USDA releases Biofuels Annual for the EU
21 August 2026
The USDA Foreign Agricultural Service (FAS) has released its 2026 Biofuel Annual for the European Union. This report details the FAS’ analysis of biofuel consumption, production and trade as well as relevant policy developments in the EU.
Consumption
EU fuel bioethanol consumption rose 44% from 2020 to 2025 due to an expanding gasoline pool and the rapid adoption of E10 fuel, transforming the European Union into a net importer. Growth was primarily driven by higher blending mandates, competitive fuel pricing, and increased consumer acceptance across major markets like Poland, France, and Germany. For 2026, fuel consumption is projected to rise by an additional 5.9%. However, this growth faces constraints from regional blending walls and caps on crop-based bioethanol. In addition, high gasoline prices could shrink the gasoline pool and reduce the consumption of bioethanol.
Total EU Biomass-Based Diesel (BBD) consumption rose 4.1% in 2025 with a projected 2.8% increase in 2026. This growth is driven by rising GHG emission reduction targets and new Sustainable Aviation Fuel (SAF) mandates. Overall BBD consumption faces pressures from a shrinking diesel fuel pool and increased transport electrification. FAME consumption is restricted by a 7% volumetric blending limit and double-counting rules, while HDRD (hydrogenation-derived renewable diesel) and SAF hold a competitive advantage due to high GHG reduction values. A potential high Indirect Land Use Change (ILUC)-risk classification for soybean oil heavily threatens the EU market by cutting off major biodiesel imports from Argentina.
Production and Trade
Following a period of growth from 2020 to 2024, overall EU fuel bioethanol production is expected to remain stagnant throughout 2026 despite strong domestic demand and an abundant global grain supply. Production constraints include production capacity limits in France and Germany and feedstock constraints in other countries. Increased demand is expected to be met through increased imports from the US and Ukraine.
Total EU BBD production grew by over 3% in 2025 and is forecast to increase by another 4.2% in 2026 driven by a 7.2% surge in HDRD and SAF production. Anti-dumping duties on Chinese biodiesel has also created opportunities for increased domestic production. FAME production was negatively affected by a collapse in exports to the US following changes to American tax credits. Feedstocks are shifting away from crop-based vegetable oils toward waste and residues, with UCO experiencing significant growth. The use of palm oil and soybean oil continues to decline rapidly due to impending sustainability requirements. While imports from China and Argentina have collapsed, those from India, Thailand, Malaysia and South Korea have increased. The UK has become the EU’s largest export market.
Policy and Regulatory Developments
The revised RED II (RED III) Directive became applicable May 21, 2025, aligning renewable energy targets with the EU Green Deal's goal of reducing greenhouse gas (GHG) emissions by 55% by 2030. However, some member states have still to transpose the Directive into national law. Annex IX of this Directive was updated in 2024 to include intermediate/cover crops, municipal wastewater derivatives, cyanobacteria, and damaged non-food/feed crops.
In April 2026, the European Commission proposed updating the High-Risk Indirect Land Use Change (ILUC) methodology using 2014 baseline data, which would classify both palm oil and soybean oil as high ILUC-risk, phasing them out from counting toward RED II targets by 2030. However, the European Parliament rejected the delegated act in July, requesting a revised proposal with a regionalized approach for soy production; a new proposal is not expected before 2027.
Rules introducing strict requirements for imports of UCO containing materials of animal origin were finalized in November 2025 and take effect November 19, 2027. Regulation 2025/2181 aims to minimize heath risks to people and animals, combat fraud and mislabeling, enforce quality standards and restrict use to approved end-destinations.
While the recent EU-Mercosur trade agreement provides Brazil with improved access to the EU bioethanol market, domestic demand in Brazil is expected to limit export expansion.
Source: USDA Biofuels Annual