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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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What the push for biofuels could mean for forests and land use

Prior to the US–Iran conflict, global biofuel production was projected to increase moderately over the next decade by between 0.9 per cent and 1.4 per cent per year.42 The vast majority of that growth in biofuel demand (80 per cent) was expected to come from emerging economies such as Brazil, India (both ethanol) and Indonesia (biodiesel).43 However, based on new policies and blending mandates announced since the beginning of the war, some projections now show global biofuel production rising by 11 per cent annually between 2025 and 2030.44

The speed at which biofuel mandates are being increased in response to the fuel crisis creates significant risks, as demand for feedstocks may rise faster than environmental safeguards, certification systems, land-use planning and enforcement mechanisms can be implemented.

If the increased biofuel mandates proposed in response to the Hormuz crisis are fully implemented, the amount of land required by 2030 could more than double, with 36 million hectares being added – similar in size to Germany.

The area used globally for growing biofuel feedstocks in 2023 was around 32 million hectares. Around 20 million hectares are already expected to be added to this total by 2030 – an area the size of Uganda.45 However, if the increased biofuel mandates proposed in response to the Hormuz crisis are fully implemented, the amount of land required by 2030 could more than double, with 36 million hectares being added – similar in size to Germany (Figure 2).46

The most consequential mandates are being proposed in major biofuel-producing countries, notably Brazil, India, Indonesia and the US. If these expanded mandates result in additional lands being brought into production, both those lands and existing agricultural land will be farmed more intensively. Indonesia, in particular, risks further deforestation if the area of feedstock plantations was to expand, either directly or indirectly, by displacing existing agricultural production.47

Figure 2. Additional post-war demand for biofuels could lead to significantly more land being allocated to production

— Note: The post-war projections for 2030 are based on mandates announced to May 2026, as compiled by Transport & Environment. The increase in land area since the war began was calculated by: 1) calculating the marginal yield (tonnes of oil equivalent per hectare) of the expanded land area projected pre-war for each major-producer country; and 2) dividing the post-war expansion in fuel production by these per-country yields. (Figures for Malaysia assume the same yield as Indonesia due to a lack of available data.)

Figure 2. Additional post-war demand for biofuels could lead to significantly more land being allocated to production — — Note: The post-war projections for 2030 are based on mandates announced to May 2026, as compiled by Transport & Environment. The increase in land area since the war began was calculated by: 1) calculating the marginal yield (tonnes of oil equivalent per hectare) of the expanded land area projected pre-war for each major-producer country; and 2) dividing the post-war expansion in fuel production by these per-country yields. (Figures for Malaysia assume the same yield as Indonesia due to a lack of available data.)

Under the right conditions, properly managed bioenergy feedstocks planted on degraded land (which is a possibility in Brazil) or intercropping (meaning a mixture of crops from different species being grown in the same area) can reduce or reverse land degradation, improve soil fertility and increase soil organic carbon stocks. However, production of feedstocks for first-generation biofuels tends to have net negative consequences for land degradation, food security and water use.48

With crop yields under threat from both constraints on fertilizer availability and potential El Niño-related disruptions to production in southern Africa, South Asia (monsoon failure is a particular concern for India) and parts of East Asia,49 the land use requirements for fulfilling these expanded biofuel mandates could potentially become even greater.

OECD/Food and Agriculture Organization of the United Nations (2025), OECD-FAO agricultural outlook 2025–2034, Paris: OECD Publishing/Rome: FAO, https://doi.org/10.1787/601276cd-en; OECD/Food and Agriculture Organization of the United Nations (2026), OECD-FAO agricultural outlook 2026–2035, Paris: OECD Publishing/Rome: FAO, https://doi.org/10.1787/47874669-en.
OECD/Food and Agriculture Organization of the United Nations (2026), OECD-FAO agricultural outlook 2026–2035.
Suzan and Gambini (2026), Seeds of crisis.
Sandford, Malins and Phillips (2024), Diverted harvest.
Calculated from Transport & Environment mtoe projections in Suzan and Gambini (2026), Seeds of crisis, using per-country yields (toe/ha) imputed for the additional production volumes, and data from major producer countries in Sandford, Malins and Phillips (2024), Diverted harvest.
Bulolo, C. (2024), ‘Will Indonesia’s biodiesel push put its climate goals at risk?’, Dialogue Earth, 24 October 2024, https://dialogue.earth/en/energy/will-indonesias-biodiesel-push-put-its-climate-goals-at-risk.
Calvin, K. et al. (2021), ‘Bioenergy for climate change mitigation: scale and sustainability’, GCB Bioenergy, 13 (9), pp. 1346–71, https://onlinelibrary.wiley.com/doi/10.1111/gcbb.12863.
World Bank (2026), ‘Food & Nutrition Security update’, briefing, June 2026, https://www.worldbank.org/en/topic/agriculture/brief/food-security-update.

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