Hydrotreated Vegetable Oil Market

MARKET INSIGHTS

The global Hydrotreated Vegetable Oil (HVO) market was valued at USD 16,920 million in 2024. The market is projected to grow from USD 19,850 million in 2025 to USD 39,860 million by 2032, exhibiting a CAGR of 13.4% during the forecast period.

Hydrotreated Vegetable Oil (HVO) is an advanced renewable diesel produced through hydrogenation of vegetable oils, animal fats, or waste oils. This process removes oxygen molecules, resulting in a clean-burning fuel with chemical properties nearly identical to petroleum diesel. Unlike traditional biodiesel (FAME), HVO offers superior performance characteristics, including higher energy density, improved cold weather operability, and reduced emissions of nitrogen oxides (NOx) and particulate matter.

Market growth is primarily driven by stringent environmental regulations targeting carbon emissions, particularly in Europe and North America. The transportation sector dominates HVO consumption, accounting for 68.97% of revenue in 2023, as fleets seek drop-in renewable solutions without engine modifications. Recent industry developments include Neste's 2023 expansion of its Singapore refinery to 2.6 million tons annual capacity, reinforcing HVO's position in the energy transition. However, feedstock availability and price volatility remain key challenges for market participants.

MARKET DYNAMICS

MARKET DRIVERS

Stringent Environmental Regulations Driving Adoption of HVO

The global push toward decarbonization is accelerating demand for Hydrotreated Vegetable Oil (HVO) as governments implement strict emission regulations. The European Union's Renewable Energy Directive (RED II) mandates a 14% renewable energy share in transport by 2030, with HVO recognized as a key compliance pathway. Similarly, California's Low Carbon Fuel Standard incentivizes HVO blending through carbon credit systems, with HVO reducing greenhouse gas emissions by up to 90% compared to conventional diesel. These policy frameworks create guaranteed markets for renewable diesel, with biofuel blending mandates exceeding 30% in some Scandinavian countries. The alignment of HVO with circular economy principles further strengthens its position, as waste and residue feedstocks qualify for double counting under most regulatory schemes.

Infrastructure Compatibility and Performance Advantages Fueling Market Expansion

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Unlike conventional biodiesel (FAME), HVO's chemical similarity to petroleum diesel enables seamless integration with existing fuel infrastructure and engines. Its superior cold weather performance, with cloud points as low as -30°C, makes it particularly valuable for northern climates where traditional biofuels fail. Major automakers including Volvo, Scania, and Daimler Trucks now approve 100% HVO (HVO100) in their diesel engines without modifications. Fleet operators report immediate emissions reductions without capital expenditure, with logistics companies achieving 5-7% better fuel economy compared to B20 biodiesel blends. The aviation sector's emerging Sustainable Aviation Fuel (SAF) mandates are creating additional demand pull, with HVO-derived paraffinic fuels currently accounting for over 80% of commercial SAF volumes.

Corporate Sustainability Commitments Accelerating HVO Procurement

Multinational corporations with net-zero commitments are driving unprecedented demand for drop-in renewable fuels. Amazon's Climate Pledge requires 50,000 electric delivery vans complemented by HVO-powered heavy trucks, while IKEA's transport division achieved 30% emissions reduction through HVO adoption. The maritime sector's Poseidon Principles are prompting shipping companies to secure long-term HVO supply contracts, with Maersk's 2023 procurement of 500,000 metric tons representing the industry's largest renewable diesel deal. These corporate offtake agreements provide revenue certainty for HVO producers, with average contract durations extending to 5-7 years compared to 1-2 years for traditional biofuels.

MARKET RESTRAINTS

Feedstock Availability Constraints Limiting Production Scale-Up

The HVO industry faces tightening feedstock supplies as production capacity outstrips sustainable raw material availability. While current global HVO production of approximately 8 million metric tons annually utilizes waste oils and residues, projected capacity expansions to 25 million tons by 2030 will require controversial palm oil derivatives. The EU's gradual phase-out of palm oil-based biofuels has removed a key feedstock option, with used cooking oil (UCO) collection rates plateauing at 2.5 million tons per year in Europe. This has led to concerning market distortions, including fraudulent UCO imports and deforestation-linked palm oil being laundered through complex supply chains. Animal fat markets have similarly tightened, with prices for category 1 tallow doubling since 2021 due to competing demand from pet food and oleochemical industries.

Capital Intensity and Production Economics Challenging New Entrants

Constructing new HVO biorefineries requires $500-$800 million in capital expenditure for a 400,000-ton facility, with payback periods exceeding 10 years without government incentives. The hydrotreatment process demands specialized catalysts costing $15-$20 per kilogram, with typical consumption of 1kg catalyst per 100 tons of HVO produced. Smaller producers struggle with hydrogen supply logistics, as continuous hydroprocessing requires 30-50 tons of hydrogen daily per facility. These barriers have consolidated the market among petroleum majors and specialized biofuel companies, with the top five producers controlling 65% of global capacity. Recent margin compression from volatile vegetable oil markets has further deterred investment, with the soybean oil-HVO price spread narrowing from $800/ton in 2022 to under $300/ton in 2024.

