The Philippines’ biofuel consumption is projected to grow by just 1-2 per cent in 2026, a sharp slowdown from the previous year, as higher fuel prices dampen demand for gasoline and diesel, the US Department of Agriculture (USDA) said in a report released on July 23.
The USDA forecast fuel ethanol consumption to increase by 2 per cent to 875 million litres this year from 860 million litres in 2025. Biodiesel consumption is expected to rise by 1 per cent to 350 million litres from 346 million litres last year, Manila Bulletin reported.
The projected growth marks a significant slowdown from 2025, when fuel ethanol consumption rose 5 per cent and biodiesel demand jumped 50 per cent.
According to the USDA, higher pump prices, driven by ongoing tensions in the Middle East, have moderated overall fuel demand. Monthly gasoline prices averaged around ₱85 per litre between March and May, about 46 per cent higher than the same period last year.
The agency said higher fuel costs have also affected vehicle sales and gasoline consumption, limiting the expansion of the country’s biofuel market.
The USDA noted that ethanol demand is also being constrained by the slow rollout of E20 fuel stations. The Philippines currently has only nine retail outlets offering the voluntary 20 per cent ethanol blend, while E10 remains the mandatory nationwide gasoline blend.
“Uncertainty about vehicle compatibility continues to temper E20 uptake,” the report said, adding that fuel retailers are working to address consumer concerns to encourage wider adoption.
Growth in biodiesel consumption is expected to remain modest due to the continued implementation of the B3 mandate, requiring a 3 per cent biodiesel blend in diesel fuel.
The Philippine government had earlier postponed plans to increase the biodiesel blend to B4 in 2025 and B5 in 2026 because of high international coconut oil prices. However, the country’s Department of Agriculture recently backed proposals to raise the mandate to B5 to help reduce fuel costs and support around 3.5 million coconut farmers.
On the supply side, domestic fuel ethanol production is projected to rise by 2 per cent to 385 million litres in 2026 from 377 million litres last year. Despite the increase, imports are expected to account for 56 per cent of the country’s ethanol requirements, with fuel ethanol imports forecast to increase by 1 per cent to 490 million litres. The United States is expected to remain the Philippines’ largest ethanol supplier.
Domestic biodiesel production is also projected to increase by 6 per cent to 370 million litres from 348 million litres, supported by the entry of additional biodiesel producers.
Although the Philippines currently prohibits biodiesel imports, the USDA said allowing imports could help ease rising diesel prices.
Under the country’s Biofuels Act, oil companies are required to blend locally produced biofuels with conventional transport fuels to reduce dependence on imported fossil fuels.
