Global biofuel demand set to grow by nearly 70% as food prices rise

The current scramble for biofuel feedstocks to combat high oil prices could see biofuel consumption globally rise by 30% this year and a staggering 70% by 2030, a new T&E study shows. This risks putting severe pressure on global food prices with vegetable oil prices already at a post-2022 peak. T&E warns governments not to trade a fuel crisis for a food crisis.

Prices for most food commodities - especially vegetable oils - have increased for three consecutive months, repeating the pattern that followed the Russian invasion of Ukraine back in 2022. Since the US-Israeli attack on Iran and subsequent high oil prices, governments including the US, Indonesia and Thailand have brought forward new biofuel blending targets. At the same time, export powerhouses like Brazil and Indonesia are limiting the exports of key biofuel crops.

Kädi Ristkok, energy and climate director at T&E, said: “Governments are playing a dangerous game by promoting food for fuel. Leaders are understandably trying to find solutions to the current oil crisis, but biofuels can never play more than a marginal role in our energy system without devastating consequences. The unintended impacts on food prices and the environment are enormous. Instead of feeding cars, governments must pursue more sustainable options like electrification.”

With future agricultural production set to be curtailed due to a fertiliser shortage, global food commodity reserves risk being depleted quickly. Biofuels already use up 5% of the world’s fertilisers to produce just 4% of global transport fuels. Any increase in biofuels production would put further strain on a market that has been heavily disrupted by the blockage of the Strait of Hormuz.

The situation is particularly stark in certain countries. Indonesia devotes close to a fifth of its total fertilisers to biofuels, while for the US that figure is one-tenth. The world’s major biofuels producers rely on Russia, China and the Middle East for over 50% of their fertiliser imports, T&E’s analysis shows.

Increasing biofuel supplies without competing with food crops is hard to achieve. If biofuels were to represent 20% of the global road fuel mix as countries like Indonesia and Brazil are trying to reach, an additional 130 million hectares of land would be needed - equal to the entire land mass of South Africa. This would lead to the loss of ecosystems and the subsequent deforestation would result in significantly more carbon emissions than the fossil fuels they replace.

“A global fertiliser crunch risks unravelling global food security. While governments are searching for ways to stockpile fertilisers, no one is talking about biofuels. The more crops we burn, the more fertilisers we will need. Governments must prioritise food over fuel,” concludes Kädi Ristkok.