The Philippines’ biofuel consumption is expected to post moderate growth of one percent to two percent this year as higher pump prices temper fuel demand, according to the United States Department of Agriculture (USDA).

In a report released July 23, the USDA noted that growth in both domestic fuel ethanol and biodiesel consumption will slow this year.

Fuel ethanol demand is projected to grow by two percent to 875 million liters from 860 million liters in 2025. Meanwhile, biodiesel consumption is forecast to rise by one percent to 350 million liters from last year’s 346 million liters.

These projections are sharp deceleration from last year’s performance, when fuel ethanol consumption surged by five percent and biodiesel expanded by 50 percent.

The USDA attributed the slower uptake to the moderating overall fuel pool and elevated pump prices driven by ongoing Middle East conflicts.

The agency estimated that monthly gasoline prices averaged roughly ₱85 per liter from March to May, about 46 percent higher than in the same period last year.

Higher fuel costs have weighed on vehicle sales and overall gasoline demand, which serve as the primary growth engines for biofuel adoption beyond standard fuel pools.

In terms of fuel ethanol, the USDA said consumption is also being affected by the slow rollout of pump stations offering the E20 blend in the country, of which there are currently only nine.

“Uncertainty about vehicle compatibility continues to temper E20 uptake, a concern that fuel retailers hope to address to broaden sales,” the report read.

The Philippines currently implements the 20-percent bioethanol blend (E20) on a voluntary basis. At present, gasoline products sold in the country are mandated to contain an E10 blend.

Meanwhile, the USDA said the modest expansion in biodiesel consumption is due to the continued implementation of the B3 mandate, or the required three-percent biodiesel blend.

The government earlier suspended the scheduled increase in the biodiesel blend to B4 in 2025 and B5 in 2026 due to elevated coconut oil prices in the international market.

Last month, the Department of Agriculture (DA) expressed support for calls to increase the blend level to B5 to help cushion the impact of higher fuel prices on motorists and support up to 3.5 million coconut farmers.

The USDA said domestic fuel ethanol production is estimated to reach 385 million liters this year, up two percent from last year’s 377 million liters.

Despite the gradual improvement in production, imported fuel ethanol is expected to account for 56 percent of the total supply needed to meet both the mandated E10 and voluntary E20 blends.

The country’s fuel ethanol imports are expected to increase by one percent to 490 million liters this year from 485 million liters, with the US maintaining its position as the largest supplier.

In addition, the USDA said domestic biodiesel production could rise by six percent to 370 million liters from 348 million liters, driven by the increase in the number of biodiesel producers.

While the Philippines does not allow the entry of biodiesel imports, the USDA said importing the commodity “could be the solution to manage the increase in diesel pump prices.”

Under the Biofuels Act, the government aims to reduce the country's dependence on imported fuels by requiring oil companies to blend locally sourced biofuels into all liquid fuels for motors and engines.