Renewable Diesel Market Size - By Feedstock (Animal Fat, Vegetable Oil), By Application (Transportation, Power Generation), 2025 – 2034

Renewable Diesel Market Size

The global renewable diesel market was valued at USD 23 billion in 2024 and is estimated to grow at a CAGR of 8.1% from 2025 to 2034. Rising adoption of fuels offering environmental benefits such as reduced greenhouse gas emissions compared to traditional petroleum diesel will propel the product adoption. Furthermore, growing adoption of solutions with excellent compatibility with existing diesel engines and infrastructure, without significant additional investment in infrastructure or engine modifications will accelerate the fuel adoption.
 

Increasing government programs including the U.S. Renewable Fuel Standard and California’s Low Carbon Fuel Standard are expected to boost the development of the renewable diesel market. In May 2024, Alberta, Canada, allocated a tax incentive for agricultural processing investments to Imperial Oil Ltd. for its USD 507 million project regarding the construction of Canada’s largest renewable diesel plant. The project is planned to start production next year with a production capacity of 20,000 barrels per day.
 

Rising demand for fuels that offer energy security by reducing dependency on petroleum, especially in regions seeking to diversify their energy sources will complement the product penetration. This is particularly crucial in the reference to geopolitical uncertainties or rising crude oil prices.
 

Growing key players' interest in renewable diesel adoption due to its reduced carbon emissions compared to petroleum diesel, and the higher cetane number compared to conventional diesel, leading to more efficient combustion, will stimulate the product growth. In October 2021, At its Cherry Point Refinery in Washington state, BP announced plans to invest USD 269 million in three projects to increase the refinery's capacity to produce renewable diesel, lower its carbon dioxide emissions, and improve efficiency.
 

Renewable Diesel Market Trends

• Increasing need from industries and consumers for more environmentally friendly and sustainable products in almost every industry from transportation and aviation to logistics to reduce their environmental impact and meet sustainability targets will augment the business outlook.
   
• Expanding availability of feedstocks and the establishment of larger-scale production facilities will help to drive down costs, making renewable diesel more cost-competitive and accessible to a broader market. As per the EIA, as of January 2023, the U.S. renewable diesel and other biofuel production capacity reached 3 billion gallons per year, exceeding biodiesel capacity for the first time. This growth will enhance the production capacity thereby driving renewable diesel market outlook.
   
• Rising stringent environmental regulations to reduce greenhouse gas (GHG) emissions, particularly in the transportation sector will improve the industry growth. Regulations such as the Low Carbon Fuel Standard in California and the Renewable Fuel Standard in the U.S. are compelling fuel producers to blend renewable diesel with conventional fuels, accelerating its adoption.
   
• Numerous companies are working toward achieving net-zero emissions along with sustainable energy usage, which is increasing the market demand for renewable diesel as a cleaner fuel option.  In January 2023, Imperial Oil, an ExxonMobil affiliate, is spending approximately USD 560 million for the construction of the largest facility for the production of renewable diesel in Canada the Canadian Strathcona oil refinery. The facility is anticipated to produce 20,000 barrels a day, and its operation may reduce Canada’s transportation emissions by 3 metric tons annually, in compliance with Canada’s Clean Fuel Regulation.
   

Renewable Diesel Market Analysis

• The renewable diesel industry was valued at USD 17.9 billion, USD 21.9 billion and USD 23 billion in 2022, 2023 and 2024, respectively. The industry is segmented into vegetable oil, animal fat, and others based on feedstock.
   
• The vegetable oil segment is anticipated to reach more than USD 44.5 billion by 2034, on account of its environmental benefits such as renewable nature, biodegradable properties, and reduced greenhouse gas emissions. Rising demand for high energy density feedstocks, allowing renewable diesel to have similar performance characteristics to petroleum diesel, including combustion efficiency and engine power will enhance vegetable oil adoption.
   
• Furthermore, the large availability of raw materials such as palm oil, canola, soybeans, and rapeseed type vegetable oils is expected to ease feedstock sourcing and subsequently increase renewable diesel production. In December 2024, Neste, together with BMW is working to increase the adoption of HVO100 fuel – renewable diesel made from hydrotreated vegetable oil – on more BMW vehicles. This fuel type is fundamentally diesel but emits up to 90% less greenhouse gas than fossil diesel.
   
