Global Biofuels Output Could Surge 70% Amid Energy Crisis

Global biofuels production is projected to surge by nearly 70% by 2030 as major producing countries raise their fuel-blending mandates in response to the energy crisis triggered by the Middle East conflict, a study co-authored by British think tank Chatham House and Forest Stewardship Council has found. Biofuels like ethanol, which typically originate from food crops or animal feed and are mixed with gasoline or diesel, become more cost-competitive as crude oil and gasoline prices spike. Several countries, including the U.S., the EU, Brazil, India and Indonesia have adopted or proposed higher biofuel blending mandates since the outbreak of the conflict in late February.In the U.S., the Environmental Protection Agency (EPA) unveiled the Renewable Fuel Standard (RFS) "Set 2" rule for 2026 and 2027 in April, establishing the highest renewable fuel volume mandates in the 20-year history of the program. The mandate raises biomass-based diesel volume requirements to 5.4 billion gallons for 2026 and 5.7 billion gallons for 2027, up from 3.35 billion gallons in 2025. EPA estimates that meeting the new requirements will require about 6.07 billion gallons of biomass-based diesel in 2026 after accounting for exports and other fuel that does not generate compliance credits. The EPA separately issued an emergency waiver allowing nationwide sales of E15, gasoline blended with 15% ethanol, through the summer driving season to lower pump prices and increase fuel supply.Meanwhile, the European Union could soon require its members to increase their use of biofuels.Under the current Renewable Energy Directive framework, member states are mandated to achieve a 29% share of renewable energy in transport by 2030. However, subsequent policy shifts and leaked draft updates to the directive (RED IV) signal that the EU is further adjusting eligible volumes, including proposing a 30% increase in eligible volumes for crop-based biofuels under a 7% EU-wide cap.Set OilPrice.com as a preferred source in Google here.Brazil has moved even faster. In July, the National Energy Policy Council (CNPE) temporarily raised the mandatory ethanol content in gasoline to 32%, after increasing the blend from 27% to 30% in June 2025. Brazilian law allows the government to raise the ethanol mandate as high as 35%. The Energy Ministry estimates that E32 will replace about 900 million liters of gasoline imports each year with domestically produced ethanol. Brazil also banned biodiesel imports, reserving its diesel blending mandate for domestic producers. Brazil is already the world’s second-largest biofuels producer after the U.S., and together the two countries supply roughly 80% of the world’s fuel ethanol.A similar scenario unfolded in Indonesia, where the government launched its mandatory B50 biodiesel program on July 1, 2026, forcing a 50% palm-oil-based blend into conventional diesel to halt low-grade diesel imports and drive energy self-sufficiency. The aggressive ramp-up in biofuels use mirrors Indonesia's 2022 palm oil export ban, which sent global edible oil prices to record highs and severely penalized downstream consumer goods companies. Indonesia is the world’s leading producer of palm oil, producing over 45 million metric tons of the commodity each year. This is more than double the amount produced by Malaysia, the world's second-largest producer.Not surprisingly, the experts are warning that the ongoing increase in biofuel use in a bid to enhance domestic energy security is likely to come at a huge cost. Indeed, the study found that the expansion could double the land area required to grow biofuel feedstocks across the globe by 2030, claiming an additional 36 million hectares (85 million acres) of land--an area roughly the size of Germany--If all proposed blending mandates are fully implemented. Additionally, the big biofuel push would undermine global efforts to enhance food security by redirecting land and resources used in the production of primary food crops such as corn, rice, soybeans, sugar cane and vegetable oils into biofuels."By prioritizing energy security in the short term, some policy responses may be trading off against increased food insecurity in the medium term (and) any additional shock such as extreme weather could severely affect food prices," the authors said. "The speed at which biofuel mandates are being increased creates significant risks as demand for feedstocks may rise faster than environmental safeguards, certification systems, land-use planning and enforcement mechanisms can be implemented."Source: ReutersBack in April, the International Council on Clean Transportation (ICCT) warned that the shipping sector alone could drive demand for biofuels to 140 billion litres by 2035, roughly triple the entire current global market for vegetable oil biofuels. The huge increase in consumption of vegetable oil could potentially triple their prices, adding an extra burden to low-income households, net food-importing nations and the nearly 700 million people living with food insecurity worldwide. By Alex Kimani for Oilprice.com