June 19, 2024

U.S. Biofuels Market is expected to be Flourished by Growing Demand for Renewable Energy Sources

The U.S. biofuels market consists of liquid fuels and biogas which are produced from organic matter or waste. Bioethanol and biodiesel are the major biofuels produced and consumed in the U.S. Bioethanol is produced from corn and used as a gasoline additive to increase octane and improve vehicle emissions. Biodiesel is produced from soybean oil, waste cooking oil, and animal fats. It is used as an additive or replacement for petroleum diesel. The biofuels industry has played a crucial role in decarbonizing the transportation sector and reducing dependence on imported petroleum. The global U.S. Biofuels Market is estimated to be valued at US$ 38.45 billion in 2024 and is expected to exhibit a CAGR of 8.1 % over the forecast period 2024 to 2031, as highlighted in a new report published by Coherent Market Insights.

Market Dynamics:

The growing demand for renewable sources of energy is expected to flourish the U.S biofuels market over the forecast period. Biofuels production helps reduce greenhouse gas emissions and lessens the country’s dependence on foreign oil imports. Additionally, various federal and state policies aim to support the production and consumption of biofuels in the transportation sector. For instance, the Renewable Fuel Standard mandated by the Environmental Protection Agency requires increasing volumes of biofuels like ethanol to be blended in gasoline. Also, incentives such as tax credits encourage the use of biofuels and their blending. Furthermore, advanced biofuels produced from non-food biomass are gaining popularity due to their higher greenhouse gas reductions than corn-based ethanol. Continuous research and development of technologies to produce cellulosic ethanol and renewable diesel from lignocellulosic biomass on a commercial scale will further drive the biofuels industry in the forthcoming years.

Segment Analysis

The U.S. biofuels market is dominated by the ethanol sub-segment, which holds around 95% market share. Ethanol is widely used as a biofuel and gasoline additive to increase octane and improve vehicle emissions. It is produced from corn and is the most common type of biofuel in the United States. Corn ethanol provides a cost-effective domestic fuel source and reduces dependence on imported petroleum.

PEST Analysis

  • Political: The U.S. government supports the biofuels industry through tax incentives and renewable fuel standards. The Renewable Fuel Standard program mandates increasing levels of biofuel blending into gasoline. This policy drives demand for biofuels.
  • Economic: Lower oil prices in recent years have made biofuels less competitive. However, biofuels help support farm incomes and rural jobs. Production is concentrated in major corn growing states like Iowa and Nebraska.
  • Social: Using renewable biofuels is seen as more environmentally friendly than fossil fuels. It reduces emissions from vehicles. However, some argue that growing corn for ethanol negatively impacts food prices and availability.
  • Technological: Second generation biofuels made from non-food feedstocks like agricultural waste are being developed. These have potential to be cheaper and produce greater greenhouse gas reductions than corn ethanol. But commercialization challenges remain.

Key Takeaways

The global U.S. biofuels market is expected to witness high growth over the forecast period, driven by government support policies and blending mandates. The Renewable Fuel Standard program is a major driver of increasing ethanol usage.

Regional analysis: The Midwestern states have been the dominant producers due to abundant corn supplies. Iowa, Nebraska, and Illinois account for over 60% of U.S. ethanol production. The Central region is expected to continue leading as corn ethanol remains the primary biofuel type.

Key players operating in the U.S. biofuels market are Archer Daniels Midland, Renewable Energy Group, Valero Energy Corp., Darling Ingredients Inc., Cargill Inc., POET LLC, Green Plains Inc., Flint Hills Resources and Marathon Petroleum Corporation. Key players are investing in research on cellulosic ethanol and renewable diesel to gain market share as technologies advances.

*Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it