• The animal fat segment is anticipated cross USD 4.5 billion by 2034 due to its reduced greenhouse gas emissions. Abundance and cost effectiveness of the feedstock will enhance the renewable diesel market growth. Furthermore, the expanding industrial and transportation industry escalates demand for renewable diesel to meet sustainability targets, creating demand for food-based biofuels as a viable alternative to plant-based feedstocks.
   
• Eminent players are investing in building the renewable diesel industry by improving its adoption in various applications. For instance, in September 2021, Shell approved the construction of an 820,000-ton-per-year biofuels facility at its Energy and Chemicals Park Rotterdam, formerly the Pernis refinery. One of Europe’s largest, it will produce sustainable aviation fuel and renewable diesel from waste sources including used cooking oil, animal fat, and industrial residues.
   

• Based on application, the renewable diesel market is segmented into transportation, power generation and others. The transportation segment holds a market share of 73.7% in 2024 and is anticipated to grow in the forecast period. Growing municipal transit agencies, logistics companies, and heavy-duty trucking fleets focus on renewable diesel adoption to comply with sustainability goals while maintaining vehicle performance and reliability will complement the fuel adoption in the transportation sector.
   
• North America and Europe have been paying more attention to incorporating cleaner technologies in the public transport sector to decrease their carbon footprint while overcoming regulatory challenges. In March 2022, Neste announced the delivery of renewable diesel to school districts in the U.S., to support the transition from a high-emission diesel bus fleet. With more than 5 million tons of greenhouse gases emitted yearly, over 95% of school buses using diesel fuel contribute to negative environmental and public health repercussions.
   
• The power generation application is expected to grow at a faster CAGR of over 8.2% through 2034. Increasing power producers' transition towards low-carbon alternatives to meet corporate sustainability goals and participate in carbon credit markets will enhance the product adoption. Rising volatility in fossil fuel markets and the push for energy diversification will drive demand for renewable diesel in the power sector.
   
• Countries including India, the U.S., China and Germany are showing tremendous efforts to achieve net zero pledge in the power sector, creating lucrative opportunities for renewable diesel to achieve the targets. In September 2024, leading utility companies committed to investing over USD 116 billion annually in clean power generation and grid infrastructure worldwide. Launched at COP28, the Utilities for Net Zero Alliance—backed by IRENA and UN Climate Champions—aims to accelerate electrification and power system transformation in the global push for decarbonization.
   

• The U.S. renewable diesel market was valued at USD 8 billion, 9.8 billion, and 10.3 billion in 2022, 2023 and 2024 respectively. As of 2024, North America holds more than 47.5% of the market share, which is expected to improve by 2034.
   
• Growing government policies and regulations including the Renewable Fuel Standard (RFS) and the Low Carbon Fuel Standard (LCFS) designed to incentivize the use of low-carbon fuels will bolster the fuel growth. Rising application of renewable diesel in a wide range of industries such as transportation, agriculture, and construction will make the fuel an attractive alternative to traditional diesel.
   
• Key players are forming partnerships to boost renewable diesel demand and expand business prospects in the U.S. In March 2022, Neste Oyj invested approximately USD 1 billion in a U.S. renewable diesel joint venture with Ohio-based Marathon Petroleum Corp. As part of the agreement, Neste will acquire a 50% stake in the Martinez Renewable Fuels project, which is converting Marathon's Martinez, California, refinery for renewable diesel production.
   
• Asia Pacific renewable diesel market is likely to exceed USD 7.5 billion by 2034. Rising promotion of advanced fuels in countries such as Japan, South Korea, and Singapore to meet their environmental targets will bolster the fuel adoption. Growing air pollution and smog concerns in China and India will encourage renewable fuel adoption offering reduced emissions compared to petroleum diesel. Furthermore, the abundance of agricultural feedstocks such as palm oil, soybeans, and other vegetable oils, will make the region well-positioned to supply renewable diesel locally, thereby improving the market growth.
   
