Driven by the RED III directive and the acceleration of biofuel mandates, European demand could quadruple by 2030, putting production capacities and feedstocks under significant pressure.
KEY FIGURES
| 5 Mt | >11,5 Mt | ×4 | 29 % |
|---|---|---|---|
| Current EU capacity | EU 2030 Target | Demand growth 2025–2030 | Renewable Energy Target for Transportation (RED III) |
1. A Market in Strong Structural Growth
European HVO production capacity is currently estimated at around 5 million tonnes, but could exceed 11.5 million tonnes by 2030 with the commissioning of new facilities, particularly in Northern Europe and Spain. Globally, HVO/HEFA capacities could reach 30–50 million tonnes by 2030, including projects related to SAF and co-processing.
European HVO demand is expected to grow strongly in the coming years, with volumes nearly quadrupling between 2025 and 2030 to reach approximately 16–18 million tonnes, compared to the estimated 4–5 million tonnes in 2025.
This momentum is primarily driven by the regulatory framework, especially the implementation of the RED III directive, which sets a target of 29% renewable energy in transport by 2030, with specific sub-targets for advanced biofuels.
SUPPLY & DEMAND : PROJECTIONS 2025–2030
| Indicator | 2025 (est.) | 2027 (proj.) | 2030 (proj.) |
|---|---|---|---|
| EU capacity (Mt) | ~5 | ~8 | >11,5 |
| EU demand (Mt) | 4–5 | ~8–10 | 16–18 |
| Global HVO/HEFA capacity (Mt) | ~20 | ~28–35 | 30–50 |
Sources: Greenea market projections, RED III data (EUR-Lex), IEA Bioenergy 2024.
2. 2027: A Pivotal Year for Production and Regulation
The year 2027 will mark a major turning point with the widespread implementation of new national policies aligned with RED III. This milestone will represent a tipping point for all market participants, with a gradual but structural increase in blending obligations.
At the same time, 2027 will see the commissioning of new HVO/HEFA production units. However, these start-ups may experience delays or gradual ramp-ups, limiting their effective contribution during the year. The volume impact is therefore expected to be fully realized from the following year, as anticipated for projects led by Moeve, VARO Preem, Galp, Repsol, or Neste. Additional capacities expected in Europe are estimated at around 3 million tonnes by end-2027.
From 2028 onwards, an acceleration phase is expected, with a significant increase in mandates in several European countries. This development should support HVO demand, while the FAME biodiesel market remains limited due to the technical constraints of the “blend wall.”
3. Growing Competition and Its Impact on Margins
The entry of new producers in Europe and Asia should slightly increase liquidity and introduce some competition. This could have a moderate impact on HVO producer margins, benefiting distributors and HVO100 users — though this effect will likely remain marginal compared to the strong structural demand.
In this context, the supply-demand balance will remain a key factor, with a risk of structural tension on feedstocks and sustained upward support for HVO prices.
The HVO100 market thus appears as an indirect response to regulatory obligations. Oil companies have two levers: either blend biofuels into fossil fuels (B7, B10, E10, etc.) or market a 100% biofuel such as HVO100 to generate certificates proving the consumption of renewable energy volumes required by mandates.
4. Uncertainties That Could Reshape the Market
Several factors could reshape market dynamics in the medium term:
- The evolution of diesel demand in Europe, marked by a structural downward trend (–4.5% per year in France), could mechanically limit volumes that can be blended.
- The rise of competing decarbonization solutions, such as BioCNG, electrification, or B100, introduces growing competition and provides oil companies with alternatives regarding bio-certificates.
- Upcoming regulatory changes, particularly on greenhouse gas emission criteria, could reshape the market by giving a renewed role to first-generation biofuels (B100/RME/FAME) with intermediate or low-carbon crops.
5. Open Questions for the Next Five Years
Several central questions arise for the future of the HVO market:
- Will HVO maintain its dominant role in road transport decarbonization, or will it need to integrate into an increasingly diversified mix of solutions and regulations?
- What will the price level of HVO100 be for transporters across Europe, and will national price divergences persist or widen?
- How will competition on bio-certificate prices play out between different decarbonization solutions in each country?
- How will feedstock sourcing and security evolve, given the competition between HVO, HEFA, and UCOME on the used cooking oil market?
All of these factors make the HVO trajectory a key topic to monitor over the next five years.
