Biofuel demand is reviving in 2026 as the Iran war and Strait of Hormuz closure sparked a wave of volatility that made buying difficult. Vietnam is switching fully to ethanol-blended gasoline and Indonesia is raising its biodiesel mandate to 50%, while Europe holds back over food price and deforestation concerns. Think tank Transport & Environment warns biofuel demand could rise up to 70% by 2030 if oil supply stays constrained, risking a food price crisis.
Interest in developing biofuels has fluctuated and has been strongly driven by global energy trends. In 2024, following the COVID-19 pandemic, the international call for a green transition, and the increased focus on developing cleaner fuels to decarbonise hard-to-abate industries, interest in biofuels grew. However, this interest waned in 2025, as several companies backtracked on their green energy targets.
In 2026, interest in biofuels is reviving, driven by the significant price volatility of fossil fuels. The U.S.-Israeli war on Iran and the resulting closure of the Strait of Hormuz, a key energy trade corridor, have led to energy shortages and driven oil prices sharply higher in recent months, prompting many governments and energy companies to consider investing in alternative fuel production to counter the shortages.
