Bioenergy Market

GBP 78.0 per megawatt-hour is the average price Drax has achieved on contracted forward power sales for 2026 to 2028, per its full-year 2025 results, and that realised price anchors the electricity leg of this study. The bioenergy market covers commercially sold modern bioenergy: fuel ethanol, biodiesel (fatty acid methyl ester, FAME), renewable diesel and sustainable aviation fuel (SAF), bioelectricity, biogas and biomethane, and wood pellets. Douglas Insights puts 2025 revenue at USD 255.48 billion, the product of 9,729 petajoules (PJ) sold at an average USD 26.26 per gigajoule (GJ), and sees USD 405.37 billion by 2035, a 4.72% compound annual growth rate (CAGR). Policy sets the pace: the US Environmental Protection Agency (EPA) announced Renewable Fuel Standard (RFS) volumes of 26.81 billion RINs for 2026 on 27 March 2026 in its final rule. The study belongs to our bioenergy and renewable gas coverage, and every number is built under the Douglas Insights research methodology.

What price per gigajoule do bioenergy buyers pay for ethanol, renewable diesel, pellets and biopower?

Bioenergy sells at USD 26.26 per GJ on a 2025 volume-weighted basis, with a spread from USD 12.90 for wood pellets to USD 42.10 for renewable diesel and SAF. Road transport and aviation fuels sit at the top because mandates and carbon credits add to energy value.

Converted into trade units, the Douglas Insights price deck reads as follows. Fuel ethanol at USD 25.90 per GJ equals about USD 0.549 per litre at 21.2 megajoules (MJ) per litre. FAME biodiesel at USD 34.60 per GJ is roughly USD 1.142 per litre. Renewable diesel and SAF at USD 42.10 per GJ come to about USD 1.448 per litre. Bioelectricity at USD 26.40 per GJ is USD 95.0 per megawatt-hour (MWh). Biogas and biomethane average USD 13.60 per GJ, or USD 49.0 per MWh. Wood pellets at USD 12.90 per GJ match about USD 219.3 per tonne at 17 GJ per tonne.

One cross-check comes from a refiner. Valero booked USD 1.0 billion of ethanol segment revenue in the second quarter of 2026 on production of 4.7 million gallons a day, according to its earnings release filed with the SEC. That works out at about USD 2.34 per gallon, or USD 29.13 per GJ, 12.5% above our ethanol price because segment revenue also carries distillers grains and corn oil. Margins swing harder than prices: Neste reported a renewable products comparable sales margin of USD 1,223 per ton in the second quarter of 2026 against USD 361 a year earlier in its half-year report.

Douglas Insights models the average bioenergy price rising 1.33% a year to 2035, reaching USD 26.61 per GJ in 2026. Mix shift does part of the work.

What does the bioenergy market cover, and which uses of wood and dung sit outside it?

The bioenergy market counts 9,729 PJ of modern bioenergy sold to a third party in 2025, across six products and five regions. Traditional use of fuelwood, charcoal and dung for cooking is excluded, as is black liquor and bagasse burned inside the mill that produced it, because no market price is paid for that energy.

The World Bioenergy Association counts 56 exajoules (EJ) of total biomass supply in 2023, and solid biomass is 83% of it. Our 9,729 PJ, equal to 9.73 EJ, is the traded slice. Feedstocks in scope are corn, sugarcane, vegetable oils, used cooking oil and animal fats, wood and forestry residues, and manure and organic waste. End uses are road transport, aviation, power generation, industrial heat and residential heating. Equipment is left to the Anaerobic Digestion Biogas Plants Market and the Industrial Boilers Market studies.

Which bioenergy product makes the money: fuel ethanol, FAME biodiesel or bioelectricity?

Fuel ethanol leads bioenergy revenue with a 26.8% share, USD 68.44 billion in 2025, just ahead of bioelectricity at 26.6%. Ethanol wins on sheer volume: 2,642 PJ, mostly from US corn and Brazilian sugarcane, blended into gasoline under mandates in both countries.

