Global Renewable Diesel Market (by Production, Consumption, Feedstock, & Region): Insights and Forecast with Potential Impact of COVID-19 (2022-2027)

Renewable diesel is a hydrocarbon that is chemically comparable to petroleum diesel and can be delivered in petroleum pipelines and sold at retail stations with or without blending with petroleum diesel.

Renewable diesel's increasing environmental friendliness, renewability, and biodegradability would be the primary factor driving market expansion in the years ahead. In addition, the renewable diesel industry is expected to expand as fuel refiners seek alternate development avenues in a low-carbon society. The global renewable diesel market by production is estimated to reach 3.70 billion gallons per year by 2023, growing at a CAGR of 19.12% during the forecast period. The global consumption of renewable diesel is predicted to rise to 3.69 billion gallons by 2023, growing at a CAGR of 16.90% during the projected years.

Segment Covered

• By Production: The report caters the renewable diesel market’s production on the basis of following regions: Europe, North America, and Asia Pacific. Europe held the maximum share in the market, followed by the North America and Asia Pacific region. Europe has historically been the largest market for the product due to early acceptance of the product in the region as well as government emphasis on replacing carbon-emitting sources with bio-based sources. One of the major reasons for the growth of renewable diesel production was the adoption of the Renewable Energy Directive (RED) II. Renewable diesel capacities are going through a phase of rapid expansion in the US, led by global refiners retrofitting existing fossil fuel refineries to process renewable feedstock. Furthermore, Asia-Pacific’s decarbonization efforts are likely to determine the scale of adoption of renewable diesel. Emerging interest in sustainable energy resources would emphasize the adoption of renewable products, which is expected to increase the demand for renewable diesel and thereby contribute to its capacity growth in Asia.
• By Consumption: The report delivers insights of the consumption of renewable diesel around the world. North America, Europe, and the Asia Pacific are the three geographic regions that contribute to the global market for renewable diesel based on consumption. In terms of consumption, the European market has been segmented into the following regions: Germany, Italy, France, Spain, the UK, and the Rest of Europe (ROE). By using a minimum of 14% of renewable energy in road and rail transport by 2030, renewable diesel is expected to be used as an alternative for refineries to meet Europe’s renewable energy directive-II (RED-II) goals, leading to market growth. In North America, Canada’s Clean Fuel Standard is expected to boost renewable diesel use in the coming years. The program aims to achieve 30 million tons of annual reductions in greenhouse gas (GHG) emissions by 2030. The Asia Pacific renewable diesel market can be segmented into the following regions based on consumption: China and Indonesia. It is anticipated that Indonesia would be the main consumer of renewable diesel by the end of 2027, with the highest CAGR.
• By Feedstock: The US renewable diesel market production is further bifurcated based on the feedstock: Tallow, UCO (Used Cooking Oil), Corn Oil, Fish Oil, and Others. The tallow held the major share in the US renewable diesel market owing to its properties like the high centralized generation in slaughter/processing facilities and comparatively low prices. Corn oil is expected to grow at the highest rate in the forthcoming years. The low carbon feedstock market is experiencing surging demand and higher prices. digitization across a variety of end-use sectors, including banking, transportation, recreation, etc.

Top Impacting Factors

Growth Drivers

• Growing Motor Vehicle Production
• Rising Carbon Emission
• Depletion of Fossil Fuels
• Growing Aviation Industry

Challenges

• Insufficient Availability of Feedstocks
• Problems Associated with the Quality Control of Renewable Diesel

Trends

• Increasing Energy Consumption
• Structural Shift to Renewable Diesel
• Renewable Diesels Are Proving To Be More Economic
• Increasing Acceptance of Eco-Friendly Fuel

Driver: Growing Motor Vehicle Production

The increasing demand for motor vehicles is leading to their rising production across the world. The increased production of motor vehicles is resulting in the increased preference for renewable diesel as a transportation fuel. Renewable diesel fuel in vehicles provides lower emissions, is cleaner, and more efficiently burning than traditional biodiesel, with better cold and storage properties. Therefore, with the increased production of motor vehicles, the consumption of renewable diesel tends to increase, which has resulted in the expansion of market growth globally.

Challenge: Problems Associated with the Quality Control of Renewable Diesel

One major difference that separates renewable diesel from petroleum-based diesel is the renewable diesel’s behaviour under extreme temperature conditions. Cold-flow properties in the winter and oxidation stability in both summer and winter are major issues in quality control. These properties differ slightly based on the feedstock in which the fuel was produced. While the oxidative stability of renewable diesel differs greatly from that of petroleum-based diesel. The rate at which this oxidation occurs increases with higher temperatures. The storage during the summer months will cause renewable diesel to deteriorate rapidly. Therefore, quality control with the issues of cold-flow properties and oxidation stability becomes difficult, which poses as a challenge for the growth of the renewable diesel market globally.

Trend: Increasing Energy Consumption

Growing energy consumption makes the challenge of transitioning the energy systems away from fossil fuels towards low-carbon sources of energy more difficult. New low-carbon energy has to meet this additional demand and try to displace existing fossil fuels in the energy mix. With growing environmental concerns and supportive government legislation, it is projected that a significant portion of the population would rely on renewable diesel and other natural resources in the coming years. This signifies that the majority of the energy used would come from sustainable, biodegradable, and non-toxic sources. This would result in a rapid increase in the use of paraffinic biofuels like Hydrotreated Vegetable Oils (HVO), which is anticipated to propel the expansion of the worldwide renewable diesel market.

The COVID-19 Analysis

The global renewable diesel market has experienced positive growth during the pandemic. In 2020, fuel use declines in heavy-duty commercial vehicles were less severe, offsetting declines in light-duty passenger use of diesel and providing relative stability to the distillate market as compared to the light-duty fuels market which was fully impacted by lockdown measures. Renewable diesel demand further increased in the following year as the road transport sector rebounded. In the post-COVID era, factors such as government support for the consumption of renewable diesel by providing subsidiaries and growing demand for eco-friendly fuels that reduce greenhouse gas emissions are anticipated to drive market growth.

Analysis of Key Players

The global renewable diesel market is moderately consolidated. The key players in the global renewable diesel market are Chevron Corporation (Renewable Energy Group), Neste, PBF Energy Inc., Valero Energy Corporation, Phillips 66, Aemetis, Inc., GEVO, Inc., Marathon Petroleum Corporation, Global Clean Energy Holdings, Inc., World Energy, Ryze Renewables, and Shell plc.