Hormuz Blockades Boost Global Renewable Fuels Mandates

---

Written by Paul Wiseman for IIR News Intelligence (Sugar Land, Texas)

---

Summary

Renewables gain new momentum replacing some transportation fuels choked off behind the Strait of Hormuz. According to Industrial Info Resources data, there are nearly 5,000 renewable fuel projects around the world, with an investment value of $303 billion.

---

Renewable Fuels Globally

According to Industrial Info Resources data, there are nearly 5,000 renewable fuel projects around the world, with an investment value of US$303 billion. The Industrial Info Resources Global Market Intelligence (GMI) Project Database offers key details on the projects--including key contractors, investment values and necessary equipment.

Renewable fuels such as ethanol, bio-or-renewable diesel (RD), sustainable aviation fuel (SAF), and others accounted for only about 4% of global transportation fuel use in 2022, according to Renewable Energy Policy Network for the 21st Century (REN21). But with the sudden and continuing blockading of the Strait of Hormuz, through which 20% of the world's crude oil exports pass, nations are suddenly scrambling to fill supply gaps any way they can, and renewable fuels are suddenly everyone's best friend.

Nations around the world are upping mandatory blend rates for two main reasons: cost savings and energy security. While much of the time renewable fuels can be more costly per gallon than their crude-based cousins, price spikes like the 40%-plus rises in oil prices in recent months make renewables more comparable, thus more desirable.

Here are some examples of blending-rate moves being made around the world:

• Indonesia: Raising the mandatory blending rate for palm oil-based biodiesel from 40% to 50%.
• Vietnam: Switched to a higher ethanol blend (E5 or higher) in April, ahead of schedule, due to price surges.
• Malaysia: Planning to raise palm-based fuel in diesel to 20% from 10%.
• Brazil: The world's second-leading ethanol producer, will raise the percentage of ethanol in gasoline from 30% to to 32%.

Brazil is unique in that it also is a top oil producer. However, its shortage of refining capacity means it must often import gasoline and refined products while simultaneously exporting crude. Its ethanol production helps bridge the gap, providing some energy security as well as cost relief in the current environment.

U.S. Changes Renewable Fuels Standards

In late March the Environmental Protection Agency (EPA) finalized rules for 2026-27's Renewable Fuel Standard (RFS), to historically high levels of biofuels. RFS began in 2005 as a way to boost farm prices and reduce oil imports.

The new rules do several key things:

• Extending temporary emergency waivers to allow the sale of 15% ethanol blends (E15) during the summer, bypassing typical volatility restrictions to lower pump prices. The American Farm Bureau Federation says the waiver could save as much as 30 cents per gallon while oil industry analysts see only single digit savings.
• Raising the renewable volume obligations (RVOs) for production of renewable fuels: This is expected by the Trump administration to give farmers an extra $3-$4 billion in net income.

The higher RVOs could increase biofuels production by 60% says the EPA, assuming there is enough production capacity to manage that. And while there is currently a large surplus of both corn (ethanol) and soy (biodiesel and renewable diesel), farm analysts question whether they could keep up with a significant increase in demand.

"North America is home to most of the operational renewable diesel and sustainable aviation fuel capacity with over 5.6 billion gallons per year of capacity," said Hillary Stevenson, Vice President of Energy Intelligence for Industrial Info Resources.

"Capacity growth has slowed in recent years due to regulation uncertainties with only 306 million gal/yr capacity added in 2025. The year 2026 could be another slow time for RD/SAF growth in North America, with only 215 million gal/yr expected to be added. On the other hand, Europe, with rising blending mandates, is planning to add 772 million gal/yr in 2026."

Renewable Fuels as the Farmer's Friend

Previous stories here have noted the negative effects of higher fuel prices on everyone including farmers, corn and soybean farmers, as noted, could see significantly higher prices for their production, mitigating some of the higher cost for the diesel consumed by farm machinery.

"High crude oil prices are not necessarily bad for biofuels, (and) therefore not necessarily bad for Corn Belt agriculture," said farm expert Scott Irwin, an agricultural economist at the University of Illinois, in a recent episode of Kansas State University's Agriculture Today podcast quoted in farmtalk.com.

He noted that the U.S. produces about 1.5 million barrels of biofuels per day, about 7.5% of the 20 million barrels of petroleum it uses per day.

Pushback: Renewable Fuels vs. Food Prices and Deforestation

In places like the EU and Brazil, concerns are rising that the push to add crops for biofuels leads to deforestation, according to a 2022 story in Transport Environment, which, ironically, actually reverses efforts to stem carbon dioxide (CO2)-based climate issues by removing trees that absorb significantly more CO2 than corn and soybean crops do.

There are also concerns about the expansion of biofuels-based crops raising food costs by switching farmland away from food production.

Key Takeaways

• Renewable fuel mandates are being raised around the world as nations cope with higher oil prices and reduced supplies due to U.S.-Iran blockades.
• This push could help farmers who grow crops like corn and soybeans, which are used in ethanol and bio/renewable diesel, respectively.

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).