Fuel ethanol, at USD 68.44 billion, holds its lead because the World Bioenergy Association counts 121 billion litres produced in 2024, more than 60% of all liquid biofuels. Bioelectricity follows at USD 68.02 billion, built on 698 terawatt-hours (TWh) of biopower generated in 2024, of which China supplied 209 TWh. Biodiesel (FAME) takes USD 58.83 billion and a 23.0% share; Indonesia, at 13 billion litres in 2024, and Brazil, at 8.9 billion litres, anchor it, but its volume grows only 1.55% a year as renewable diesel takes new capacity. Renewable diesel and sustainable aviation fuel earn USD 33.31 billion from just 791 PJ, since each gigajoule sells for 62.5% more than ethanol. Biogas and biomethane add USD 16.05 billion, at the lowest price per GJ of any gas or liquid product. Wood pellets close the table at USD 10.84 billion, a 4.3% share, on 47 million tonnes of global production in 2023.

Renewable diesel and SAF is the fastest-growing bioenergy segment at 8.97% a year, climbing to USD 78.62 billion by 2035. Volume does most of it, 8.05% a year, because aviation quotas and low-carbon fuel credits pay for hydrotreated fuels that drop into existing engines with no blend wall.

Why are blend mandates, SAF quotas and biomethane grids lifting bioenergy demand?

Bioenergy volume grows 3.35% a year to 2035 in the base case, and four drivers explain all of it. Transport blending adds 0.89 points, renewable diesel and SAF 0.81 points, biogas and biomethane 0.71 points, and power plus pellets 0.94 points, together lifting sales from 9,729 PJ to 13,526 PJ.

Ethanol and biodiesel blend mandates: 0.89 points

Blend rules are the oldest bioenergy driver and still the largest single policy lever. Brazil raised anhydrous ethanol in gasoline from 30% to 32% from 1 August 2026, under a resolution of its National Energy Policy Council (CNPE) published on 30 July 2026, according to the Ministry of Mines and Energy; the Fuel of the Future law, Law 14,993 of 2024, allows up to 35%. In the United States the EPA set 26.81 billion RINs for 2026 and 27.02 billion for 2027. Douglas Insights expects ethanol and FAME together to add 1,006 PJ by 2035, worth 0.89 points of the volume leg.

Renewable diesel and sustainable aviation fuel: 0.81 points

Hydrotreated fuels are the steepest bioenergy growth line. The World Bioenergy Association counts 20 billion litres of renewable diesel and 1.3 billion litres of SAF produced in 2024. Neste expects its renewables capacity to reach 6.8 million tons a year in 2027, and Diamond Green Diesel runs about 1.2 billion gallons a year of capacity on the US Gulf Coast, per Valero. Our model adds 925 PJ by 2035, which is 0.81 points, the most added by any single bioenergy product.

Biogas upgrading and grid injection: 0.71 points

Biogas output reached 1.76 EJ in 2023, and the International Energy Agency (IEA) sees biogases in end uses rising by 0.4 EJ between 2023 and 2030 in its Renewables 2024 report. Upgraded biomethane qualifies for gas-grid quotas and for transport credits, so Douglas Insights models biogas and biomethane volume rising 5.35% a year, adding 807 PJ and 0.71 points.

Biopower and pellets for dispatchable power and heat: 0.94 points

Bioelectricity is dispatchable, unlike wind and solar. Global biopower capacity reached 150.8 gigawatts (GW) in 2024 after a record 4.6 GW added that year, and Drax generated 15.0 TWh in 2025, 6% of UK power and 11% of UK renewables. Power plus pellets add 1,065 PJ by 2035 in our model, 0.94 points of the 3.35% volume leg.

Which feedstock bottlenecks and policy hurdles hold back bioenergy volume?

Three restraints remove 0.88 points from bioenergy volume growth in the base case: lipid feedstock limits take 0.38 points, electric vehicles 0.29 points and biomass subsidy cliffs 0.21 points. Without them, the volume leg would run near 4.2% a year rather than 3.35%.

Used cooking oil and animal fats are finite. Renewable diesel and SAF plants compete for the same waste lipids, so Douglas Insights trims 0.38 points from bioenergy volume for feedstock scarcity. Margin swings show the stress: Neste moved from USD 361 to USD 1,223 per ton in twelve months.

Electric cars erode the gasoline pool that ethanol blends into. Each point of blend rate is worth less when gasoline demand falls, so Douglas Insights holds global ethanol volume growth to 2.45% a year, a drag of 0.29 points on total bioenergy volume.

Subsidy cliffs hit biopower. Drax shows the pattern: it needed a new low carbon dispatchable contract for difference (CfD) for Drax Power Station, which it calls an inflection point for the group. Plants without such contracts close, and Douglas Insights removes 0.21 points for conversions that never get a successor scheme.

