By 2025, Europe’s demand for Hydrotreated Vegetable Oil (HVO) or renewable diesel is expected to grow significantly, driven by two key factors:
1.Stricter Renewable Energy Mandates: Increased mandatory requirements for renewable energy use in the transportation sector are set to drive sustained demand for HVO.
2.Policy Changes in EU Member States: Adjustments to renewable fuel credit carryover regulations in countries like Germany and the Netherlands will provide new incentives for HVO market growth.
If announced expansion projects proceed as scheduled, European HVO production capacity could increase by over 400,000 tons by 2025. Most of the new facilities will have the flexibility to pivot towards the production of Sustainable Aviation Fuel (SAF), particularly Hydroprocessed Esters and Fatty Acids Synthetic Paraffinic Kerosene (HEFA-SPK). This adaptability ensures readiness to meet shifting market demands.
However, businesses aiming to import HVO into the EU will face mounting challenges. The EU is set to impose final anti-dumping duties (ADD) on HVO and biodiesel originating from China by mid-February 2025. Similar duties, along with countervailing tariffs, are already in place for HVO and biodiesel from the United States and Canada, further restricting imports.
In contrast, the United Kingdom offers a different outlook. Following the removal of HVO tariffs in 2022, HVO produced in the United States can flow freely into the UK market, presenting new opportunities for American suppliers while intensifying competition in the region.
Overall, while the European HVO market is poised for significant growth by 2025, international trade policies and regional market disparities will present notable challenges for market participants.