Green diesel, also known as renewable diesel, is a bio-based alternative fuel produced from non-petroleum renewable resources such as vegetable oils, animal fats, and waste cooking oils through hydrotreatment. Unlike biodiesel, green diesel is chemically similar to petroleum diesel and can be used in existing diesel engines without modifications. The market is gaining traction due to global efforts to reduce carbon emissions, meet renewable energy targets, and improve energy security.
The global green diesel market was valued at USD 35.39 billion in 2023 and is anticipated to grow at a CAGR of 11.3% from 2024 to 2033.
2. Recent Developments
2024: Neste expanded its renewable diesel production capacity in Singapore, positioning itself as a global leader.
2024: TotalEnergies and Clean Energy launched a joint venture for green diesel supply to U.S. transportation sectors.
2023: U.S. passed updated tax credits under the Inflation Reduction Act to incentivize renewable diesel production.
Ongoing: Several oil majors are converting traditional refineries to renewable diesel production plants.
3. Market Dynamics
3.1 Drivers
Rising demand for cleaner fuels and decarbonization policies.
Government mandates and subsidies for renewable fuel adoption.
Compatibility with existing infrastructure and diesel engines.
3.2 Restraints
High production and feedstock costs.
Feedstock supply chain volatility and competition with food sources.
Limited awareness and infrastructure in some developing regions.
3.3 Opportunities
Expansion of aviation biofuels and marine applications.
Advancements in feedstock flexibility and production technologies.
Emerging markets adopting green energy transition plans.
4. Key Market Restraints
Feedstock Competition: Competes with food and agriculture for raw materials like soybean oil and animal fats.
Capital-Intensive Plants: High upfront investment required for renewable diesel refinery conversion or new builds.
Policy Uncertainty: Market relies heavily on subsidies and mandates; changes in regulation can impact profitability.
5. Regional Insights
North America
Largest market, driven by U.S. federal and California state-level renewable fuel standards (e.g., LCFS, RFS).
Europe
Strong growth due to EU’s Fit for 55 package and mandates under RED II. Countries like Sweden and the Netherlands are leading adopters.
Asia-Pacific
Emerging market with rapid industrialization and government support for cleaner fuels in countries like Singapore, China, and Japan.
Latin America & MEA
Slow but growing adoption. Brazil and the UAE are exploring renewable diesel to diversify energy portfolios and reduce emissions.
6. Challenges and Opportunities
Challenges
Limited feedstock availability on a global scale.
Trade-offs between food security and fuel production.
Technological limitations in scaling up advanced hydrotreatment processes.
Opportunities
Utilizing non-food waste (e.g., algae, used cooking oil) as feedstock.
Partnerships between oil & gas and renewable energy companies.
Export potential for countries with advanced biofuel capacities.
7. Key Players
Neste Corporation
TotalEnergies SE
Chevron Corporation
Renewable Energy Group (acquired by Chevron)
ENI S.p.A.
Valero Energy Corporation (Diamond Green Diesel)
Preem AB
BP p.l.c.
Phillips 66
These companies are actively investing in production capacity expansion, joint ventures, and vertical integration to secure feedstock supply.
Table of Contents
Market Introduction
Recent Developments
Market Dynamics
3.1 Drivers
3.2 Restraints
3.3 Opportunities
Key Market Restraints
Regional Insights
Challenges and Opportunities
Key Players
Conclusion
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8. Conclusion
The green diesel market is witnessing accelerated growth driven by climate policies, investor interest in sustainable fuels, and the fuel's drop-in compatibility with current diesel engines. While feedstock supply and policy dependency present ongoing risks, innovation in production methods and expanding applications across transport sectors are expected to solidify green diesel’s role in the global transition to low-carbon energy.