The biofuels industry is transitioning from legacy supply chains to meet rising demand and policy shifts, Clarence Woo, managing director of Singapore-based Global Center for Green Fuels, told Platts, part of S&P Global Commodity Insights, at the sidelines of the recently concluded APPEC 2025 conference, said Sept. 15.
Woo outlined how shifting mandates and breakthroughs in feedstock technology are impacting established global trade flows.
Platts: This year, biofuel policies are increasing mandates for crop-based biofuels. How will this influence trade flows next year?
Woo: On a global level, starting with the US, the 45Z has provided a tremendous boost to the US domestic market, supporting its biofuel producers. Additionally, with ongoing US tariff negotiations, there is a lot of potential for the US to export its biofuels, particularly ethanol. Vietnam recently proposed importing fuel ethanol to meet its E10 mandate, which is set to take effect next year. Meanwhile, Japan has reiterated its commitment to ethanol as part of its efforts to reach decarbonization targets for road transport and aviation.
Japan is looking at other biofuel producers, such as Brazil and potentially India, for biomass and feedstocks, to meet its projected growth in demand for biofuels.
So, looking at current developments, when you discuss on an international level, I think there are many opportunities for this growth to occur with the new tariff adjustments.
On the Asia level, I think there have been many significant policy changes. Japan has announced an E10 mandate by 2030 and E20 by 2040, which translates to about 4-5 million metric tons of ethanol (in 2030) that could potentially be imported into Japan. That could double by 2040.
At the same time, with Vietnam’s announcement to increase the ethanol mandate from 5% to 10% nationwide by Jan. 1, 2026, you’re looking at at least 800,000 mt to 1 million mt of ethanol that could be produced domestically in part and imported into the region.
Platts: How will this policy shift toward crop-based biofuels impact the second-generation biofuel and feedstock industry?
Woo: With technological advances in the agriculture sector, I think the definitions of first-generation and second-generation technologies no longer apply to modern biofuel development.
First and foremost, from a scientific perspective, there are no technological phases among these various pathways. They are essentially just different production pathways. The industry is now shifting toward reclassifying biofuels based on sustainability and carbon intensity.
This new generation of biofuels is now produced using advanced techniques such as regenerative agriculture, GPS-based precision farming, minimal fertilizer use, very little water consumption, a circular economy, zero waste, etc. It also includes double cropping and cover crops, no-till farming, and other innovations that enhance sustainability and no longer burden land use or food security.
Then you examine the biofuel production aspects, including bioenergy carbon capture and storage and new technologies for production, where biomass is used for energy generation, etc. When you combine all these factors, it results in crop-based biofuels that are equal to or better than the carbon intensity of what we labeled as second-generation biofuels.
Platts: Regarding government policies, we’re seeing a rise in protectionist measures this year. How is the industry navigating this?
Woo: I would say that this is a period of transitional adjustment rather than a protectionist trade environment. Economies around the world are assessing their biofuel needs and developing policies to ensure a steady supply.
We are seeing this play out in Indonesia and China. In today’s market, everybody is talking about where to find ready and available feedstock to make green fuels for roads, aviation, and maritime. And they’re all competing against each other. As a result, governments are starting to recognize this now.
Demand for biofuels will grow significantly because it’s not just for road transport. In the aviation sector, we’re expecting about 20 million mt of additional demand over the next 10 to 15 years. You’ll also need at least another 20 million mt for maritime decarbonization.
For governments, the main concern is not about implementing protectionist measures but about reorganizing the fuel supply chain.
Platts: Biofuel producers have faced a rough start to the year, especially in the SAF space. What are the main challenges currently in this space?
Woo: I think there’s a gap in expectations between suppliers and buyers, especially regarding product pricing. The aviation industry faces a significant gap as SAF prices are three to four times higher than regular jet fuel. For airlines, this makes it difficult to agree on long-term contracts, but for SAF suppliers and producers, without these contracts, they can’t invest in production. This is the situation that is mainly holding the industry back.
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Source: Platts
