With the HVO premium doubling in a year and production capacity struggling to keep pace with demand, coprocessing remains massively underutilised in Europe. Greenea and Tracfic analyse the structural barriers limiting this readily available solution.
By the Greenea Research & Tracfic team · May 2026
KEY FIGURES
| ×2 | 1,5 Mt | 5 % | 0,3 % |
|---|---|---|---|
| HVO/gasoil premium in 1 year (€700→€1,400/m³) | EU coprocessing capacity currently used | Theoretical max potential of EU refineries | Capacity actually mobilised today |
1. A Market Under Pressure: The Diagnosis
HVO prices in the European Union are rising, and the premium over gasoil has almost doubled in one year from around €700/m³ to close to €1,400/m³. On top of this, margins close to €600/m³ are expected from leading HVO producers by the end of Q1 2026, even though feedstock costs have not moved at all. The signal is unambiguous: this price increase stems primarily from a supply issue, not a demand shortfall.
Two concurrent factors explain this situation: project delays across the European Union, and the introduction of duties on exports from regions such as China, effectively removing a portion of global capacity from the market. The EU therefore needs to increase its HVO production capacity to ease price pressure and coprocessing is the fastest solution available.
2. Coprocessing in Europe: Vast Theoretical Potential, Disappointing Reality
The European Union has around 600 million tonnes of crude oil refining capacity. It is widely acknowledged that 5% of this capacity could be used for coprocessing — approximately 30 million tonnes, more than enough to serve a market estimated at 5 million tonnes in 2025.
The reality is very different:
EU COPROCESSING CAPACITY — CURRENT STATE AND POTENTIAL
| Indicator | Today | 5-year projection | Max potential |
|---|---|---|---|
| EU crude oil refining capacity | ~600 Mt | ~600 Mt | ~600 Mt |
| Theoretical coprocessing capacity (5%) | ~30 Mt | ~30 Mt | ~30 Mt |
| Effective coprocessing capacity | 1,5 Mt (0,3 %) | ~2 Mt | 30 Mt |
| EU refineries doing coprocessing | ~1/3 | n/a | All |
Only around 1.5 million tonnes of this capacity is currently being used, with projections barely reaching 2 million tonnes over the next five years — equivalent to just 0.3% of theoretical potential. Furthermore, only one third of EU refineries currently practice coprocessing, meaning that those that do are only operating at around 1% of their coprocessing capacity, far below the feasible 5%.
3. Structural Barriers: Why Aren’t Refineries Accelerating?
SUMMARY OF COPROCESSING BARRIERS IN EUROPE
| Barrier | Description | Nature |
|---|---|---|
| Risk aversion | Coprocessing still perceived as a risk of critical unit shutdown. Unrealistic quality requirements (metals, phosphorus, sulfur | Technical |
| Hydrogen | Technical retrofit required + significant increase in H₂ consumption when scaling from 1% to 5% bio feedstock share. | Technical |
| Pre-treatment | Lack of outsourced pre-treatment capacity. Specifications disconnected from market realities, leading to inefficient investments. | Technical/Econ. |
| Sustainability compliance | C14 analysis still a bottleneck, despite ongoing simplification via ISCC and EU delegated acts. | Regulatory |
| Logistics & trading | Few petroleum teams specialised in bio feedstocks. Logistical constraints in Central Europe. | Operational |
| Admin. & safety | Bringing waste, residues or animal fats onto petroleum sites introduces additional regulatory and safety requirements. | Administrative |
Risk aversion
Refineries generally still perceive coprocessing as a risk that could trigger the shutdown of an entire critical unit. This pushes operators to impose impossible-to-meet quality constraints on bio feedstock teams — including requirements for metals, phosphorus, chloride, and sulfur below 5 ppm, which are not achievable at scale with current market offerings. Some refineries even resort to using biodiesel (FAME) directly to circumvent these constraints.
Hydrogen as a Bottleneck
Not all refineries are equipped to handle bio feedstocks. Coprocessing generally involves a degree of technical retrofit and increased hydrogen consumption per tonne refined. Scaling from 1% to 5% bio feedstock share can lead to a significant increase in H₂ requirements.
Pre-treatment Uncertainties
The lack of pre-treatment capacity raises structural questions: should pre-treatment be outsourced (OPEX) or built in-house as a long-term investment (CAPEX)? Moreover, the specifications set by engineering teams do not always reflect market realities, likely driving investments in pre-treatment units that could prove economically inefficient and misaligned with market standards — while also significantly impacting overall production yields.
Sustainability Compliance
C14 analysis remains a bottleneck for sustainability compliance, although simplification is underway at EU level through delegated acts and schemes such as ISCC.
Logistics and Bio Feedstock Trading
Not all petroleum companies have teams specialised in handling bio feedstocks. In certain regions — particularly Central Europe, bio feedstock logistics present a genuine challenge. This explains why coprocessing units tend to cluster near import-export hubs (Spain, ARA, Italy).
Administrative and Safety Requirements
Bringing waste, residues, or animal fats onto petroleum sites introduces additional requirements in terms of regulatory compliance, safety standards, and risk management.
4. Two Growth Levers, Two Levels of Difficulty
The coprocessing market can grow through two complementary pathways:
- Increasing the share of oil refineries accepting coprocessing
- Increasing the bio feedstock share within refineries already doing coprocessing (from 1% to 5%)
The “Easy” Part: Starting for Inactive Refineries
For refineries with no coprocessing activity, the first step is accessible: incorporating a low proportion of bio material (0.5%–1%) without significantly jeopardising fossil refining operations. This can represent 50–100 kt of bio capacity per site, and requires primarily an investment in feedstock market knowledge, laboratory testing, and logistics and compliance management.
Some refineries may also choose to wait for regulatory developments on locally sourced feedstocks — such as low-carbon rapeseed and sunflower oil which could be reconsidered under RED regulations. Given the high quality of these feedstocks, the strategic logic is clear: why risk existing assets if legislation could shift in five to ten years?
The “Hard” Part: Scaling from 1% to 5%
The real challenge is scaling continuously over time, avoiding one-off situations where a refinery can run on bio for a few months and then nothing happens. This requires:
- Drastically increasing feedstock sourcing capacity (global teams, offtake agreements, acquisitions)
- Internalising pre-treatment or building solid partnerships with pre-treatment players in the ARA region, Italy, and particularly Spain (the EU’s main pre-treatment hub), alongside significant H₂ retrofit or revamping
- Potentially accepting first-generation feedstocks to balance quality and availability
5. An Undervalued Asset — With Different Stakes by Use Case
Whether in Europe or globally, coprocessing remains undervalued despite its strong potential. It could play a key role in easing HVO price pressure, reducing emissions from existing refining assets, and mitigating the risk of long-term overcapacity in HVO production.
In the road transport sector, coprocessing has limited applicability because HVO is increasingly distributed as HVO100 a pure molecule. In the aviation sector, however, coprocessing is essential: bio-kerosene cannot be used as a pure molecule, meaning coprocessing routes will continue to play an indispensable role in producing sustainable aviation fuel (SAF) at scale.
In the short term, coprocessing allows refineries to increase margins in a supply-constrained environment. In the long term, it extends the operational life of fossil-fuel-based assets while reducing their carbon footprint. Crucially, unlike dedicated HVO capacity — which is exposed to significant feedstock availability uncertainty coprocessing benefits from inherent flexibility: the refinery can always revert to fossil-based feedstocks if necessary.
