Southeast Asia, a region of more than 700mn people with an ever increasing energy demand, is steadily turning to biofuels as part of its broader energy transition. With ambitious climate targets, pressure to reduce carbon emissions, and growing demand for transport fuels, countries across the ASEAN region are accelerating their efforts to scale up the biofuel sector - particularly biodiesel and bioethanol - while seeking a balance between sustainability, food security, and rural economic development.

At the heart of this shift lies a region heavily reliant on fossil fuels but also rich in agricultural biomass. Nations like Indonesia, Malaysia, Thailand, and the Philippines have already identified biofuels as strategic tools not only for cutting emissions but also for reducing dependence on imported oil and providing income to rural farming communities.

Indonesia

Indonesia, the region’s largest economy and the world’s top producer of palm oil, has been a regional frontrunner in the biofuel space for some time. Its mandatory biodiesel blending programme - B35, requiring a 35% palm oil blend in diesel fuel - was implemented nationwide in 2023. By 2025, Indonesia is aiming to introduce B40 and eventually move towards B50, despite concerns over supply chain readiness and engine compatibility.

State energy firm Pertamina has been a key player in ramping up production and distribution. In 2024, Indonesia produced over 12.5mn kilolitres of biodiesel, with around 40% consumed domestically. And after much effort, exports are growing, particularly to China and the EU, though the latter has raised sustainability concerns linked to deforestation and land use change. Nevertheless, Indonesia remains bullish, investing in second-generation biofuels and aiming to produce green diesel from used cooking oil and agricultural waste by 2027.

Malaysia

Neighbouring Malaysia, also a major palm oil exporter, has likewise been scaling up its biodiesel blending mandates. In early 2024, it extended the B20 biodiesel policy to the industrial sector nationwide, with plans for B30 by 2026. Malaysia is also working to enhance the sustainability credentials of its palm oil industry by improving certification standards and satellite monitoring of land use to address environmental criticisms.

To this end, Kuala Lumpur is also exploring joint ventures with Japan and South Korea to develop advanced biofuel facilities, including biomass-to-liquid (BTL) technology and co-processing at existing refineries. Biojet fuel -used for aviation - is a particularly attractive area, as Malaysia seeks to become a regional hub for sustainable aviation fuel (SAF) by 2030.

Thailand

Thailand meanwhile presents one of the most diversified and mature biofuel programmes in the region. The country blends both bioethanol and biodiesel into its fuel supply, with mandates that vary depending on fuel type. As of 2025, E10 (10% ethanol) and E20 blends are widely available, with E85 (85% ethanol) offered for compatible vehicles. Biodiesel blending (B7 to B10) is also in place, with the government actively supporting flexible policies that respond to market and crop conditions.

Thailand's bioethanol is primarily derived from molasses and cassava, both crops abundant in the country. The government has invested heavily in bio-refineries, with over 26 bioethanol plants and 15 biodiesel facilities operating nationwide. Bangkok’s alternative energy development plan (AEDP) targets over 7.5mn litres of ethanol production per day by 2037, alongside 8mn litres of biodiesel.

In recent years, Thailand has also made strides in second-generation biofuels, using agricultural waste such as rice straw and corn stover. The Bio-Circular-Green (BCG) Economy Model has been adopted as a national strategy, placing biofuels at the intersection of economic growth and environmental stewardship.

Philippines

In the Philippines, Manila introduced a national biofuels policy as early as 2006, but its progress has been more uneven. As of 2025, the country mandates a 2% biodiesel blend (B2) and a 10% ethanol blend (E10). However, implementation challenges persist, including ageing infrastructure, price volatility, and weak enforcement mechanisms.

The government is now working to reinvigorate the sector and The Philippine Department of Energy (DOE) has laid out a roadmap to increase the ethanol mandate to E20 and biodiesel to B5 by 2030. Efforts are also being made to revive the domestic sugarcane industry, which supplies ethanol, and to incentivise investment in modern distilleries and feedstock diversification. Coconut-based biodiesel is a particular focus, with the potential to support livelihoods in rural areas including Mindanao and the Visayas.

Vietnam, Cambodia, Laos

Vietnam is gradually stepping into the biofuel space too. Though earlier efforts were slowed by low demand and weak price competitiveness, renewed interest in clean energy and the government’s Power Development Plan VIII have spurred new momentum. E5 petrol (5% ethanol blend) is now widely available, and plans are underway to expand ethanol production from cassava and sugarcane residues.

Cambodia and Laos, however, remain in the early stages of biofuel development, but both are exploring partnerships with South Korea, Japan and China to develop biomass projects and local refineries. In these smaller economies, biofuels are viewed as potential rural job creators and a solution to growing energy imports as much as for their ethical concept.

Sustainability

While biofuels offer clear economic and energy security benefits in most areas, sustainability concerns do remain. Deforestation, monoculture expansion, and food-versus-fuel trade-offs have sparked criticism from environmentalists and some international buyers. As such, Southeast Asian countries are increasingly turning to waste-based and second-generation biofuels to address these concerns. Certification schemes, such as the Roundtable on Sustainable Palm Oil (RSPO) and national sustainability frameworks, are also being strengthened.

Additionally, the development of sustainable aviation fuel (SAF) and marine biofuels is gaining traction. Regional airlines plying global routes, such as Singapore Airlines and Thai Airways, have begun trialling SAF, while shipping firms are exploring algae-based fuels to comply with IMO regulations.

As such, Southeast Asia’s biofuel sector is not without its challenges, but the direction of travel is clear. National governments are prioritising biofuels within broader energy security and climate frameworks, while advances in technology and sustainability monitoring are helping to make the sector more credible. And, as ASEAN looks to diversify its energy mix and reduce emissions, biofuels - particularly those derived from waste and non-food sources - will play an increasingly vital role. With continued investment, Southeast Asia could become a global model for sustainable biofuel development.