Biofuel Market Predictions: How Did We Do for 2024?

Each year, ResourceWise releases blogs outlining several predictions across the commodities we cover—biofuels included. As we wrap up 2024, it’s tradition to take some time and review those predictions.

The biofuels market was especially volatile this year. With ongoing questions on regulations like EUDR and CSRD and a shifting US political landscape, one word really defines what we saw in our data: uncertainty.

So, how did we do with our 2024 forecast? Let’s review the eight predictions we made at the start of the year and find out.

1. Chinese Imports Will Face Increased Scrutiny, Slowing Their Flow into the EU Even More

Since late 2022, Chinese HVO and biodiesel supplies have played a key role in shaping Europe's biofuel industry. A substantial influx of imported biofuels, largely produced from waste materials and benefiting from double-counting under EU biofuel mandates, has fueled this shift.

These imports have had a profound impact on the EU’s domestic market. EU-based producers saw significant drops in prices for both biofuels and the raw materials required to produce them.

By 2023, China's biodiesel exports peaked at approximately 1.8 million tons. This occurred despite increasing allegations from European stakeholders who raised concerns about unethical practices within China's supply chains. Producers have long argued that such subsidies distort the market, creating unfair competition.

After an investigation, the EU ruled in accordance with these concerns, imposing anti-dumping duties on Chinese biodiesel and hydrotreated vegetable oil (HVO) importers. The tariffs range from 23.7% to 36.4% and took effect in August.

Learn More with On-Demand Webinar: After China Anti-dumping: The International Biofuels Landscape

While the market is still reeling from these changes, the flow of Chinese biodiesel imports has already seen big decreases into the EU as their producers seek out other pathways for the fuel.

2. Demand in Non-Mandated Use of Biofuels Will Grow as CSRD Reporting Standards Take Effect

The Corporate Sustainability Reporting Directive (CSRD) requires companies to integrate multiple points of sustainability-related requirements into their operations and report that data in their annual corporate reporting. The CSRD encompasses the entire supply chain, adding a layer of complexity to overall reporting. Compliance will be rolled out over the next few years with the first group required to apply the new 2024 rules starting January 1, 2025.

Broadly speaking, global biofuel demand has increased in most cases, both inside and out of compliance requirements. We’ve seen particularly impressive growth in markets like SAF and bio-bunkering.

However, CSRD implementation delays and other ambiguities have raised several questions about the requirements. This has led to some fiery exchanges between the EU Commission and member states, including infringement procedures against 17 states for failing to add CSRD to their national laws.

The CSRD is not the only EU regulation that has seen questions, objections, and delays. The European Deforestation Regulation (EUDR) also delayed implementation by a year due to rising questions and pressure from various stakeholders.

With such confusion in requirements, many companies have hesitated to fully invest in specific, regulation-based compliance until more clarity is provided.

3. The US Green Diesel Market Will Slow Its Growth and Create a Surplus, While Exports Look to Increase

Production surpluses did indeed impact the US renewable diesel market. According to ResourceWise data, the US currently sits about 1.53 billion gallons of green diesel above the mandated amounts. However, the market could see a correction that will impact the supply and demand landscape for 2025.

Biofuel demand is expected to rise in regions implementing new mandates like the EU. Some analysts have surmised that this could lead to fuel exporters opting out of shipping to the US altogether in 2025.

Furthermore, the Trump administration’s imminent return to the White House—and policymaking—will yield yet-to-be-determined shifts in the market. Without assurances of retroactive BTC (Biodiesel Tax Credit) benefits, selling to the US might not be a financially viable option for international suppliers.

Additionally, the 2025 biomass-based diesel mandate under RFS2 (the Renewable Fuel Standard) is projected to add around 500 million gallons of renewable fuel demand. Coupled with a potential drop in imports, this may strain the domestic market by a total of roughly 1.33 billion gallons.

4. We May See a US Marine Biofuel Blending Mandate

The uncertainty about biofuels mentioned at the beginning of this post holds especially evident regarding US policy on marine biofuel blending, among others.

Early in the year, both marine and SAF biofuel blending requirements were the subject of much commentary. But the unclear political climate in the US, alongside policy ambiguity, seemed to push formal decisions down the line for any new or updated blending mandates.

5. The Pressure to Decarbonize Will Only Continue to Gain Momentum Globally

Rising attention, scrutiny, and regulatory enforcement on decarbonization and emissions reduction have positioned these issues front and center as a global focus leading into 2025. Accordingly, the momentum is definitely heading toward a more sustainable world.