• Europe's renewable diesel market is predicted to hit USD 8.6 billion by 2034. Stringent emission regulations including the EU Renewable Energy Directive (RED II), mandate that at least 14% of transportation energy come from renewable sources by 2030 will stimulate the product adoption.
   
• Established players coming together to overcome the growing demand for renewable diesel in the transport sector will augment the business trend. In November 2022, Neste partnered with two distributors to introduce Neste MY Renewable Diesel in France, aiming to cut transport emissions. Transportation accounts for 30% of France’s total greenhouse gas emissions, making cleaner fuel alternatives essential. Neste MY Renewable Diesel can reduce emissions by 75-95% over its lifecycle compared to fossil diesel.
   

Renewable Diesel Market Share

• Top three players, including BP, Shell, and Neste account for nearly 40.5% of the renewable diesel industry. These businesses are significantly increasing their production capacity at multiple locations globally. Companies are forming collaborations to strengthen their market position and boost renewable diesel production from sustainable feedstocks.
   
• Moreover, to ensure a steady supply of renewable diesel feedstock, companies are diversifying their sources. In December 2024, BP introduced BP Bioenergy HVO in Spain, targeting heavy-duty road transport. The renewable diesel is available at select stations in Madrid, Valencia, and Navarre, with plans to expand distribution to more locations in 2025.
   

Renewable Diesel Market Companies

• Chevron Corporation, a leading renewable diesel producer, reported USD 3.2 billion in earnings for Q4 2024, up from USD 2.3 billion in Q4 2023. Chevron has introduced renewable diesel blends, such as a fuel comprising 80% renewable diesel and up to 20% biodiesel.
   
• Neste, a leading company in the market, recorded USD 21,601.1 Million in revenue in 2024, and USD 23,999.3 Million in 2023. The company is forming partnerships as a key strategy to grow in the market. In January 2025, Neste, in collaboration with Global Energy and KPI OceanConnect, made its inaugural supply of Neste MY Renewable Diesel to Singapore's marine sector.
   
• Diamond Green Diesel, a privately held company, a joint venture between Darling Ingredients and Valero Energy, is North America's largest renewable diesel producer. Its fuel cuts greenhouse gas emissions by up to 80% compared to conventional diesel. In late 2022, DGD expanded capacity with a 470-million-gallon-per-year plant near Valero’s Port Arthur, Texas refinery, boosting total output to 1.2 billion gallons annually.
   

Eminent players operating in the renewable diesel market are:

• BP
• Chevron
• Diamond Green Diesel
• Eni
• Gevo
• Marathon Petroleum
• Neste
• PBF Energy
• Repsol
• Shell
• Valero
• World Energy
   

Renewable Diesel Industry News

• In October 2024, Repsol introduced Nexa 100% Renewable Diesel at its service stations, a premium fuel compatible with all diesel engines. Its specialized formulation enhances performance and extends engine lifespan.
   
• In February 2024, Colonial Oil is partnering with Finnish biofuels producer Neste on a renewable diesel project in Savannah, Georgia. The joint venture aims to expand renewable diesel availability in Savannah and the southeastern U.S., supporting local container service companies such as Terminal Investment and Gateway.
   
• In April 2021, BP announced a reduction in its plans to develop new sustainable aviation fuel (SAF) and renewable diesel projects at existing locations. The company revealed it is pausing two potential projects while continuing to evaluate three others for advancement.
   

This renewable diesel market research report includes an in-depth coverage of the industry with estimates & forecast in terms of revenue and volume in “USD Billion & MT” from 2021 to 2034, for the following segments:

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Market, By Feedstock

• Animal Fat
• Vegetable Oil
• Others

Market, By Application

• Transportation
• Power Generation
• Others

The above information has been provided for the following regions and countries:

• North America
  • U.S.
  • Canada
• Europe
  • Germany
  • France
  • Spain
  • UK
  • Italy
• Asia Pacific
  • China
  • India
  • Indonesia
  • Australia
• Middle East & Africa
  • Saudi Arabia
  • South Africa
• Latin America
  • Brazil
  • Argentina