Sustainable Biofuels & E-Fuels Market 2026-2036: Technologies, Players, Forecasts

Transportation accounts for ~20% of all global CO₂ emissions. While electric vehicles may provide the long-term sustainable solution for road vehicles, they do not address the large amounts of existing ICE (internal combustion engine) vehicles. They also cannot provide a feasible solution for aviation and shipping due to energy density constraints. Therefore, low-carbon fuels will be needed in large amounts to reach global net-zero targets. Many of these sustainable fuels can be drop-in replacements, requiring minimal changes in global infrastructure.

 

In this "Sustainable Biofuels & E-Fuels Market 2026-2036: Technologies, Players, Forecasts" report, IDTechEx provides detailed analysis of advanced biofuels (second generation and beyond) and e-fuels. This analysis encompasses production processes, relevant policies, key technological innovations, technology providers, and project developers. It also explores the techno-economic challenges and opportunities in the sector. The report focuses on key fuels such as renewable diesel, sustainable aviation fuel (SAF), and renewable methanol, amongst others.

 

 

Undoubtedly, 2025 was a landmark year for sustainable fuels. In both the UK and EU, regulation such as ReFuelEU Aviation means binding blending targets for SAF (sustainable aviation fuel) came into effect, creating unprecedented large-scale mandatory demand for SAF. New project announcements worldwide have focused on SAF rather than renewable diesel. This reflects the industry belief that SAF markets will be more lucrative long-term as the leading tool for aviation decarbonization. Subsequently, this IDTechEx report contains forecasting for SAF market potential, with the global SAF market projected to reach US$50 billion in 2036.

 

However, there is still a large amount of regulatory uncertainty surrounding SAF. For example, in the US, the planned project pipeline for SAF is very large, but current available government support for SAF would not economically incentivize SAF over renewable diesel production at most facilities outside of voluntary demand from airlines. In the short term, this may lead to significant SAF overcapacity as facilities open ahead of expected regulatory demand.

 

This IDTechEx report provides a comprehensive analysis of the renewable diesel and SAF markets, focusing on policy landscapes driving the market, production processes, notable technological innovations, key players, project case studies, and economics. It highlights the different production technologies and routes for renewable diesel and SAF production, exploring emerging pathways, as well as providing insights into the unique challenges and opportunities within each sector.

 

The HEFA/HVO pathway is a major contributor to early SAF growth. This is the lowest cost production pathway for SAF, with a selling price not too far from conventional jet fuel. However, HEFA feedstocks (used cooking oils, fats, and greases) are limited, and at some point beyond 2030, the global SAF market will have to start contending with the "HEFA tipping point" - when HEFA SAF supply will become insufficient to meet the rapidly growing demand for SAF spurred by increased decarbonization regulation.

 

This will force a pivot to emerging SAF pathways such as alcohol-to-jet, gasification/Fischer Tropsch, and e-SAF. These technologies are scaling up. For example, the first commercial ATJ facility (LanzaJet's Freedom Pines Fuels that came online in 2025) produces 9 million gallons of SAF and 1 million gallons of renewable diesel per year. However, high cost remains a significant barrier that technology development and regulation need to address.

 

This report provides a comprehensive analysis of second-generation biofuel technologies, such as cellulosic ethanol production, pyrolysis, gasification, Fischer-Tropsch (FT) synthesis, hydrothermal liquefaction (HTL) and alcohol-to-jet/gasoline, along with key innovations, project case studies, and technology suppliers. It also extensively covers the e-fuel landscape, focusing on production pathways, key players, and advancements in syngas generation, offering valuable insights into this rapidly evolving sector.

 

 

Renewable methanol production is also rapidly increasing, with several ~100,000 tonnes per annum facilities already under construction. China will soon emerge as the leading region given its dominant position in existing methanol markets, its low CAPEX construction, and its plentiful biomass and green hydrogen resources for emerging biomass gasification and e-methanol technologies. Demand for low-carbon methanol is being driven by demand for clean marine fuels, decarbonization of the chemical sector, and as a feedstock for the SAF (via the methanol-to-jet pathway). IDTechEx's report offers an in-depth analysis of the renewable methanol market, covering technology suppliers, key project developers, and announced project capacities, providing a detailed outlook on the future of renewable methanol.

 

The sustainable fuel market is poised for significant growth in the coming years with IDTechEx forecasting global renewable diesel and SAF production capacity will exceed 67 million tonnes annually by 2036, growing at a CAGR of 8.1% between 2026 and 2036. This impressive growth trajectory underscores the increasing importance of sustainable fuels in the global energy mix.

 

The major drivers for this growth are policy developments, such as SAF fuel mandates in the EU and UK or the US' 45Z tax credit, as well as a push from vehicle fleet operators and airlines to reduce carbon emissions. Another major driver is the emergence of a wide range of production technologies and their commercial uptake in sustainable fuel production projects. However, the sector also faces significant challenges associated with overall energy efficiency (especially when comparing e-fuels to EVs for road transport), feedstock availability, project development issues (long development timelines and significant funding needed) and achieving cost parity with conventional fossil fuels. Together, these drivers and challenges are shaping this rapidly developing market.

 

This report provides detailed market forecasts for various sustainable fuel types, including renewable methanol, renewable diesel, and SAF. Detailed market forecasts are provided, that may be broken down by production regions (Europe, North America, South America, and APAC) and technological pathways (e.g., HEFA/HVO, gasification-FT, and power-to-liquids/e-fuels) for renewable diesel, SAF, and renewable methanol. From detailed technology analyses to market forecasts and project case studies, this report provides the insights needed to understand and navigate the sustainable fuel landscape.

Introduction to the sustainable fuel market:

 

Overview of the conventional (first generation) biofuel market:

 

Second generation biofuel production technologies. For each of the below, IDTechEx analyzed the production technologies, key innovations, project case studies, technology suppliers, challenges & opportunities:

 

Third & fourth generation biofuel technologies:

 

E-fuel production landscape. For each of the below, IDTechEx analyzed the production technologies, key innovations, project case studies, technology suppliers, challenges & opportunities:

 

Advanced biofuel & e-fuel markets:

 

Market forecasts:

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