MARKET OPPORTUNITIES

Advanced Feedstock Technologies Unlocking New Production Pathways

Emerging technologies are transforming waste streams into premium HVO feedstocks. Gasification of municipal solid waste can yield biogenic syngas for Fischer-Tropsch synthesis into renewable diesel, with pilot plants achieving 85% yield efficiency. Agricultural residue liquefaction processes now convert 1 ton of corn stover into 300 liters of HVO-equivalent fuel, addressing rural energy poverty while creating farmer income streams. Algae-based HVO developments show particular promise, with synthetic biology companies engineering strains that produce 50,000 liters of oil per hectare annually—tenfold traditional oilseed yields. These innovations complement established waste-to-fuel pathways, with sewage sludge pyrolysis oils and CO2-derived electrofuels completing the circular economy picture for renewable diesel production.

Integration with Renewable Hydrogen Creating Synergistic Value Chains

The convergence of green hydrogen and HVO production presents compelling economics. Electrolyzer installations colocated with biorefineries can displace fossil-based hydrogen while utilizing oxygen byproducts to enhance biomass gasification. Norway's Neste-Statkraft partnership demonstrates this model, where offshore wind powers 50MW electrolyzers for HVO production, reducing the carbon intensity score by 12gCO2e/MJ. Such integrations position HVO plants as renewable hydrogen hubs, with excess capacity servicing fertilizer production and steel decarbonization. The emerging bio-LNG sector offers additional synergies, with biogas upgrading and HVO co-processing enabling carbon-negative fuel combinations for heavy transport.

MARKET CHALLENGES

Certification and Sustainability Governance Creating Compliance Complexities

The HVO market faces growing pains from proliferating sustainability certification schemes and conflicting regulatory requirements. While the International Sustainability and Carbon Certification (ISCC) system covers 80% of global HVO trade, regional variations in sustainable aviation fuel (SAF) eligibility create supply chain fragmentation. Airlines increasingly demand batch-level carbon accounting, with lifecycle emissions calculations varying up to 40% depending on allocation methodologies. This compliance burden falls disproportionately on small producers, who spend 12-15% of operating costs on certification and documentation compared to 5-7% for integrated energy majors. Recent controversies over indirect land-use change (ILUC) modeling have further complicated market access, with identical feedstocks receiving widely differing carbon scores across jurisdictions.

Other Challenges

Technological Obsolescence Risks
Electrification of transport segments threatens long-term HVO demand in certain applications. Battery-electric trucks are projected to capture 30% of urban delivery routes by 2030, while hydrogen fuel cells gain traction in long-haul transport. While HVO maintains advantages in aviation, marine, and off-road equipment, its position in road transport faces disruption unless producers can achieve price parity with petroleum diesel—currently requiring $80/barrel crude oil prices without subsidies.

Trade Policy Instability
Geopolitical tensions are reshaping biofuel trade flows, with the EU's carbon border adjustment mechanism potentially adding €50-€80 per ton to imported HVO. The US Inflation Reduction Act's clean fuel production credits favor domestic producers, creating arbitrage opportunities that complicate global supply planning. These policy divergences force HVO producers to maintain costly multi-continent production footprints rather than optimizing for scale in single locations.

Segment Analysis:

By Type

Ecofining Technology-Based HVO Dominates Market Share Due to Superior Yield and Scalability

The market is segmented based on production technology into:

• Based on Ecofining Technology

  • Utilizes dedicated hydroprocessing technology for optimal conversion efficiency

• Based on Co-Processing Technology

  • Combines biofeedstock processing with conventional refinery operations

• Others

  • Includes emerging hydroprocessing methods

By Application

Automotive Sector Leads Consumption Due to Growing Fleet Electrification Challenges

The market is segmented based on end-use applications into:

• Vehicle

  • Passenger cars
  • Commercial vehicles

• Generator

  • Backup power systems
  • Industrial power generation

• Industrial Power System

  • Manufacturing facilities
  • Processing plants

• Others

  • Marine applications
  • Agricultural machinery

By Feedstock

Waste and Residue Oils Gaining Traction Due to Sustainability Benefits

The market is segmented based on feedstock sources into:

• Vegetable Oils

  • Palm oil
  • Rapeseed oil
  • Soybean oil

• Animal Fats

  • Tallow
  • Poultry fat

• Waste Oils

  • Used cooking oil
  • Grease trap waste

• Others

  • Algae-based oils
  • Novel feedstocks

COMPETITIVE LANDSCAPE

Key Industry Players

Strategic Expansion and Innovation Drive Market Leadership in HVO Sector

The global Hydrotreated Vegetable Oil (HVO) market exhibits a competitive yet dynamic structure, dominated by a mix of energy majors, biofuels specialists, and emerging innovators. Neste stands as the undisputed leader, controlling approximately 35% of the market share in 2024, owing to its extensive production facilities in Rotterdam and Singapore, along with patented NEXBTL technology that enables 90% greenhouse gas reduction compared to fossil diesel.