Which companies run the largest ethanol, renewable diesel and wood pellet bioenergy assets?

Valero leads the disclosed bioenergy volumes, and Douglas Insights estimates its share at 4.4% of 2025 revenue, with Diamond Green Diesel volumes counted in full. The top three disclosed producers, Valero, Neste and Drax, hold about 7.8%, so bioenergy remains a fragmented market.

Valero runs two bioenergy businesses: its ethanol segment earned USD 318 million of operating income in the second quarter of 2026, and renewable diesel USD 717 million against a USD 79 million loss a year before. Annualised, that is about 318 PJ.

Neste holds the second-largest disclosed bioenergy volume in our sample. It sold more than 1 million tons of renewable products in the second quarter of 2026, which Douglas Insights annualises to about 176 PJ and a 2.9% share. Neste says its Rotterdam expansion is planned to make that site the largest renewable diesel and SAF refinery in the world.

Drax is the largest disclosed biopower generator in our sample, producing 4.2 million tonnes of pellets in 2025, 5% more than in 2024, and 15.0 TWh of power. Darling Ingredients is the other Diamond Green Diesel partner; it has agreed to sell about USD 150 million of production tax credits generated by the joint venture, per its own release. POET calls itself the largest biofuel producer in the world and runs 35 bioprocessing facilities, while Verbio reported final EBITDA of EUR 193.9 million for its 2025/26 year. The EPA rule of 27 March 2026 lifts every US name on this list, because biomass-based diesel volumes rise to 9.07 billion RINs in 2026.

Where is bioenergy volume growing fastest, from US corn belts to Brazilian cane mills?

North America leads bioenergy revenue with USD 80.15 billion in 2025, but Asia Pacific grows fastest at 6.21% a year to USD 126.98 billion by 2035. The IEA places much of new renewable fuel demand in India and China, while US and European volumes are held near gasoline and diesel demand.

North America earns USD 80.15 billion and grows 3.86% a year to USD 117.05 billion, carried by US corn ethanol and Gulf Coast renewable diesel. Europe follows at USD 65.35 billion, rising 3.55% a year to USD 92.63 billion, because RED III lifts the renewable target to 42.5% while road fuel demand shrinks. Asia Pacific starts at USD 69.52 billion; China produced 209 TWh of biopower in 2024, 30% of the world total, and Indonesia made 13 billion litres of biodiesel. Latin America, at USD 33.70 billion, grows 5.63% a year to USD 58.27 billion as Brazil moves to E32.

The Middle East and Africa is the wildcard: only USD 6.77 billion in 2025, growing 4.42% a year to USD 10.43 billion, but a single sugarcane ethanol mandate or a SAF export refinery would move that line faster than any other in this bioenergy model.

How do corn, sugarcane, used cooking oil and forestry residues split the bioenergy feedstock bill?

Corn and sugarcane feed most of the 2,642 PJ of fuel ethanol in 2025, vegetable oils most FAME, and used cooking oil and animal fats most renewable diesel. Wood and forestry residues supply pellets and biopower, and manure and organic waste supply biogas.

The United States produced 61.4 billion litres of ethanol in 2024, mostly from corn, and Brazil 32.5 billion litres, mostly from sugarcane, according to REN21. Together they make 77.6% of the 121 billion litres counted globally, which is why the ethanol price in this bioenergy study follows US and Brazilian rack prices. Waste lipids are tighter, and their value rises with each new hydrotreating plant. The European Union consumes 50% of the world pellet supply.

Which bioenergy technologies, from cellulosic ethanol to biomethane upgrading, change the cost curve?

Three bioenergy technologies shape the 2035 cost curve: hydrotreating for renewable diesel and SAF, membrane upgrading for biomethane, and cellulosic conversion of residues. Only the first is at commercial scale, and it already earns USD 33.31 billion in 2025 revenue.

Cellulosic biofuel remains small. The EPA set 1.36 billion RINs for 2026 and 1.43 billion for 2027 and partially waived the 2025 cellulosic requirement because production fell short.

Which rules govern bioenergy: RED III, the Renewable Fuel Standard and the Fuel of the Future law?

Three rule sets drive 66.5% of new bioenergy volume to 2035 in our model: the EU Renewable Energy Directive (RED III), the US Renewable Fuel Standard and Brazil’s Fuel of the Future law. Each sets a mandated quantity, so bioenergy demand follows policy more than oil prices.

