U.S. Biofuels Market Size, Share, Growth, Report 2025 To 2034

U.S. Biofuels Market Size and Growth Factors 2025 to 2034

The U.S. biofuels market size was valued at USD 32.61 billion in 2024 and is expected to reach around USD 85.54 billion by 2034, growing at a compound annual growth rate (CAGR) of 11.5% over the forecast period from 2025 to 2034. The U.S. biofuels market in is experiencing impressive growth and this has been due to the government subsidies, sustainability requirements, and the rising demand of low-carbon substitutes. The renewable fuel standard (RFS) and incentives in the Inflation Reduction Act (IRA) are promising to invest in advanced biofuel production, including biodiesel, renewable diesel, and sustainable aviation fuel (SAF). The contribution to market growth in the transportation and aviation industries through increasing the use of low-carbon fuels is also increasing.

The market is also taking a different shape as a result of innovations, with next generation biofuels being produced using non-food feeds such as agricultural residues, algae and forestry wastes. The combination of AI, IoT, and automation of biorefinery is improving efficiency, output, and real-time tracking. Energy companies, biotech companies, and farmers are developing strategic alliances that improve the supply chain and facilitate the implementation of the circular economy. Consequently, the biofuels industry of the U.S. is getting smarter, green, and closer to national clean energy and decarbonization objectives.

Report Highlights

• By Biofuel Type – Ethanol (48.5%): Leading due to large-scale corn-based production, widespread use as a gasoline additive, and strong government support through the Renewable Fuel Standard (RFS).
• By Feedstock – Corn (54.0%): Dominant because of high starch content, abundant supply, established logistics, and its role as the primary feedstock for U.S. ethanol production.
• By Production Technology – Fermentation (51.4%): Leading as it enables efficient ethanol production from corn and biomass, with AI and IoT integration optimizing yield, process control, and energy efficiency.
• By Form - Liquid Biofuels (62.70%): Leading the market with maximum revenue share in 2024.
• By Application – Transportation (68.20%): Dominates the market with highest revenue share in 2024.

Market Trends

• Specific Solution Requirement: The market of biofuels in the United States is also expanding, as the demand of energy with low carbon and the sustainability efforts of the government boosts the market. The real-time process control and predictive optimization of yield processes are being improved with the help of AI-powered analytics and IoT-based monitoring systems. To decrease the use of food crops, producers are considering the next-generation feedstocks, including agricultural residues, algae, and forestry waste. Sustainable aviation fuel (SAF), renewable diesel, and biodiesel are found in several industries. The energy companies, biotech companies and research institutions are forming collaborations which are leading to innovation. This will result in greener smarter and digitally connected biofuel manufacturing systems.
• Technology Enhancement and Co-Relation to other Technologies: The current development of biofuel production is shifting towards modular bio-refineries, predictive analytics that run on AI, and sensor-based process control. Digital twins, machine learning, and big data can be used to monitor emissions in real time and optimize the conversion of feedstock. These technologies go hand in hand with renewable energy networks, carbon capture systems, and sustainable transport systems. Alliances in energy, agricultural, and biotech industries are increasing the pace of technology. It is geared towards the production of less emission fuels that are more efficient. The result is a generation of new, efficient, connected and sustainable systems of biofuel production.

Report Scope

Market Dynamics

Market Drivers

Increased Renewable Energy and Decarbonization Demand

• Government policies such as the Renewable Fuel Standard (RFS) and incentives provided in the Inflation Reduction Act (IRA) are increasing production capacity. Low-carbon fuels are increasingly being used in transport, aviation, and other industrial purposes. The growth of the market is facilitated by investing in infrastructure and strategic alliances. Demand of sustainable fuels is increasing due to public awareness on the effects of the environment. Mass production of biofuels can be used to achieve national carbon cut levels. Corporate sustainability and renewable requirements also contribute to the growth of the market.

Move to High-technological and Sustainable Biofuels

• Manufacturers are shifting towards non-food feedstocks in order to enhance sustainability and minimize carbon footprints. Predictive maintenance, IoT connection, and AI-optimization boost the efficiency and output of energy. The utilization of renewable materials and circular economy are in line with the national carbon-neutrality objectives. Clean energy integration and carbon capture enhance environmental compliance. Automation is helping the industry reduce the cost of doing business and the environmental emissions. The innovations lead to cleaner and smarter biofuel systems.

Market Constraints

Great Development and Implementation Varies

• To enable production of advanced biofuels, the plant would demand huge amounts of capital regarding technology, automation, and sourcing of feedstock. Smaller manufacturers have problems of cost effectiveness and operation scaling. The costs of operation are high with the cost of AI systems, biorefinery automation and IoT monitoring modules. Mitigation of some costs is done by partnerships and government grants, but there are still challenges. High costs in infrastructure make it hard to penetrate low-cost regional markets. Emerging players may be slowed down by finances in adopting the technology.