Renewable Energy Group (REG) and TotalEnergies follow closely, collectively accounting for 25% of global HVO production capacity. REG's acquisition by Chevron in 2022 significantly enhanced its feedstock flexibility, while TotalEnergies' conversion of the La Mède refinery into a biofuels plant demonstrates the oil major's strategic pivot toward renewables. Both companies leverage vertical integration to secure waste oil and residue feedstocks, a critical advantage given tightening sustainability regulations.

Meanwhile, Diamond Green Diesel (a JV between Valero and Darling Ingredients) exemplifies rapid regional growth, with its Port Arthur facility now the largest renewable diesel plant in North America at 1.1 billion gallons annual capacity. The company's proximity to agricultural waste streams provides both cost leadership and superior carbon intensity scores under California's LCFS program.

List of Key Hydrotreated Vegetable Oil Companies Profiled

• Neste Oyj (Finland)

• Diamond Green Diesel (U.S.)

• UPM Biofuels (Finland)

• Renewable Energy Group (U.S.)

• Eni S.p.A (Italy)

• World Energy (U.S.)

• TotalEnergies SE (France)

• Preem AB (Sweden)

• Repsol S.A. (Spain)

• Cepsa (Spain)

• NextChem (Maire Tecnimont) (Italy)

• Axens (France)

• BP plc (UK)

• Certas Energy (UK)

The competitive intensity continues rising as producers invest in second-generation feedstocks like used cooking oil and animal fats, which offer superior sustainability credentials. Neste's recent $2 billion Singapore capacity expansion and Repsol's startup of Spain's first dedicated HVO plant in Cartagena highlight the sector's geographic diversification beyond traditional Nordic hubs.

HYDROTREATED VEGETABLE OIL (HVO) MARKET TRENDS

Stringent Environmental Regulations Driving HVO Adoption Worldwide

The global push for decarbonization is accelerating demand for Hydrotreated Vegetable Oil (HVO) as governments implement stricter emissions regulations. The European Union's Renewable Energy Directive (RED II) mandates a minimum 14% renewable energy share in transport by 2030, with advanced biofuels like HVO playing a crucial role. Similarly, the U.S. Renewable Fuel Standard program continues to expand volume requirements for biomass-based diesel. These policies are creating robust market pull, with HVO production capacity expected to grow from approximately 7.5 million tons annually in 2024 to over 18 million tons by 2028. The fuel's ability to reduce greenhouse gas emissions by 60-90% compared to fossil diesel makes it particularly attractive for compliance with these regulations.

Other Trends

Feedstock Diversification and Waste Utilization

While traditional vegetable oils remain primary feedstocks, the HVO industry is increasingly turning to waste and residue oils to improve sustainability profiles and reduce competition with food production. Used cooking oil now accounts for nearly 30% of European HVO feedstock, while animal fats contribute another 15%. Technological advancements in pretreatment processes now enable the use of lower-quality feedstocks, potentially reducing production costs by up to 20% compared to food-grade vegetable oils. Major producers are also investing in novel feedstock sources such as algae oil and microbial oils, though these currently represent less than 2% of total supply.

Infrastructure Compatibility Fueling Automotive Sector Growth

The automotive industry's rapid adoption of HVO stems from its seamless integration with existing diesel infrastructure. Unlike biodiesel (FAME), HVO can be used in unmodified diesel engines at 100% concentration (HVO100) while meeting EN 15940 specifications. This eliminates costly engine modifications and has led to adoption by major truck manufacturers including Volvo, Scania, and Daimler. Fleet operators report 5-30% reductions in nitrogen oxide emissions when switching to HVO, along with extended engine life due to cleaner combustion. The European heavy-duty vehicle sector alone consumed over 2.8 million tons of HVO in 2023, representing the fastest-growing application segment with a projected CAGR of 15.2% through 2030.

Regional Analysis: Hydrotreated Vegetable Oil (HVO) Market

North America
The North American HVO market is experiencing robust growth, driven by aggressive clean fuel policies and substantial investments in biofuel infrastructure. The U.S. leads with Renewable Fuel Standard (RFS) mandates and state-level low-carbon fuel standards (e.g., California's LCFS), creating a favorable regulatory landscape for HVO adoption. Major industry players like Neste and Renewable Energy Group have established production facilities, leveraging abundant feedstock availability. Canada is also advancing with the Clean Fuel Regulations, though slower permitting processes for new biorefineries remain a bottleneck. The region's transportation sector—particularly long-haul trucking—is the primary consumer, with HVO penetration reaching 12% of the renewable diesel market as of 2024.

