Global demand for biofuels is climbing fast, driven by decarbonisation targets and renewed concern over the security of conventional oil supplies.
Yet the industry is approaching a structural bottleneck: there simply may not be enough raw material to keep up with the pace of growth.
Global biofuel production rose from 1,074.66 terawatt hours in 2020 to 1,424.52 terawatt hours in 2024, with the United States leading output.
Production has grown sevenfold over the past two decades, spurred largely by blending mandates in major economies.
The Organisation for Economic Co-operation and Development has recorded average annual consumption growth of 3.3 per cent over the past decade, with hard-to-abate transport sectors, particularly aviation and shipping, under mounting regulatory pressure to decarbonise.
The European Union’s ReFuelEU Aviation and ReFuelEU Maritime rules are prime examples, mandating rising shares of low-carbon fuel in those sectors.
According to GlobalData, global biodiesel production increased 111 per cent between 2015 and 2024, while sustainable aviation fuel output doubled between 2024 and 2025 alone, reaching 2.3 million tonnes annually.
Analysts expect SAF to grow from around 2 per cent of the jet fuel market today to roughly 70 per cent by 2050.
Brazil, Indonesia and India have emerged as key growth markets.
Brazil raised its ethanol blending mandate to 30 per cent and its biodiesel mandate to 15 per cent in 2025, building on its established sugarcane ethanol industry.
Indonesia has pushed its palm-oil-based biodiesel mandate from B30 to B35, and is now moving toward B50.
India has nearly tripled bioethanol production in five years while pursuing a 20 per cent ethanol blending target.
The trouble lies in supply. Much of the world’s biofuel still depends on vegetable oils, used cooking oil and animal fats, all of which are inherently finite resources, according to Clarice Brambilla, an energy transition analyst at GlobalData.
The International Energy Agency has warned that supplies of used cooking oil and animal fats could approach exhaustion by 2027, and the OECD projects little to no growth in waste oil and fat availability through 2030.
Turning to conventional crop-based feedstocks brings its own problems. Around 8 per cent of global cropland, roughly 32 million hectares, is already dedicated to biofuel feedstock production, and the process can require as much as 20,000 litres of water per litre of fuel.
Campaigners have cautioned that expanding conventional feedstocks further risks driving up food prices and straining freshwater systems.
Industry figures argue the picture is not as dire as critics suggest. Gary Hubbard of the Biofuel Company, Saudi Arabia’s only biofuel producer, contends that supply bottlenecks are less about global scarcity than about weak collection infrastructure and distorted pricing in importing regions.
Several governments, including the United Arab Emirates and Indonesia, are now restricting or taxing exports of used cooking oil to preserve domestic supply.
Longer term, the industry is looking toward next-generation feedstocks such as lignocellulosic biomass, including wood waste and rice husks, and algae-based fuels.
“All countries should focus on transparency and governance over local collection services, transporting to local biodiesel refineries for local consumption of biodiesel.”
Localisation, he says, is “the way forward”.
The lignocellulosic market was valued at US$8.2 billion in 2024 and is projected to reach $102 billion by 2030, though high pretreatment costs and capital-intensive infrastructure remain barriers to commercialisation.
Policy will likely determine how the crunch plays out. The European Union’s RED III directive caps conventional crop-based biofuels at 7 per cent of transport energy per member state, pushing the market toward waste and residue-based alternatives.
The European Commission estimates that between €3.8 billion and €7.5 billion will be needed annually by 2030 to support industrial-scale production, on top of at least €700 million a year in direct payments to farmers and feedstock aggregators.
As Brambilla puts it, feedstock supply can continue to support market growth, but only if the industry moves decisively beyond the fuels it depends on today.
