The top five ethanol producers in 2012 were the United States, Brazil, China, Canada, and France. But the United States and Brazil accounted for 87% (61% and 26%, respectively) of the global total.

US ethanol production totaled 50.4 billion liters (13.3 billion gallons), down about 4% from 2011; US production depends mainly on corn as a feedstock, and corn prices rose in 2012 due to a severe summer drought in the Midwest. As a result, in the fall the United States briefly became a net importer of ethanol after nearly three uninterrupted years of net exports.

Brazil’s production rose 3% to 21.6 billion liters (5.7 billion gallons), partly because of a drop in sugar prices. The other top producers account for far smaller volumes; China’s output, for instance, totaled 2.1 billion liters (555 million gallons) in 2012, while Canada’s totaled 1.8 billion liters (476 million gallons). The European Union (EU) as a whole produced 4.6 billion liters (1.2 billion gallons) of fuel ethanol in 2012.

The United States also led in biodiesel production, with 3.6 billion liters (951 million gallons), while Argentina took second place with 2.8 billion liters (740 million gallons), and Germany and Brazil had roughly the same output at 2.7 billion liters (713 million gallons) apiece.

China’s biodiesel production, at only 200 million liters (53 million gallons) in 2012, lags far behind its output of fuel ethanol. Several European nations produce biodiesel, and the EU as a whole still accounted for 41% of global biodiesel output despite a decline of 7% in 2012. Worldwide, biodiesel production grew at an average annual rate of 17% from 2007 through 2012, although the rate of growth slowed considerably.

Biofuel demand is strongly driven by blending mandates and supported by subsidies. Seventy-six states, provinces, or countries had such mandates on the books in 2012, up from 72 the previous year. Global subsidies for liquid biofuels were estimated in 2012 to be well over US$20 billion.

Mandates or targets have been established in 13 countries in the Americas, 12 in the Asia-Pacific region, and 8 in Africa. In Europe, the EU-27 group of countries is subject to a Renewable Energy Directive (RED) that called for 5.75% biofuel content in transportation fuels in 2012. The United States and China have established-and Brazil has already achieved-targets of between 15 and 20% no later than 2022; India has also mandated 20% ethanol by 2017.

Whether these targets are stable and will be met is an open question, however. India, for example, is said to have an uneven record of meeting its own mandates. The EU’s RED came under strong challenge in 2012 as a result of concerns over the effect that biofuel feedstock cultivation was having on food prices and changes in land use. In response, the European Commission proposed limiting conventional biofuels (those derived from food crops) to a 5% share of all transport fuels.

In the United States, the Environmental Protection Agency’s mandate that petroleum refineries buy nearly 33 million liters of advanced cellulosic biofuels for blending in 2012 was thwarted by underproduction: less than 76,000 liters was produced that year.

Global investment in biofuels equaled about $5 billion in 2012, down 40% from 2011; $3.8 billion of this was in industrial nations and $1.2 billion in developing ones.

Biofuels investment within the Group of Twenty (G-20) nations has declined every year from 2007 through 2012. Despite this trend, some observers expect biofuel investment to rise; one forecast, for example, put 2023 revenues at $7.6 billion on investment of $69 billion over the decade, supported by continued blending mandates.