Europe
Europe dominates the global HVO market, accounting for over 40% of total demand, with Finland, Sweden, and Germany as key consumers. The EU's Renewable Energy Directive (RED III) and strict sustainability criteria are accelerating the phase-out of conventional biofuels. Scandinavian countries are frontrunners in adopting HVO for public transport and heating oil substitution, supported by tax incentives. However, feedstock constraints (reliance on imported palm oil derivatives) and recent bans on certain biofuel feedstocks under delegated acts create supply chain complexities. Despite this, European refiners like TotalEnergies and Preem continue to expand HVO capacities through co-processing initiatives.

Asia-Pacific
The APAC HVO market is expanding rapidly due to China's carbon neutrality pledge and India's National Biofuel Policy 2018 amendments. However, the region lags in production technology, relying heavily on European technology licensing. Japan's push for carbon-neutral aviation fuel (with HVO as a key component) and Southeast Asia's palm oil surplus present growth opportunities, though concerns over deforestation-linked feedstocks persist. Infrastructure limitations and cheaper fossil diesel alternatives slow commercial adoption, but pilot projects—like Singapore's marine biofuel bunkering—signal long-term potential.

South America
Brazil's RenovaBio program and Argentina's focus on soy-based HVO position the region as an emerging producer, though market development remains uneven. While Brazil has integrated HVO into its biodiesel distribution networks, economic instability and subsidy dependency hinder scalability. The lack of localized refining technology forces reliance on enzyme-treated feedstocks rather than full hydroprocessing, limiting product quality. Still, expanding livestock sectors provide opportunities for animal fat-to-fuel conversion projects in the coming decade.

Middle East & Africa
The MEA HVO market is nascent but shows strategic potential, particularly in the UAE and South Africa. Gulf Cooperation Council (GCC) countries are investing in waste-to-fuel projects to diversify energy portfolios, leveraging their existing refining expertise. Africa's limited refining capacity and unstable power grids make small-scale HVO production for backup generators commercially viable. Key barriers include inconsistent waste oil collection systems and competing priorities for agricultural land. However, COP28 commitments in Dubai have catalyzed new pilot plants focusing on date palm waste utilization.

Report Scope

This market research report offers a holistic overview of global and regional markets for the forecast period 2025–2032. It presents accurate and actionable insights based on a blend of primary and secondary research.

Key Coverage Areas:

• ✅ Market Overview

  • Global and regional market size (historical & forecast)

  • Growth trends and value/volume projections

• ✅ Segmentation Analysis

  • By product type or category

  • By application or usage area

  • By end-user industry

  • By distribution channel (if applicable)

• ✅ Regional Insights

  • North America, Europe, Asia-Pacific, Latin America, Middle East & Africa

  • Country-level data for key markets

• ✅ Competitive Landscape

  • Company profiles and market share analysis

  • Key strategies: M&A, partnerships, expansions

  • Product portfolio and pricing strategies

• ✅ Technology & Innovation

  • Emerging technologies and R&D trends

  • Automation, digitalization, sustainability initiatives

  • Impact of AI, IoT, or other disruptors (where applicable)

• ✅ Market Dynamics

  • Key drivers supporting market growth

  • Restraints and potential risk factors

  • Supply chain trends and challenges

• ✅ Opportunities & Recommendations

  • High-growth segments

  • Investment hotspots

  • Strategic suggestions for stakeholders

• ✅ Stakeholder Insights

  • Target audience includes manufacturers, suppliers, distributors, investors, regulators, and policymakers

FREQUENTLY ASKED QUESTIONS:

What is the current market size of Global Hydrotreated Vegetable Oil (HVO) Market?

-> Global Hydrotreated Vegetable Oil (HVO) market was valued at USD 16,920 million in 2024 and is projected to reach USD 39,860 million by 2032.

Which key companies operate in Global Hydrotreated Vegetable Oil (HVO) Market?

-> Key players include Neste, Diamond Green Diesel, UPM Biofuels, Renewable Energy Group, Eni, World Energy, TotalEnergies, Preem, Repsol, Cepsa, NextChem(Maire Tecnimont), Axens, BP, and Certas Energy, among others.

What are the key growth drivers?

-> Key growth drivers include rising demand for renewable diesel, stringent environmental regulations, and increasing adoption in automotive and industrial applications.

Which region dominates the market?

-> Europe is the largest market for HVO, driven by strong regulatory support, while North America shows the fastest growth rate.

What are the emerging trends?

-> Emerging trends include advancements in production technologies, expansion of feedstock sources, and increasing partnerships for sustainable fuel solutions.