Overview of global biofuels markets forecast

Aida González Palomino, chief analyst, SGS Inspire, describes how last year was one of growing uncertainty at a global level with new tariffs imposed by the US on fuels, electric vehicles and its components from several countries.
Subsequent negotiations with the US administration eased the level of tariffs for some countries.
More sanctions were imposed on Russian energy and assets by the EU, the UK and the US.
The regulatory push for alternative fuels instead of fossil-derived fuels was scaled back in parts of the US, otherwise most countries in the rest of the world continued their efforts to implement biofuel and sustainable aviation fuel (SAF) mandates, invest in hydrogen and promote the uptake of electric vehicles (EVs).
In 2026, geopolitics could still impact the flow and price of commodities and fuels at global level, following the US intervention in Venezuela and announced US tariffs on countries doing business Iran in January.
However, it is expected that countries with climate commitments will continue to progress their plans at national level.


Asia Pacific



According to SGS INSPIRE, bio-based fuels will continue to reduce the fuel import bill in Asia Pacific.
Vietnam’s government plans to enforce the E10 mandate from June 1, converting it into the only gasoline grade sold nationwide.
Indonesia‘s government has confirmed its plan to increase the biodiesel mandate from the current B40 to B50 this year.
Nevertheless, two approaches are being considered: firstly, blending 50% v/v FAME; and secondly, blending 40% v/v FAME with 10% v/v paraffinic diesel (B40D10).
SGS INSPIRE expects regular diesel to be B50 and premium diesel to be B40D10, as paraffinic diesel costs are much higher than FAME. Additionally, domestic capacity to produce paraffinic diesel is minimal and will not be enough to meet the demand for 10% v/v of total diesel.
While the Philippines government aims to raise its ethanol mandate to E20 in 2026, domestic ethanol supply will not be sufficient, and the country will need a significant increase in imports. This initiative may face opposition from parliament, but E20 availability will likely be expanded to more fuel stations in any case.
In Japan, SGS INSPIRE expects renewable diesel blend (RD40) to be available in more fuel stations, primarily to cater to heavy-duty commercial vehicles, and other special-purpose vehicles that are difficult to electrify.
The Singapore government aims for SAF to account for 1% v/v of all aviation fuel consumption in 2026.
To support SAF adoption, an additional duty ranging from $1  (€0.67) to $41.60 (€27.30) per flight ticket applies.


Europe



In 2026 more EU member states will transpose the Renewable Energy Directive (RED) III into their national laws, as some are awaiting final approvals and others have advanced transposition drafts.
However, the slow and hesitant granting of these approvals created uncertainty in renewable fuel markets, such as biofuels and e-fuels.
SGS INSPIRE anticipates that the patchwork of RED III transposition will remain in 2026, which may lead to the suspension or cancellation of plans for renewable fuels production facilities, like the suspension of H2UB green hydrogen hub announced in June 2025.
In non-EU countries, mostly UK, Norway and Switzerland, biofuel and SAF consumption is expected to increase.
In Switzerland, the SAF mandate which follows the EU Regulation (2023/2405) of the European Parliament and of the Council of October 18, 2023 on ensuring a level playing field for sustainable air transport (ReFuelEU Aviation) will be in force from January 1, 2026.


North America



In the US, key federal programmes supporting low-carbon fuels, including tax credits for SAF, renewable diesel, and hydrogen, are expected to undergo further federal review.
Potential changes to eligibility criteria, funding levels, or implementation timelines could affect project economics and slow final investment decisions.
Meanwhile, state-level programmes such as LCFS are expected to continue shaping regional fuel markets, reinforcing differences in compliance conditions across the country.

Renewable fuel markets are expected to maintain their current trajectory, though with greater volatility.
A key source of uncertainty is the incomplete rulemaking for the 45Z clean fuel production credit which is intended to apply to renewable ethanol, biodiesel, renewable diesel and SAF.
However, the clean fuel credit still lacks final rules on which feedstocks and production methods will qualify for incentives and how the value of the tax credits will be calculated.
In addition, feedstock markets are expected to remain tight, with restrictions on imported used cooking oil (UCO) and limits on credit generation for canola and distillers’ corn oil (DCO), since the government has not yet decided how these feedstocks will be considered for fuel credits.
In combination with these factors, renewable diesel profit margins have weakened, as feedstock costs have increased and the value of fuel credits has become less predictable, leading several U.S. refineries to delay or cancel conversion plans.
Ethanol demand is expected to benefit from expanded access to higher blends, including the ongoing introduction of E15 in California, broader state-level approvals, such as several Midwest states adopting year-round E15 sales, and new potential demand channels, such as the ETJ pathway for SAF production.
However, infrastructure and vehicle-compatibility constraints may limit growth.
In the US, the EPA’s proposed Renewable Fuel Standard volumes for 2026–2027 will raise biofuel blending obligations if approved, including higher requirements for advanced biofuels and biomass-based diesel, along with a supplemental reallocation of previously waived small-refinery obligations meaning that blending volumes exempted in prior years would be reassigned to other obligated parties, effectively increasing total compliance demand this year.


Latin America



Biofuels expansion accelerates across the region.
In Brazil, 2026 marks the implementation of the National Decarbonisation Programme for natural gas and biomethane, new National Energy Policy Council (CNPE) carbon-intensity benchmarks, and continued fuel ethanol and biodiesel growth.
Ethanol production is projected at 40 billion litres, while biodiesel blending rises to 16% v/v. Costa Rica, Guatemala and Panama will introduce national fuel ethanol blending mandates ranging from 5% v/v to 8% v/v. Guatemala is set to produce 60 million litres of ethanol in 2026, with an emphasis on advanced bioethanol.
SAF advances with new regulatory frameworks and capacity planning. Brazil evaluates a 10,000 b/d ethanol-to-SAF project, while Colombia targets a 1% SAF blend (27 million liters) and launches comprehensive CORSIA-aligned procedures and value-chain coordination throughout 2026.


Africa



On the biofuel side, the Government of Uganda announced the enforcement of a new mandate of up to 5% v/v of ethanol in gasoline from January 1.
In Ethiopia, the development of national biofuel framework is expected to progress in 2026, with potential biofuel mandates in the road transport and aviation sectors.
In Ghana, the SAF project is transitioning in the second phase, indicating a positive signal. Many other African countries are in the early stages of investigating SAF feedstock potential nationally and the respective policy framework required to drive SAF demand in the aviation sector.
The developments of national legislations to promote the hydrogen industry are planned in countries such as Namibia and South Africa.

 

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