Why Are Governments Encouraging Vehicle Owners to Replace Conventional Fuels with Biodiesel?

Biodiesel is an eco-friendly fuel which can be produced domestically and utilized in diesel engines with minimal or no alterations to fuel or engine systems. In comparison to conventional fuels, biodiesel emits lesser carbon dioxide (CO2) and other greenhouse gas (GHG) emissions and they are free of aromatic and sulfur compounds. Owing to the environment-friendly trait of this clean fuel, several governments are encouraging its usage in vehicles. Additionally, the surging focus of many countries on reducing dependence on foreign oil reserves will also fuel the consumption of biodiesel in the forthcoming years.

Moreover, the surging concerns over reducing GHG emissions are expected to propel the biodiesel market growth during the forecast period (2021–2030). According to P&S Intelligence, the market generated $39.0 billion revenue in 2020. For example, the U.S. Environmental Protection Agency (EPA) and National Highway Traffic Safety Administration (NHTSA) jointly finalized the Phase 2 greenhouse gas emission and fuel economy standards for medium- and heavy-duty vehicles for model years to reduce CO2 emissions by around 1.1 billion metric tons in the U.S. between 2021 and 2027.

The application segment of the biodiesel market is classified into fuel, power generation, and others, such as military, mining, and healthcare. Under this segment, the fuel category generated the highest revenue during the historical period (2015–2020), and it is expected to display the fastest growth during the forecast period. This can be credited to the increasing focus of the agriculture, automotive, and marine industries on using clean fuels, owing to the burgeoning need to reduce the emission of toxic pollutants. 

Globally, the European region accounted for the largest share in the biodiesel market in 2020, owing to the surging number of government regulations for mitigating greenhouse gas (GHG) emissions. For example, the Euro VI vehicle emission standards limit the emission of NOx, hydrocarbon (HC), and carbon monoxide (CO) from gasoline-powered light-duty vehicles to 0.06 g/km, 0.1 g/km, and 1.0 g/km, respectively. Euro VI norms also allow the emission of 0.08 g/km of nitrogen oxide (NOx), 0.17 g/km HC+NOx, and 0.5 g/km of CO from diesel-powered light-duty vehicles in the region. 

Thus, the toughening vehicular emission regulations and rising government focus on mitigating GHG emissions will encourage the adoption of biodiesel across the world.