Each year, we publish a forward-looking assessment of the forces shaping biofuels and feedstocks markets. As 2026 comes fully into focus, policy evolution, geopolitical change, and structural demand shifts point to another year of growth. But that growth will be inevitably accompanied by volatility and strategic adjustment.
Here are our 10 key biofuels industry predictions for 2026.
International biofuel markets will be forced to adjust to rapidly changing assumptions around underlying oil supply, particularly following changes in leadership in Venezuela. These shifts will ripple through crude oil pricing expectations and influence the relative competitiveness of biofuels in global energy markets.
Spreads between oversupplied oil markets and tighter international vegetable oil markets are likely to widen in 2026. This divergence will raise the relative cost of biofuels, particularly for pathways that depend on constrained vegetable oil feedstocks or supplies of scarce advanced waste oils.
Biofuel demand is programmed for significant expansion in Europe, the Americas, and Asia. This growth is driven by blending mandates, decarbonization targets, and energy security priorities. It also comes even as feedstock availability remains uneven.
Read More: Feedstock Fundamentals: What Are Biofuels Made From?
Europe will be the focus of early-year attention as expanded RED III mandate programs take effect. European trade will begin adjusting to this new supply-demand paradigm, although full market realignment will take some time to fully develop.
More details will emerge throughout the year on so far unannounced national RED III programs and unresolved elements within already announced frameworks. The market will price in its responses to these new developments as fresh information arrives on its regulatory structure.
Annex IX A “advanced” feedstocks will sit at the center of European biofuel demand growth in 2026. Their preferential treatment under RED III will intensify competition for qualifying waste-based and advanced inputs.
The US market is also moving into a higher-demand year. However, trading behavior will remain hesitant until RFS 2 volumes and IRS tax credit policy are finalized, likely during the first half of 2026. Additional regulatory clarity will be crucial for unlocking more confident trading strategies.
The US will also need to adjust to constrained supplies of imported biofuels and feedstocks. In particular, the focus will be on those restricted by tariffs and exclusions from federal tax credit eligibility. The constraints will further influence domestic pricing and sourcing decisions.
Soybean markets will continue juggling uncertainty around the new trend in Chinese buying behavior and more favorable domestic production economics. Much of the outcome in domestic demand tied to biofuel demand under evolving EPA RFS 2 and IRS tax credit frameworks.
Throughout 2026, international biofuels and feedstocks will continue building toward the challenges of sustainable aviation fuel (SAF) and maritime decarbonization. These sectors will increasingly influence feedstock competition, investment priorities, and long-term market structure.
These predictions outline the major themes shaping biofuels markets in the year ahead. For a more comprehensive look at what’s coming in 2026, including market dynamics, regulatory shifts, and upstream signals, you can also watch our on-demand webinar.
The Biofuels Market Outlook 2026 webinar dives deeper into RED III implementation, global demand growth, SAF and maritime developments, and the policy signals shaping trading strategies.