Second Generation Bio-Fuels - Global Strategic Business Report

The global market for Second Generation Bio-Fuels was estimated at US$21.3 Billion in 2024 and is projected to reach US$30.0 Billion by 2030, growing at a CAGR of 5.9% from 2024 to 2030. This comprehensive report provides an in-depth analysis of market trends, drivers, and forecasts, helping you make informed business decisions. The report includes the most recent global tariff developments and how they impact the Second Generation Bio-Fuels market.

Global Second Generation Bio-Fuels Market - Key Trends & Drivers Summarized

Why Are Second Generation Bio-Fuels Considered Central to Decarbonization Goals?

Second generation (2G) bio-fuels represent a transformative evolution from conventional (1G) bio-fuels by leveraging non-food biomass-such as agricultural residues, lignocellulosic waste, and forestry byproducts-as feedstocks. Unlike 1G bio-fuels which rely on sugarcane, corn, or palm oil, 2G bio-fuels are designed to avoid the food-vs-fuel conflict while offering improved greenhouse gas (GHG) reduction potential. They are seen as critical to achieving national and international carbon neutrality goals, particularly in hard-to-abate sectors such as aviation, marine, and heavy-duty transportation. By valorizing waste biomass and creating circular fuel production loops, 2G bio-fuels align closely with sustainable energy transition mandates under frameworks such as the Paris Agreement and EU Green Deal.

Advanced conversion technologies, including enzymatic hydrolysis, gasification, and pyrolysis, enable the breakdown of tough lignin and cellulose structures into fermentable sugars or syngas for subsequent conversion into ethanol, biodiesel, or drop-in fuels like Fischer-Tropsch diesel. These fuels can be integrated into existing combustion engines or fuel infrastructures with minimal modification. As a result, they are emerging as a near-term, scalable solution to reduce fossil fuel dependency and decarbonize legacy transport systems without requiring major overhauls in vehicle technology or distribution networks.

How Are Technological Breakthroughs Accelerating Commercial Viability of 2G Bio-Fuels?

Technological innovation in biomass pretreatment, microbial engineering, and catalytic upgrading is rapidly bridging the gap between pilot-scale feasibility and commercial deployment. New biological pretreatment techniques are enabling more efficient deconstruction of lignocellulosic biomass at lower energy inputs, while engineered enzymes and microbial strains are improving fermentation efficiency and yield. Thermochemical pathways such as gasification and hydrothermal liquefaction are gaining traction for producing advanced fuels like bio-syngas and bio-crude that can be refined into jet fuel, diesel, or naphtha.

Hybrid biorefineries are now being designed to process a wide range of feedstocks and co-produce multiple products, including fuels, bio-based chemicals, and power. This multi-product approach enhances economic viability and risk mitigation. Process intensification techniques-such as integrated hydrolysis and fermentation (IHF), in-situ product recovery, and membrane separation-are also improving process economics and environmental performance. Governments and energy agencies are increasingly supporting demonstration-scale facilities and commercialization roadmaps through grants, carbon credits, and blending mandates. These advances are fostering investor confidence and enabling 2G bio-fuels to enter mainstream energy portfolios.

Which Sectors and Regions Are Spearheading the Demand for Second Generation Bio-Fuels?

Aviation and maritime transport sectors are among the most aggressive adopters of second generation bio-fuels, given their limited short-term alternatives to liquid hydrocarbons. Sustainable aviation fuels (SAF) derived from agricultural residues or forestry waste are being actively tested and deployed by leading airlines, often in partnership with fuel producers and regulatory bodies. Likewise, marine transport operators are integrating advanced biodiesels and bio-oils into their fleets to meet International Maritime Organization (IMO) decarbonization targets. Ground transportation, especially public buses and heavy-duty trucks, is also a significant user of 2G ethanol and diesel in regions with established blending mandates.

Geographically, North America and Europe are leading in R&D and commercialization, driven by supportive policy frameworks like the U.S. Renewable Fuel Standard (RFS2), California's Low Carbon Fuel Standard (LCFS), and the EU's RED II directive. Major investments have been made in cellulosic ethanol facilities across the U.S. Midwest, Brazil, and Scandinavia. India and China are rapidly emerging as innovation centers and demand hubs, with strong governmental backing and abundant biomass availability. Africa and Southeast Asia, rich in agro-residues, are also being explored as feedstock sources, especially under joint development initiatives with international clean energy consortia.

What Factors Are Driving Market Growth for Second Generation Bio-Fuels Worldwide?

The growth in the second generation bio-fuels market is driven by several factors, including stringent carbon reduction targets, advances in biomass conversion technologies, and rising geopolitical and economic pressures to diversify energy sources. As global oil markets remain volatile and energy security becomes a top priority, countries are ramping up investment in indigenous, renewable, and decentralized fuel alternatives. 2G bio-fuels, with their superior lifecycle emission savings and non-reliance on edible crops, are being prioritized under national energy blueprints and climate action plans.

Blending mandates, carbon pricing mechanisms, and incentives for low-carbon fuel producers are accelerating commercialization. Private-public partnerships and cross-sector alliances are fueling capital investments into next-gen biorefineries, while carbon-conscious consumers and corporate ESG initiatives are catalyzing demand for cleaner transport fuels. The availability of abundant and underutilized biomass feedstocks globally ensures long-term scalability. As sustainability metrics become embedded in fuel procurement policies across aviation, logistics, and public transportation sectors, second generation bio-fuels are positioned to emerge as a cornerstone of the global energy transition over the next decade.

