between Valero Energy Corporation and Darling Ingredients, scaled up its production of green diesel to meet the increasing demand for sustainable fuels in the United States.

Green Diesel Market

Key Players:

• Neste Corporation
• Shell
• Wilmar International Limited
• Enerkem
• TotalEnergies
• Honeywell UOP
• Renewable Energy Group, Inc. (REG)
• Marathon Petroleum Corporation
• Diamond Green Diesel
• Chevron Corporation
• UPM Biofuels
• Eni S.p.A.
• Phillips 66
• ExxonMobil
• Gevo, Inc.
• Other Prominent Players (Company Overview, Business Strategy, Key Product Offerings, Financial Performance, Key Performance Indicators, Risk Analysis, Recent Development, Regional Presence, SWOT Analysis)

Regional Analysis

Green Diesel Market is segmented based on regional analysis into five key regions: North America, Latin America, Europe, Asia Pacific, and the Middle East and Africa. The North American region is expected to dominate the Green Diesel Market due to its strict environmental policies that encourage the use of cleaner fuels to combat climate change. Governments in this region provide significant financial assistance, tax breaks, and regulations that mandate the use of renewable fuels, thus encouraging investments in green diesel. The region has well-developed infrastructure for biofuel production and distribution, such as refineries and fueling stations, which enables wider adoption. Continuous developments in green diesel technology are increasing manufacturing efficiency and lowering costs, making it more competitive. Overall, North America's comprehensive regulatory framework, government support, strong infrastructure, technological innovation, and consumer demand position it as a leading player in the green diesel market.

Source: Fatpos Global

Impact of COVID-19 on the Green Diesel Market

COVID-19 epidemic brought challenges and opportunities for the green diesel sector. Lockdowns and travel restrictions initially resulted in a large reduction in transportation fuel consumption, affecting demand for both normal and green diesel. The rise in feedstock prices caused by supply chain interruptions has an impact on production costs as well. However, the outbreak led to an increased focus on sustainability and environmental awareness. Governments have included support for renewable energy in their recovery plans, which may benefit the Green Diesel industry. The increased consumer desire for environmentally friendly solutions is likely to drive up demand for green diesel in transportation. Despite this, the pandemic proved that green diesel holds huge potential for future energy plans, especially as governments focus on long-term recovery and climate goals in the aftermath of the outbreak.

Green Diesel Market is further segmented by region into:

• North America Market Size, Share, Trends, Opportunities, Y-o-Y Growth, CAGR – United States and Canada
• Latin America Market Size, Share, Trends, Opportunities, Y-o-Y Growth, CAGR – Mexico, Argentina, Brazil, and Rest of Latin America
• Europe Market Size, Share, Trends, Opportunities, Y-o-Y Growth, CAGR – United Kingdom, France, Germany, Italy, Spain, Belgium, Hungary, Luxembourg, Netherlands, Poland, NORDIC, Russia, Turkey, and Rest of Europe
• Asia Pacific Market Size, Share, Trends, Opportunities, Y-o-Y Growth, CAGR – India, China, South Korea, Japan, Malaysia, Indonesia, New Zealand, Australia, and Rest of APAC
• Middle East and Africa Market Size, Share, Trends, Opportunities, Y-o-Y Growth, CAGR – North Africa, Israel, GCC, South Africa, and Rest of MENA

Green Diesel Market Scope and Segments:

Frequently Asked Questions (FAQ):