Global Biofuels Output Could Surge 70% Amid Energy Crisis

A joint study by Chatham House and the Forest Stewardship Council finds that global biofuels output could rise by almost 70% by 2030 if countries proceed with higher blending mandates enacted or proposed in response to the energy shock from the Middle East conflict. Higher crude oil and gasoline prices have made crop- and oil-based biofuels such as ethanol more competitive with fossil fuels, prompting policy shifts in major producing countries.

In the United States, the Environmental Protection Agency published the Renewable Fuel Standard "Set 2" rule for 2026 and 2027, setting the largest renewable fuel volume mandates in the program’s 20-year history. The rule raises biomass-based diesel requirements to 5.4 billion gallons in 2026 and 5.7 billion gallons in 2027, compared with 3.35 billion gallons in 2025; the EPA estimates about 6.07 billion gallons will be required in 2026 after adjustments. The agency also issued an emergency waiver allowing nationwide sales of E15 gasoline through the summer driving season to bolster supply and reduce pump prices.

The European Union is also considering adjustments to its Renewable Energy Directive framework, which currently obliges member states to reach a 29% share of renewable energy in transport by 2030. Draft updates (RED IV) leaked publicly and other policy moves suggest the EU may expand eligible volumes for crop-based biofuels by about 30% within a proposed 7% EU-wide cap. Meanwhile, Brazil has rapidly raised ethanol blending obligations—raising the gasoline ethanol mandate temporarily to 32% in July after taking it to 30% in June 2025, with law permitting up to 35%—and has banned biodiesel imports to prioritize domestic producers.

Indonesia launched a mandatory B50 biodiesel program on July 1, 2026, requiring diesel to contain 50% palm-oil-based biodiesel as part of a push for energy self-sufficiency. The study’s authors warn that the rapid scale-up of biofuel mandates could double the land area devoted to biofuel feedstocks by 2030, adding roughly 36 million hectares and redirecting land used for crops such as corn, rice, soybeans, sugar cane and vegetable oils away from food production. They cautioned that prioritizing short-term energy security risks increasing medium-term food insecurity and that any additional shock, like extreme weather, could sharply affect food prices if demand for feedstocks outpaces environmental safeguards, certification systems and land-use enforcement.

Other analyses cited in the report highlight sector-specific risks: the International Council on Clean Transportation estimated in April that shipping could push biofuel demand to 140 billion litres by 2035—around three times the current global market for vegetable oil biofuels—potentially tripling vegetable oil prices and placing extra burden on low-income households, net food-importing countries and populations already experiencing food insecurity.