Scope Of Study:

The report analyzes the Second Generation Bio-Fuels market in terms of units by the following Segments, and Geographic Regions/Countries:

Segments: Feedstock Type (Lignocellulosic Biomass Feedstock, Agricultural Residues Feedstock, Wood Residues Feedstock, Algae Feedstock, Industrial Waste Feedstock); Production Technology (Gasification Technology, Fermentation Technology, Transesterification Technology, Hydrothermal Liquefaction Technology); Application (Transportation Fuels Application, Electricity Generation Application, Heating Oils Application, Aviation Fuels Application); End-Use (Commercial End-Use, Industrial End-Use, Residential End-Use)

Geographic Regions/Countries: World; United States; Canada; Japan; China; Europe (France; Germany; Italy; United Kingdom; Spain; Russia; and Rest of Europe); Asia-Pacific (Australia; India; South Korea; and Rest of Asia-Pacific); Latin America (Argentina; Brazil; Mexico; and Rest of Latin America); Middle East (Iran; Israel; Saudi Arabia; United Arab Emirates; and Rest of Middle East); and Africa.

Key Insights:

• Market Growth: Understand the significant growth trajectory of the Lignocellulosic Biomass Feedstock segment, which is expected to reach US$11.6 Billion by 2030 with a CAGR of a 6.9%. The Agricultural Residues Feedstock segment is also set to grow at 6.7% CAGR over the analysis period.
• Regional Analysis: Gain insights into the U.S. market, estimated at $5.8 Billion in 2024, and China, forecasted to grow at an impressive 9.4% CAGR to reach $6.1 Billion by 2030. Discover growth trends in other key regions, including Japan, Canada, Germany, and the Asia-Pacific.

Why You Should Buy This Report:

• Detailed Market Analysis: Access a thorough analysis of the Global Second Generation Bio-Fuels Market, covering all major geographic regions and market segments.
• Competitive Insights: Get an overview of the competitive landscape, including the market presence of major players across different geographies.
• Future Trends and Drivers: Understand the key trends and drivers shaping the future of the Global Second Generation Bio-Fuels Market.
• Actionable Insights: Benefit from actionable insights that can help you identify new revenue opportunities and make strategic business decisions.

Key Questions Answered:

• How is the Global Second Generation Bio-Fuels Market expected to evolve by 2030?
• What are the main drivers and restraints affecting the market?
• Which market segments will grow the most over the forecast period?
• How will market shares for different regions and segments change by 2030?
• Who are the leading players in the market, and what are their prospects?

Report Features:

• Comprehensive Market Data: Independent analysis of annual sales and market forecasts in US$ Million from 2024 to 2030.
• In-Depth Regional Analysis: Detailed insights into key markets, including the U.S., China, Japan, Canada, Europe, Asia-Pacific, Latin America, Middle East, and Africa.
• Company Profiles: Coverage of players such as Abengoa Bioenergy, Advanced Biofuels LLC, Algenol Biotech LLC, Amyris, Inc., Beta Renewables S.p.A. and more.
• Complimentary Updates: Receive free report updates for one year to keep you informed of the latest market developments.

Some of the 32 companies featured in this Second Generation Bio-Fuels market report include:

• Abengoa Bioenergy
• Advanced Biofuels LLC
• Algenol Biotech LLC
• Amyris, Inc.
• Beta Renewables S.p.A.
• Clariant AG
• DuPont de Nemours, Inc.
• Enerkem Inc.
• Fiberight LLC
• Gevo, Inc.
• GranBio LLC
• Iogen Corporation
• INEOS Group
• LanzaTech, Inc.
• Neste Corporation
• POET LLC
• Raízen SA
• Renewable Energy Group (REG)
• Reliance Industries Limited
• TotalEnergies SE
• Verbio SE
• Virent Energy Systems Inc.

This edition integrates the latest global trade and economic shifts as of June 2025 into comprehensive market analysis. Key updates include:

• Tariff and Trade Impact: Insights into global tariff negotiations across 180+ countries, with analysis of supply chain turbulence, sourcing disruptions, and geographic realignment. Special focus on 2025 as a pivotal year for trade tensions, including updated perspectives on the Trump-era tariffs.
• Adjusted Forecasts and Analytics: Revised global and regional market forecasts through 2030, incorporating tariff effects, economic uncertainty, and structural changes in globalization. Includes segmentation by product, technology, type, material, distribution channel, application, and end-use, with historical analysis since 2015.
• Strategic Market Dynamics: Evaluation of revised market prospects, regional outlooks, and key economic indicators such as population and urbanization trends.
• Innovation & Technology Trends: Latest developments in product and process innovation, emerging technologies, and key industry drivers shaping the competitive landscape.
• Competitive Intelligence: Updated global market share estimates for 2025, competitive positioning of major players (Strong/Active/Niche/Trivial), and refined focus on leading global brands and core players.
• Expert Insight & Commentary: Strategic analysis from economists, trade experts, and domain specialists to contextualize market shifts and identify emerging opportunities.
• Complimentary Update: Buyers receive a free July 2025 update with finalized tariff impacts, new trade agreement effects, revised projections, and expanded country-level coverage.