Regulatory and Certification Requirements

• It is complicated and time-consuming to comply with EPA standards, ASTM specification and state-level low-carbon fuel programs. The certification can be very expensive and can slow down commercialization. Lack of compliance would result in fines, recalls and bad reputation to the producers. Divergences in regulations across different regions are necessitating an ever-changing adaptation and innovation. Constant compliance brings credibility to the market at the expense of operations. The regulatory pressure works to improve technology and provides barriers to entry.

Market Challenges

Supply Chain Vulnerabilities

• The market is vulnerable to being hit due to reliance on agricultural feedstocks, catalysts, and specialized equipment. Supply is also complicated by global trade restrictions, transportation bottlenecks and price fluctuations. Lack of supplier diversity exposes one to disruption. Local feedstock networks and alternative sourcing can be improved to increase resilience. Continuous operation is important in order to fulfill production schedules. Effective supply chain management has continued to be among the priorities toward stability of the market.

Technological Complexity and Skills Gap

• Implementation of AI, IoT, and high-level bioprocessing needs highly qualified employees and technical knowledge. Numerous areas lack trained workers and qualified specialists. The integrated systems require on-going training and upskilling. The partnership with universities and research centers can be used to close the gap. Lack of skills would delay the use of sophisticated technologies. The upskilling programs are critical in maintaining innovation and operational effectiveness.

Market Opportunities

Combination with Electric and Hybrid Transportation

• Advanced biofuels supplement the use of renewable energy, especially in heavy transportation and aviation. Sophisticated production allows it to predict the supply to satisfy the dynamism in the fuel demand. AI and IoT improve the efficiency in operations and real-time distribution tracking. Alliances with transport companies enhance the adoption and integration of systems. Biofuels are a low-carbon source where electrification is restricted. This tendency enhances the shift to sustainable mobility solutions.

Expansion of Emerging and Regional Markets

• Urbanization, industrialization and renewable policies drive up biofuels demand within the U.S. State-level bio-fuel programs and local production incentives promote biofuel use. The development of electric and hybrid cars is a new source of biofuels integration opportunities. Market penetration is facilitated by consumer awareness on the benefits of the environment. The presence of strategic alliances and investments make the market grow and become resilient. The new market orientation will guarantee sustainability and the use of advanced biofuels in the long run.

Segmental Analysis

Biofuel Type Analysis

Ethanol: Ethanol is the most common biofuel in the U.S. which is primarily produced from corn since it is high in starch. It is also the most widely used gasoline additive as it boosts the octane rating and lowers emissions. Current production facilities use AI and IoT technologies to predictive monitor and optimize production processes. Non-food biomass is becoming a potential substitute source for cellulosic ethanol. Government mandates such as the Renewable Fuel Standard (RFS) help the market adoption. Constant innovations focus on improving yields, reducing carbon footprints, and increasing energy efficiency which are all positive for the environment.

Biodiesel: Biodiesel is produced from vegetable oils, animal fats, and waste oils, making it a renewably available alternative to diesel. It is mainly used in transportation and industrial sectors to reduce greenhouse gas emissions. Transesterification optimization is facilitated through IoT and AI analytics. There are legal sustainability and waste oil feedstock use incentives. Production is now upgrading to modular and fully automated styles. This segment’s growth has been automated with the increasing adoption of fleet corporate sustainability.

Market Share, By Biofuel Type, 2024 (%)

Renewable Diesel: While it is true that renewable diesel is comparable to petroleum diesel, it is made from HVO (Hydrotreated Vegetable Oil) or another renewable feedstock, not petroleum. It has lower emissions, is compatible with current diesel engines, is used in heavy-duty trucks, provides more energy, and is extremely efficient. AI and IoT systems supervise and optimize the control parameters of the reactions. Massive production is made possible with the IRA and RFS incentives. There is ongoing R&D to optimize processes and improve feedstock flexibility. In the trucking industry, renewable diesel is used to lower the carbon footprint in the transport sector and is also in heavy-duty trucks.

Sustainable Aviation Fuel: Sustainable Aviation Fuel (SAF) is a type of biofuel used in the aviation industry, specifically biofuels made through the HEFA (Hydroprocessed Esters and Fatty Acids) and ATJ (Alcohol-to-Jet) processes. SAF is installed on current jet engines. It also reduces carbon emissions. With the help of artificial intelligence, predictive analytics, and monitoring systems designed and developed specifically for the aviation industry, SAF production is more efficient and quality controlled. Partnerships between airlines and biofuel production companies are encouraged by government incentives as well as low carbon fuel standards. Sustainable and scalable advanced feedstocks like algae and waste oils are also available.  

Feedstock Analysis

Corn: When it comes to making ethanol, corn is the most popular feedstock. As a starch-dense grain, it is also low-cost, and is readily available along established supply channels. AI and IoT technologies streamline the fermentation process by converting sugars and energy. Initiatives such as the RFS guarantee a government-sponsored and underwritten, commanding demand to ensure the marketed adoption. The U.S. biofuels market primarily consists of corn-based ethanol and every sector of the market is underpinned by refined corn-based ethanol. Almost all modern bio-refineries are far less wasteful and emission friendly, and constant R&D enables increased production guaranteed by sustainable practices.