Directive (EU) 2023/2413 entered into force on 20 November 2023 and sets a binding target of at least 42.5% renewables in the EU energy mix by 2030, aiming for 45%, per the European Commission. The US final rule fixes 26.81 billion RINs for 2026, 27.02 billion for 2027 and reallocates 70% of small refinery exemptions granted for 2023 to 2025; it also removes renewable electricity as a qualifying fuel. Brazil’s E32 resolution is temporary, valid for 180 days and renewable for 180 more, inside a legal ceiling of 35% ethanol.

What if RFS volumes or the Brazilian E32 blend move the bioenergy outlook for 2035?

Bioenergy revenue reaches USD 405.37 billion by 2035 in the base case, with a slower case at USD 346.68 billion and a faster case at USD 464.22 billion. The gap is set by policy quantities, because two thirds of new bioenergy volume is mandate-backed.

The slower case assumes US volumes stall after the 2026 and 2027 levels the EPA set on 27 March 2026, Brazil returns from E32 to E30 when the 180-day term lapses, and lipid prices cap renewable diesel. The faster case assumes Brazil moves to the legal 35% ceiling and SAF quotas tighten. Add or subtract one point of annual petajoule growth and the 2035 bioenergy value shifts by about USD 39.3 billion. Published forecasts run from about 7.1% to 9.7% a year; our 4.72% sits below them because we count energy sales only, not plant equipment, and hold prices close to 2025 levels.

Douglas Exclusive: the Bioenergy Mandate Pull Tracker

The Bioenergy Mandate Pull Tracker is a Douglas Insights model built from 20 inputs: 14 sourced data points on volumes, capacities and mandates, and 6 Douglas Insights coverage ratios, one per product. It tracks how much of the new bioenergy volume between 2025 and 2035 is backed by a binding quantity rule rather than by price.

The finding: 2,529 of the 3,803 new bioenergy petajoules, or 66.5%, depend on a mandate. Renewable diesel and SAF is the most exposed at 91%, bioelectricity the least at 34%. The 14 sourced inputs are the six production and generation counts from the World Bioenergy Association and REN21, two IEA outlook figures, the EPA total and biomass-based diesel volumes, the Brazilian E32 and E35 limits, the RED III 42.5% target and the Neste 6.8 million ton capacity goal.

Methodology: how were bioenergy petajoules and per-gigajoule prices counted?

Bioenergy revenue is 9,729 PJ multiplied by USD 26.26 per GJ, which equals USD 255.48 billion, built from six product lines and five regions. Volumes come from 2023 and 2024 production counts rolled forward to 2025; prices are Douglas Insights 2025 averages per product.

Ethanol volume starts from 121 billion litres at 21.2 MJ per litre, or 2,565 PJ in 2024, rolled to 2,642 PJ. FAME uses 50 billion litres at 33 MJ, 1,650 PJ, rolled to 1,700 PJ. Renewable diesel and SAF use 21.3 billion litres at 34.4 MJ, 733 PJ, rolled to 791 PJ. Bioelectricity converts 698 TWh at 3.6 PJ per TWh, 2,513 PJ, rolled to 2,576 PJ. Pellets convert 47 million tonnes at 17 GJ per tonne, 799 PJ, rolled to 840 PJ, and biogas sold for direct use is set at 1,180 PJ against the IEA count of 1.1 EJ in end uses in 2023.

Two cross-checks agree within stated gaps. The Valero ethanol revenue per GJ sits 12.5% above our ethanol price, a gap explained by co-products. Our 2030 liquid biofuel volume of 5.98 EJ compares with the IEA forecast of 5.7 EJ, 4.9% higher, because we grow renewable diesel and SAF at 8.05% a year. Regional rows add to the global figure in 2025 and 2035, and segment values reconcile to USD 255.48 billion.

Sources

1. US EPA Final Renewable Fuel Standards rule for 2026 and 2027 (2026)
2. Ministry of Mines and Energy, Brazil E32 resolution published (2026)
3. Drax Group Full year results 2025 (2026)
4. Neste Half-year financial report January to June 2026 (2026)
5. Valero Energy (SEC) Second quarter 2026 earnings release (2026)
6. IEA Renewables 2024: renewable fuels (2024)
7. European Commission Renewable Energy Directive (2023)
8. World Bioenergy Association Global Bioenergy Statistics Report 2025 summary (2025)
9. REN21 Global Status Report 2025: bioenergy (2025)