As Western nations pursue carbon neutrality with increasing urgency, biodiesel is making a timely and strategic comeback—not as a flashy disruptor, but as a practical and scalable solution that bridges the present and future of clean transportation.
While much of the media spotlight is on electric vehicles and hydrogen, biodiesel remains a quietly powerful contender, offering tangible environmental, economic, and operational benefits—especially for hard-to-electrify sectors like freight, agriculture, and municipal fleets.
Transportation is the largest source of greenhouse gas emissions in the U.S. and one of the fastest-growing emitters in the EU. In the U.S., the sector accounts for about 30% of total energy use and 70% of petroleum consumption.
In Europe, despite progress in passenger EVs, transport remains the only sector where emissions continue to rise. Against this backdrop, biodiesel presents a rare win-win: it reduces emissions, enhances energy security, supports domestic agriculture, and integrates seamlessly with existing diesel infrastructure.
From an environmental and public health standpoint, the case for biodiesel is compelling. Life cycle assessments by the U.S. Department of Energy’s Argonne National Laboratory and the California Air Resources Board (CARB) have found that pure biodiesel (B100) reduces greenhouse gas emissions by up to 74% compared to petroleum diesel.
The Clean Fuels Alliance America reports that using B100 across major U.S. cities could prevent over 456,000 asthma attacks annually, avoid at least 142,000 lost workdays, 9,400 cancer cases, and 910 premature deaths, saving more than $7.5 billion in public health costs.
Moreover, biodiesel's higher flash point (>130°C vs. ~52°C for petroleum diesel) makes it significantly safer to handle, store, and transport—an underappreciated asset in emergency response scenarios or environmental spill prevention.
In cities like Seattle, Denver, and Los Angeles, studies have shown that switching to biodiesel can reduce vehicular cancer risk by up to 72%.
On a technical level, biodiesel improves fuel lubricity and boosts cetane ratings—important factors in engine performance, particularly under ultra-low sulfur diesel (ULSD) standards. Since sulfur removal reduces the natural lubricity of diesel, even a 2% biodiesel blend (B2) can restore wear protection without requiring engine modifications. This is a crucial benefit for older diesel engines still prevalent in North American and European fleets.
From an energy resilience perspective, biodiesel’s domestic production strengthens national fuel security by diversifying the energy supply and reducing dependence on volatile international oil markets.
The U.S. Inflation Reduction Act (IRA) has earmarked over $9.4 billion for biofuels and clean energy, catalyzing a wave of new investment and regional supply chain development. In 2024 alone, the U.S. biodiesel sector contributed over $42.4 billion to the national economy, supported 107,000 jobs, and generated $6 billion in annual wages—$15.2 billion of which went to soybean growers.
Europe, too, is betting big on biofuels. Under the European Green Deal and updated Renewable Energy Directive (RED III), EU member states are ramping up targets for renewable transport fuels, aiming for at least a 14% share by 2030.
Analysts forecast the European biodiesel market could reach $18.7 billion by 2033, with a CAGR of 5.6%. More than 25,000 direct jobs in biodiesel production and over 220,000 across the broader EU biofuels value chain reflect its growing economic weight.
However, biodiesel’s journey is not without controversy. The “food vs. fuel” debate remains unresolved, especially with first-generation biodiesel made from palm oil or food crops like soy and corn.
Research from the University of Leicester and other institutions shows that palm-based biodiesel, especially from peatlands, can result in higher lifecycle emissions than fossil fuels, negating its environmental benefits.
Concerns over deforestation, indigenous rights, and biodiversity loss have led to tighter EU restrictions on feedstock eligibility and sustainability scoring under RED II and RED III.
As a result, policy is now shifting toward advanced biofuels—those derived from waste oils, non-edible crops, and agricultural residues. Hydrotreated vegetable oil (HVO), often made from used cooking oil (UCO), is especially attractive due to its lower carbon intensity and high engine compatibility.
Some EU nations even allow HVO to count twice toward renewable targets under double-counting provisions. But the surge in Chinese UCO exports has caused a glut in the European market, leading to plant closures like the recent shutdown of Greenergy’s Lincolnshire facility in the UK.
The removal of import duties on U.S. HVO by the UK has further tilted the competitive landscape, putting domestic producers at a disadvantage.
Across the Atlantic, U.S. farmers and biodiesel stakeholders are raising similar alarms. While the IRA’s tax credits have energized domestic production, cheap UCO imports from Asia threaten to distort the market and erode the benefits for American producers. There’s growing pressure on lawmakers to limit tax incentives to domestically sourced, sustainably verified biofuels.
Market instability and policy inconsistency remain key concerns. In Europe, fluctuating mandates and regulatory ambiguity have shaken investor confidence.
Major players like Shell, BP, and Neste have paused or postponed biofuel projects, while plummeting carbon credit prices and weakened blending targets have slashed profit margins across the board. In the UK, producers like Greenergy and ABF have issued urgent calls for government support to avoid a cascade of closures.
To unlock biodiesel’s full potential, experts recommend a coordinated strategy: prioritize advanced, waste-based biofuels; strengthen traceability and sustainability certification; stabilize credit markets and mandates; and integrate biodiesel as a complementary—not competing—solution alongside electrification and green hydrogen.
On the ground, real-world examples show what’s possible. The City of Lincoln, Nebraska transitioned over 130 municipal fleet vehicles to B20, displacing 215,000 gallons of petroleum diesel and aligning fleet operations with its Climate Action Plan goals.
In the Northeastern U.S., states like New York and Rhode Island are blending biodiesel into heating oil, with consumption expected to reach 10–20% of heating fuel demand by 2030.
In Portugal, Galp is investing €400 million in a new Sines refinery to produce 270,000 tons of HVO annually by 2026—using wind and solar-powered electrolysis for hydrogen, combined with waste oils. This project exemplifies how biodiesel can anchor circular economy strategies and integrate with broader renewable infrastructure.
For fleet operators and commercial users, biodiesel offers a compelling value proposition: lower total emissions, reduced engine wear, minimal infrastructure investment, and flexibility in fuel procurement. For policymakers and investors, it supports job creation, rural development, and decarbonization goals—all while building a resilient and distributed fuel supply chain.
Ultimately, biodiesel isn’t just a "bridge fuel." With the right policies and sustainability safeguards, it can be a cornerstone of the West’s clean transport future. But that requires moving beyond buzzwords and ensuring transparent, lifecycle-based standards that differentiate truly sustainable biofuels from their carbon-costly counterparts.
Biodiesel may not steal headlines like EVs or hydrogen, but it delivers where it counts: cleaner air, lower emissions, stronger economies, and energy resilience. In the quiet but consequential race to decarbonize transport, biodiesel deserves far more than a footnote—it deserves a seat at the strategy table.