Biofuel-Powered Machinery Market Size, Share & Industry Analysis, By Fuel Type (Biodiesel, Bioethanol, Biogas, and Others), By End User (Agriculture, Construction, Industrial, and Others), and Regional Forecast, 2026 – 2034

The global biofuel-powered machinery market size was valued at USD 4.81 billion in 2025. The market is projected to grow from USD 5.13 billion in 2026 to USD 9.41 billion by 2034, exhibiting a CAGR of 7.9% during the forecast period.

The market is gaining momentum alongside the expansion of the biofuels market, driven by increasing investments in renewable energy and efforts to reduce carbon footprints across industrial sectors. Biofuel-powered machinery includes equipment used across agriculture, construction, and industrial applications that operates using biodiesel, bioethanol, biogas, or blended renewable fuels. Growth in biofuels production facilities and advancements in biofuels processing technologies are supporting reliable fuel availability and encouraging wider adoption of biofuel-compatible machinery. In addition, biofuel producers are expanding capacity to meet the rising demand as industries seek to increase energy efficiency while transitioning toward lower-emission operations.

Key industry players such as John Deere, CNH Industrial, AGCO Corporation, Caterpillar Inc., and Volvo Construction Equipment are actively supporting the integration of biofuels across off-road machinery platforms, reinforcing the role of the biofuel industry in enabling sustainable equipment solutions.

BIOFUEL-POWERED MACHINERY MARKET TRENDS

Growing Shift toward Low-Carbon Off-Road Machinery is a Key Market Trend

The trend to move away from carbon fuels to renewable fuels used to power off road equipment and similar machinery has increased significantly to become a dominating trend in the off-road vehicle sector. More end users of off road machinery include agricultural, construction, and heavy industrial sectors. These industries will continue to evaluate biofuel alternatives such as biodiesel, bioethanol, and biogas as practical substitutes for diesel fuel. In conditions where electrification options are still available due to limitations with power, cost, and infrastructure. Some advancements in engine compatibility and fuel blending have made it possible to increase the deployment of biofuel powered machinery without significant changes made to existing equipment prosthetic systems. Therefore, biofuels will continue to be viewed as a transitional solution that supports the achievement of sustainability initiatives while allowing the continued use of large equipment fleets.

• For example, Advanced Innovative Engineering (AIE), in collaboration with Brunel University, has been developing biofuel-capable rotary engine technology for off-road and industrial machinery, highlighting how manufacturers are innovating to support low-carbon machinery adoption.

Download Free sample to learn more about this report.

MARKET DYNAMICS

MARKET DRIVERS

Rising Focus on Emissions Reduction and Fleet Decarbonization to Drive Market Growth

The growing focus on reducing greenhouse gas emissions from non-road and off-highway equipment is a primary driver of the market. Sectors such as agriculture, construction, and industrial operations operate large fleets of diesel-powered machinery, making them key targets for decarbonization initiatives. Biofuel-powered machinery allows fleet operators to reduce lifecycle emissions while continuing to use established engine platforms and fueling systems. The ability of biodiesel and other biofuels to function as drop-in or blended fuels provides a cost-effective and near-term pathway for emissions reduction, which is accelerating adoption across asset-intensive industries.

• For instance, India is planning to extend biofuel blending initiatives to diesel-powered construction equipment, which is expected to increase the demand for biofuel-compatible machinery across the construction sector.

MARKET RESTRAINTS

Feedstock Availability and Operational Complexity May Limit Market Expansion

The anticipated growth of the biofuels market is hindered by multiple obstacles related to sourcing feedstock, fluctuation in feedstock costs, and a complex operational environment. Feedstock (i.e. materials used to produce biofuels) are typically derived from agricultural products, waste oils, and organic residues, all three of which are heavily impacted by issues related to availability and price uncertainty. For these reasons, it is unclear how likely biofuels will continue to remain competitively priced with conventional fuels over the long term. Likewise, operating in a biofuel environment associated with large numbers of machines poses significant logistic and operational challenges surrounding the quality of biofuels, delivery of biofuels to machines, and warranty agreement compliance.

• For example, Balfour Beatty conducted trials using Syntech biofuel in heavy construction machinery and highlighted challenges related to supply coordination, equipment compatibility, and warranty alignment, underscoring practical constraints in large-scale deployment.