Here on the blog, we have tracked organizations such as the Science Based Targets Initiative (SBTi), a group that partners with corporations to develop reality-oriented decarbonization plans. Despite internal strife due to a controversial inclusion of carbon credits in its strategy development, SBTi partnerships help move companies forward in their low-carbon transitions.

Additionally, government mandates such as the above-mentioned CSRD and EUDR will begin more directly enforcing decarbonization efforts in 2024 and beyond. As these requirements ramp up, this momentum will also further increase.

6. Low Carbon Fuels Will Surge in Demand with Further Corporate Emission Reduction Goals

Connecting to the last prediction, global biofuel demand has certainly seen an uptick across 2024. For instance, we have seen particularly strong growth within the bio-bunkering market. An increasing number of ports are now offering bio-bunkering, and several freight companies have announced their ships' readiness for the fuel.

Learn More with On-Demand Webinar: The Rise of Marine Biofuels

Besides government mandates (both current and forthcoming), many corporations are simply jumping into the adoption process sooner rather than later. The decision helps them set the bar while progressively integrating compliance—avoiding hasty or shortsighted decisions closer to regulatory deadlines.

Although demand has risen, we have also identified some production-related market issues. For example, SAF's anticipated production of 1.5 million metric tons in 2024 fell considerably short at only about 1 million metric tons.

Why the shortfall? In some cases, the answer can be attributed to feedstock disruptions, especially in cases such as China’s current pivoting due to EU tariffs. As the country seeks new pathways for its former biodiesel trade with the EU, we may see other changes that could disrupt market motions.

But the primary cause unsurprisingly relates back to policy uncertainty in the wake of political shifts. The most notable example includes the return of the Trump administration in the US (and a much different take on renewables compared to Biden). Political turmoil in Germany has also affected the market in several ways.

7. Resources Like Wood Will See the Spotlight as Renewable Feedstocks

As an advanced feedstock, wood products have generated considerable attention within renewables. Processes and technology have brought costs down, making these feedstocks more commercially viable.

For instance, biochar is seeing an increase in attention and focus as a feedstock. Produced through pyrolysis, a high-temperature process that decomposes organic materials in low-oxygen conditions, biochar conserves carbon and reduces contamination.

Biochar also prevents carbon emissions through smoke or fumes, making it a cleaner and more efficient method. It is created using woody biomass—much of which would have been otherwise unusable as waste.

Read More: Biochar: Huge Potential in Biofuels and Renewable Energy

Another important wood product in the carbon transition is torrefied black pellets. These energy-dense bio-products are made from biomass like wood chips through high-temperature, low-oxygen torrefaction. This process creates robust, water-resistant pellets with coal-like energy efficiency—albeit from renewable resources.

Torrefied black pellets offer a lower-carbon alternative to traditional coal without a complex retrofitting of equipment to use it. It could help some more entrenched, CO₂ intensive industries such as mining make large strides in their decarbonization process.

Read More: How Torrefied Black Pellets Will Help the Carbon Transition

8. Rules on Future Fuels for Electricity and Hydrogen Will Become More Concrete

Like many other predictions we made, uncertainty has directly impacted policy clarity. This is especially evident in the US as the Republican victory calls many of Biden’s regulatory initiatives into question.

As a result, policies on future fuels in electricity and hydrogen have not progressed as quickly as anticipated. This led to many renewable producers in sectors like SAF pulling out of related operations until a clearer market path is defined.

An analyst report from ResourceWise’s Carbon Mitigator highlights the issue in terms of US tax credits:

The key tax credit from the Inflation Reduction Act (IRA) is 45Z, the clean fuel production credit whereby producers of low-carbon hydrogen can receive up to $3/Kg of hydrogen produced. Starting in 2025, this [is set to] replace the Blenders Tax Credit (BTC) as well as the sustainable aviation credit and be a key revenue stream for clean fuel producers going forward.

Without this in place, it makes it difficult to justify greater investment in the renewable fuels space in the US as this is worth more than $1/g for many would-be sustainable aviation fuel (SAF) producers.

Until the Trump administration lays out its policies and how they will impact current regulations like the IRA, we likely won’t see much in way of market investment decisions.

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With 2024’s trends identifying market disruptions, policy hesitation, and new technological breakthroughs, it’s important to stay up-to-date with all the latest information.

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