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The problem with biofuels as a response to the Gulf energy supply shock

How they threaten food supplies and forests, and what to do about it

Research paper

Published 21 September 2026

ISBN: 978 1 78413 687 1

Image — An aerial view of land cleared for replanting with oil palm trees in Negeri Sembilan, Malaysia, 28 June 2026. Copyright © Ezra Acayan/Getty Images.

A small area of green forest is visible above two triangular areas of deforested land, crossed by dirt tracks.

Dr Patrick Schröder

Senior Research Fellow, Environment and Society Centre, Chatham House

Bhargabi Bharadwaj

Research Associate, Environment and Society Centre

Biofuel production is set to expand rapidly over the next four years, as the search for alternatives to Gulf oil supplies gains momentum amid the US–Iran war. Our analysis indicates that an extra 36 million hectares of land – an area the size of Germany – could come under pressure globally as governments expand fuel-blending mandates. Additional production on this scale risks intensifying competition for land and food crops, contributing to food insecurity and incentivizing deforestation.

Policymakers must therefore treat biofuels as a targeted transitional measure to help bridge the current oil crisis, rather than a permanent solution to the problem of energy security. Our policy recommendations include stronger protections against deforestation, clearer land-use limits, enhanced criteria for feedstock sustainability, and the promotion of agroforestry and integrated approaches to land use.

DOI: 10.55317/9781784136871

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Summary

The ongoing conflict between the US and Iran and the effective closure of the Strait of Hormuz to shipping have caused a global energy ‘shock’, with Asian economies particularly exposed to higher fuel prices and supply insecurity as a result.
Biofuels are being promoted as a swift and easy way to increase domestic energy security in response to this shock. Major economies including Brazil, India, Indonesia and the US are rapidly advancing new policies to increase the share of biofuels in transport fuels. Global production of biofuels is now expected to be 68 per cent higher in 2030 than in 2025.
However, production on this scale risks intensifying competition for land and agricultural outputs, contributing to food insecurity and threatening biodiversity. Our analysis shows that the changes to biofuel mandates announced by various governments since the beginning of the Gulf energy crisis could require around 36 million hectares of additional land to be used for biofuel production globally – an area the size of Germany. This pressure will likely lead to further deforestation in ecologically sensitive regions of the world.
Biofuels must therefore be treated by policymakers as a targeted transitional measure to help bridge the current crisis, rather than a permanent solution to the problem of energy security.
An accelerated and largely uncoordinated policy push for biofuels – combined with reduced fertilizer availability due to conflict and El Niño-related impacts on agriculture – would likely rely heavily on food crops such as palm oil, soy, maize or rice as feedstocks. Growing biofuel demand could push up the prices of key crops and products like corn and vegetable oils, worsening food security risks in 2026 and beyond.
Higher shares of biofuel can help reduce exposure to oil price shocks and import dependency (e.g. for existing vehicle fleets and hard-to-electrify sectors such as heavy goods transport). However, if biofuel expansion is not managed carefully, it will increase long-term pressure on land. Pressures on forests and ecosystems like those described above will be difficult – perhaps even impossible – to reverse.
To reduce negative impacts on land, forests and food supplies, policymakers must avoid measures that stimulate demand for biofuels unless robust safeguards are in place. National biofuel mandates and bioeconomy strategies need to be designed to include stronger deforestation protections, clearer land-use limits and improved feedstock sustainability criteria. The latter should prioritize waste- and residue-based fuels, advanced second-generation biofuels and low-impact feedstocks (such as those produced sustainably on degraded land).
The role of biofuels in the fuel mix should be reassessed once immediate pressures on energy security ease and rolled back if environmental impacts become too severe, especially given that higher biofuel mandates often depend on government subsidies or other policy measures that may impose unnecessary costs relative to their benefits.
Alternatives are likely to be more cost-effective and yield better long-term results. In many transport sectors, especially passenger transport, energy efficiency measures and demand reduction, decarbonization of electricity generation and electrification offer long-term energy security with less risk of capital expenditure becoming ‘stranded’.
Meanwhile, in terms of land use, agroforestry and integrated approaches can increase biomass and land productivity while protecting biodiversity and avoiding large-scale monoculture expansion.

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