MARKET OPPORTUNITIES

Expansion of Biofuel-Ready Engine Platforms and Industrial Applications Creates Growth Opportunities

The expansion of biofuel-ready engine platforms presents opportunities for the biofuel-powered machinery market growth. Engine and machinery manufacturers are increasingly designing equipment that can operate on multiple biofuel blends, enabling customers to transition toward cleaner fuels with minimal changes to existing operations. In addition, the growing adoption of these machinery in industrial, mining, power generation, and utility applications is creating new avenues for market growth. These sectors often operate centralized and fuel-intensive machinery fleets, making them well suited for biofuel adoption at scale as fuel availability and supply chains mature.

• For instance, MAN Energy Solutions has promoted the capability of its industrial engines to operate on liquid biofuels for power generation and industrial applications, demonstrating how OEM support for biofuel compatibility can unlock new growth opportunities across heavy machinery segments.

Segmentation Analysis

By Fuel Type

Widespread Compatibility with Diesel Engines to Drive the Dominance of Biodiesel Segment

Based on fuel type, the market is divided into biodiesel, bioethanol, biogas, and others.

In 2025, the biodiesel segment accounted for the highest biofuel-powered machinery market share. The leading position of biodiesel is primarily driven by its broad compatibility with existing diesel-powered machinery across agriculture, construction, and industrial applications. Biodiesel can be used in blended forms in many off-road engines without requiring significant hardware modifications, making it a practical option for fleet operators seeking near-term emissions reductions. Major machinery and engine manufacturers have publicly supported the use of biodiesel blends in off-highway equipment.

• For example, John Deere has stated that many of its agricultural and construction machines are compatible with biodiesel blends within specified limits, enabling customers to use renewable fuels while maintaining warranty compliance.

The biogas segment is anticipated to rise with a CAGR of 8.3% over the forecast period.

To know how our report can help streamline your business, Speak to Analyst

By End User

Large Installed Base of Farm Equipment Positions Agriculture as the Leading End User

Based on end user, the market is segmented into agriculture, construction, industrial, and others.

In 2025, the agriculture segment held the largest market share. The dominance of this segment is attributed to the large installed base of diesel-powered agricultural machinery, including tractors, harvesters, and irrigation equipment, which are well suited for biofuel use. The agricultural sector has historically been an early adopter of biofuels due to direct linkage with biofuel feedstock production and localized fuel supply chains. Agricultural equipment manufacturers have consistently emphasized fuel flexibility and sustainability in their product portfolios.

• For instance, AGCO Corporation has communicated its focus on supporting alternative fuels, including biodiesel, across its agricultural machinery lineup as part of broader sustainability initiatives.

These factors have positioned agriculture as the leading end user segment in the market.

The construction segment is expected to grow at a CAGR of 8.4% over the forecast period.

Biofuel-Powered Machinery Market Regional Outlook

By geography, the market is categorized into Europe, North America, Asia Pacific, South America, and the Middle East & Africa.

Europe

To get more information on the regional analysis of this market, Download Free sample

Europe held a dominant position in the market in 2024 and continued to maintain its leading share in 2025, with a market valuation of USD 1.48 billion. The region’s market leadership is supported by strong biofuel production capacity, well-established blending mandates, and early adoption of renewable fuels across off-road and industrial machinery fleets. European countries have actively promoted the use of biodiesel and other biofuels as part of broader decarbonization and energy transition strategies.

U.K. Biofuel-Powered Machinery Market

In 2026, the U.K. market is estimated to reach around USD 0.24 billion, representing roughly 4.6% of global revenues.

Germany Biofuel-Powered Machinery Market

Germany’s market is projected to reach USD 0.37 billion in 2026, equivalent to around 7.3% of global sales. The country’s extensive use of biodiesel and biogas across agricultural and industrial applications supports steady demand for biofuel-powered machinery. Germany’s focus on industrial sustainability and energy efficiency continues to encourage adoption across heavy machinery fleets.

North America

North America is anticipated to record a market valuation of USD 1.13 billion in 2026. The region represents a significant and mature market for biofuel-powered machinery, supported by large agricultural operations, construction activity, and the growing use of renewable diesel and biodiesel in off-road equipment. The U.S. accounts for the majority of regional demand, driven by the widespread availability of biofuels and increasing sustainability commitments among large fleet operators.

U.S. Biofuel-Powered Machinery Market

The U.S. market is estimated to touch around USD 0.95 billion in 2026. The market benefits from a large installed base of diesel-powered machinery and expanding biofuel supply chains. Agricultural equipment and construction machinery represent key application areas, supported by biodiesel availability and renewable fuel programs.

