Renewable Fuel Market to Hit $2.0 Trillion by 2031, Growing at 7.9% CAGR

Global Renewable Fuel Market Booming with Government Support & Clean Energy Shift

WILMINGTON, DE, UNITED STATES, September 5, 2025 /EINPresswire.com/ --

The global renewable fuel market has been witnessing remarkable growth as governments, businesses, and communities increasingly focus on sustainable energy solutions. According to a recent report by Allied Market Research, the renewable fuel market was valued at $1.0 trillion in 2021 and is projected to nearly double, reaching $2.0 trillion by 2031, growing at a CAGR of 7.9% from 2022 to 2031. This surge is being driven by the adoption of biofuels, rising demand for eco-friendly alternatives, and international commitments to reduce carbon emissions.

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What Are Renewable Fuels?

Renewable fuels are produced from naturally replenishing resources such as biofuel feedstocks, solar power, hydropower, wind, and geothermal energy. They are considered renewable because they can be harnessed infinitely and are available in abundant supply. Unlike fossil fuels, they offer a sustainable pathway to meeting rising global energy needs while reducing greenhouse gas emissions.

Market Drivers: Policies, Commitments, and Growing Demand

The renewable fuel market is expanding rapidly due to government incentives, private sector investments, and international agreements such as the Paris Agreement and global net-zero pledges. As energy demand continues to rise—projected to increase by 28% over the next two decades—renewable energy is expected to be the fastest-growing energy source.

Biofuels on the Rise: Ethanol and biomass-based diesel dominate the renewable fuel market, with transportation biofuel production already growing by more than 6% according to the International Energy Agency.

Government Support: Policies like the Clean Air Act Amendments of 1990 and the U.S. Energy Policy Act of 2005 pushed renewable fuels into the mainstream, initially as a way to improve air quality and later as a solution to climate change.

Transportation Transformation: From hydrogen-powered fuel cell vehicles to biodiesel-powered buses and biomass-based aviation fuels, renewable fuels are reshaping global mobility.

Impact of COVID-19 on the Renewable Fuel Market

The COVID-19 pandemic initially slowed energy consumption, including biomass-based power generation. However, the rebound was strong: global power generation surged by 5.5% in 2021, surpassing pre-pandemic levels. BRICS nations, particularly China and India, led this recovery, with solar and wind energy making significant contributions to the renewable energy mix.

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Key Market Segments

By Source:

Hydropower dominated the market in 2021.

Wind energy is expected to register the fastest growth with a CAGR of 8.3%.

Other sources include biofuel, solar, geothermal, and others.

By Application:

Power generation was the largest segment in 2021.

Transportation is witnessing fast adoption with biofuels and sustainable aviation fuels.

Other applications include heating and cooling systems.

By Region:

Asia-Pacific leads the renewable fuel market with over 44% market share in 2021.

Rising electrification in rural regions, population growth, and government investments are fueling expansion.

India, for example, is expected to attract investments worth $15 billion in renewable energy in 2022 alone, focusing on solar equipment manufacturing, electric vehicles, and green hydrogen.

Future Outlook: A Trillion-Dollar Opportunity

Looking ahead, renewable fuels are expected to play a central role in global energy transitions. By 2040, nearly 49% of electricity is forecasted to come from renewable energy sources. Improved energy storage technologies and declining costs of solar and wind power will accelerate adoption further. In India alone, the use of renewables in place of coal is expected to save Rs. 54,000 crore ($8.43 billion) annually, highlighting the economic as well as environmental benefits.

Moreover, about 15,000 MW of wind-solar hybrid capacity is projected to be added between 2020 and 2025, signaling a shift toward integrated renewable systems.

Key Players in the Renewable Fuel Market

Prominent companies driving the renewable fuel industry include:

Clean Energy Fuels

Cosan SA

Exxon Mobil Corporation

My Eco Energy

Neste

Renewable Energy Group

Shell plc

Suncor Energy Inc.

Total Energies

Valero Energy Corporation

These players are pursuing strategies such as product launches, business expansion, and strategic collaborations to strengthen their positions in the renewable fuel market.

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Conclusion

The renewable fuel market represents a pivotal element in the global transition toward clean energy. With strong government backing, technological advancements, and increasing investor interest, the sector is poised for sustained growth. As countries work toward carbon neutrality, renewable fuels will continue to power industries, transport, and communities worldwide—making the journey to a sustainable future both achievable and profitable.

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About Us

Allied Market Research (AMR) is a full-service market research and business-consulting wing of Allied Analytics LLP based in Portland, Oregon. Allied Market Research provides global enterprises as well as medium and small businesses with unmatched quality of "Market Research Reports" and "Business Intelligence Solutions." AMR has a targeted view to provide business insights and consulting to assist its clients to make strategic business decisions and achieve sustainable growth in their respective market domain.

Pawan Kumar, the CEO of Allied Market Research, is leading the organization toward providing high-quality data and insights. We are in professional corporate relations with various companies and this helps us in digging out market data that helps us generate accurate research data tables and confirms utmost accuracy in our market forecasting. Each and every data presented in the reports published by us is extracted through primary interviews with top officials from leading companies of domain concerned. Our secondary data procurement methodology includes deep online and offline research and discussion with knowledgeable professionals and analysts in the industry.

David Correa
Allied Market Research
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