Algae: Algae can produce high-yield biofuels while occupying less land compared to other sources. They produce biodiesel, renewable diesels, and sustainable aviation fuels with much lower carbon emissions. Productivity is further increased with AI-based growth monitoring and automated harvesting techniques. More positive environmental benefits are achieved when coupled with carbon capture technology. Initial business uptake, driven by sustainability incentives, is underway. Algae-based feedstocks align with advanced biofuels and the circular economy.

Agricultural Residues: Cellulosic ethanol and renewable diesel use straw, husks, and corn stover as agricultural residues. Effective lignocellulosic biomass conversion occurs with pretreatment and fermentation. AI and sensors monitor moisture, composition, and quality. Residues sustain waste and meet sustainability requirements. Lower-carbon feedstock use qualifies for government incentives. Conversion processes state of the art control systems advanced in cost reduction and conversion efficiency

Waste Oils and Waste Fats: Waste oils and waste fats are economical feedstock in production of biodiesel and renewable diesel. AI and IoT systems transesterification and hydrogenation is streamlined. Waste oils are used to minimize lifecycle and emission burden making it more sustainable. Adoption is encouraged through corporate sustainability programs. Real-time monitoring of fuel quality and regulations enables constant provision. High biorefineries are optimized in terms of yield and performance.

Production Technology Analysis

Fermentation: Fermentation is one of the oldest and most common methods for producing ethanol from corn, sugarcane, and cellulosic biomass, or cellulosic biomass. Enhanced bioreactors, driven by AI and IoT sensors, manage the conversion of sugars while controlling temperature and pH in a closed loop. Real-time supervision guarantees maximum yield and efficiency of the process. Cellulosic fermentation gives the opportunity to convert biomass that is non-food to ethanol, which is a sustainable practice. Modular plants along with automation for cellulosic fermentation lowers operational costs and energy use. Environmental strain compliance gets enhanced from ongoing R&D.

Transesterification: Vegetable oils and animal fats can be transformed chemically into biodiesel by transesterification. Waste oils feedstocks have been used increasingly to improve the process sustainability. Process cistern automation reduced human error, enhanced throughput, and timing of operational tasks. Implementation of low-carbon fuels is supported by government incentives and corporates as part of their sustainable programs. Focus of sustainable biodiesel production is on yield increase and production cost.

Hydrogenation: Hydrogenation refers to the conversion of vegetable oils or waste fats in the manufacture of renewable diesel and hydrogenation drop-in fuels. Systems of AI and IoT enhance the efficiency of hydrogenation reactions and help with feedstock utilization. Real-time monitoring helps to maintain compliance with standards and fuel quality. The technology is compatible with high-powered diesel engines, which carries incentive fuel and commercial use fuel stream diesel. The primary focus of, Continuous, and Research & Development is kept on process optimization and feedstock diversification.

Gasification and Fischer-Tropsch: Gasification and Fischer Trope synthesis provides innovative ways in converting biomass and waste to synthetic fuel including renewable diesel and SAF. Gasification and synthesis conditions are tailored using AI analytics and IoT-enabled sensors. AI analytics and IoT-enabled sensors provides innovative ways in optimal gasification and synthesis conditions. Innovative ways in optimal gasification and synthesis conditions ensures the efficient utilization of agricultural residues, forestry waste and other diverse feedstocks. Modular systems for biomass gasification and Fischer Trope synthesis provides scalability in flexible production capacities. Integrating carbon capture gasification and Fischer Trope systems helps achieve decarbonized, lower lifecycle emissions and reduced environmental impact. Through innovative ways, improved conversion efficient, product quality and reliable operations are achieved in gasification systems.

U.S. Biofuels Market Top Companies

• Chevron Renewable Energy Group
• Pacific Biodiesel Technologies
• POET LL
• Valero Energy Corporation
• Green Plains Inc.
• ADM (Archer Daniels Midland Company)
• REX American Resources
• Montauk Renewables
• LanzaJet
• Gevo Inc.

Recent Developments

• In September 2025, Green Plains Inc. has entered into an agreement with Freepoint Commodities to monetize Clean Fuel Production Credits (45Z tax credits) generated in 2025 from its low-carbon ethanol facilities in Nebraska, with a term sheet also signed to cover credits from three additional plants, aiming to generate between $40 million and $50 million in EBITDA for 2025; this landmark transaction leverages a direct transfer mechanism with third-party emissions verification, supports their carbon capture expansion strategy, and may be extended through 2029 to further capitalize on the evolving transferable tax credit market.

Market Segmentation

By Biofuel Type

• Ethanol
• Biodiesel
• Renewable Diesel
• Sustainable Aviation Fuel (SAF)
• Wood Pellets
• Syngas
• Green Hydrogen
• Others (Biogasoline, Biobutanol, Biomethanol, Bioethers)

By Feedstock

• Corn
• Algae
• Agricultural Residues
• Waste Oils & Fats

By Production Technology

• Fermentation
• Transesterification
• Hydrogenation
• Gasification & Fischer-Tropsch

By Form

• Solid Biofuels
• Liquid Biofuels
• Gaseous Biofuels

By Application

• Transportation
• Aviation
• Energy Generation
• Heating
• Others