Asia Pacific

Asia Pacific is expected to reach a market valuation of USD 1.46 billion in 2026. The regional growth is driven by rapid industrialization, expanding construction activity, and growing agricultural mechanization. Several countries in the region are increasing their focus on alternative fuels to reduce emissions from non-road machinery, supporting the gradual adoption of biofuel-powered equipment.

Japan Biofuel-Powered Machinery Market

The Japan market is estimated to reach around USD 0.21 billion in 2026, accounting for roughly 4.1% of global revenue.

China Biofuel-Powered Machinery Market

China’s market is projected to be one of the largest worldwide, with 2026 revenues estimated at around USD 0.59 billion, representing roughly 11.5% of the global market.

India Biofuel-Powered Machinery Market

The India market is estimated to reach around USD 0.31 billion in 2026, accounting for roughly 6.0% of the global market.

South America and Middle East & Africa

The South America and Middle East & Africa regions are expected to witness moderate growth in this market space during the forecast period. South America is projected to reach a market valuation of USD 0.43 billion in 2026. The region’s large farming equipment base and increasing interest in sustainable fuel use are expected to support continued adoption of biofuel-powered machinery, particularly in agriculture-driven economies. The Middle East & Africa market is expected to reach a valuation of USD 0.38 billion in 2026. While biofuel infrastructure remains limited in parts of the region, increasing focus on energy diversification and sustainability is expected to gradually support market growth, particularly in construction and industrial applications.

GCC Biofuel-Powered Machinery Market

The GCC market is projected to reach around USD 0.21 billion in 2026, representing roughly 4.1% of the global market.

COMPETITIVE LANDSCAPE

Key Industry Players

Focus on Fuel Flexibility and Engine Compatibility to Strengthen Market Position

Biofuel-based machinery has only moderate consolidation within the sector, although many of the largest global manufacturers of agricultural, construction, and industrial machinery are participants in this market. Major manufacturers such as CNH Industrial, AGCO Corporation, Caterpillar Inc., John Deere, and Volvo Construction Equipment actively are forging partnerships and technology integration to support the use of biofuels in off-road machinery. All these manufacturers leverage their broad portfolios of products, strong dealer networks, and long term relationships with customers in asset-intensive industries to provide a competitive advantage. These leading manufacturers work to improve fuel compatibility while optimizing their existing diesel engine platforms to operate biodiesel or other biofuels blended with diesel engines within specified operating limits. Collaborations with engine suppliers, fuel stakeholders, and other strategic focuses of the leading manufacturers are set to validate performance and durability as well as compliance with the manufacturers' warranty based on fuel used. Additionally, continued investment in testing engines, optimizing emissions and developing sustainable products will remain at the center of their competitive strategy.

LIST OF KEY BIOFUEL-POWERED MACHINERY COMPANIES PROFILED

• John Deere (U.S.)
• CNH Industrial N.V. (Netherlands)
• AGCO Corporation (U.S.)
• Caterpillar Inc. (U.S.)
• Volvo Construction Equipment (Sweden)
• Komatsu Ltd. (Japan)
• JCB (U.K.)
• Kubota Corporation (Japan)
• MAN Energy Solutions (Germany)
• Doosan Infracore (South Korea)

KEY INDUSTRY DEVELOPMENTS

• January 2026: BP and Corteva launched a 50:50 biofuel feedstock joint venture called Etlas to produce oil for renewable diesel and sustainable fuels, strengthening the supply base for biofuel-capable machinery applications.
• October 2025: AGCO Power unveiled next-generation sustainable powertrain innovations at Agritechnica 2025, including engines and CO₂ footprint solutions designed to support transition to low-carbon fuels in off-road machinery.
• September 2025: John Deere announced expanded B30 biodiesel compatibility, enabling higher biodiesel blend usage in applicable equipment and reflecting OEM support for renewable fuel integration in heavy machinery.
• January 2025: Advanced Innovative Engineering (AIE) partnered with Brunel University to develop biofuel-powered rotary engines aimed at sustainable propulsion for non-road machinery and industrial applications.
• October 2023: John Deere unveiled a 9.0-liter concept engine compatible with ethanol at the Agritechnica trade fair, showcasing its commitment to renewable fuels and future low-carbon machinery power solutions.

REPORT COVERAGE

Request for Customization   to gain extensive market insights.

Report Scope & Segmentation