HVO Fuel Market, Global Outlook and Forecast 2025-2032

MARKET INSIGHTS

Global HVO fuel market size was valued at USD 21,380 million in 2024. The market is projected to grow from USD 25,460 million in 2025 to USD 69,270 million by 2032, exhibiting a CAGR of 18.7% during the forecast period.

Hydrogenated Vegetable Oil (HVO) is a second-generation biofuel produced through hydrotreatment of vegetable oils, animal fats, or waste oils. This advanced renewable diesel alternative offers superior performance characteristics including higher cetane numbers, improved cold flow properties, and reduced greenhouse gas emissions compared to conventional biodiesel. Unlike traditional FAME biodiesel, HVO is chemically identical to fossil diesel, allowing it to be used in existing diesel engines without modification.

The market growth is driven by stringent environmental regulations and increasing adoption of renewable fuels across transportation sectors. Europe currently dominates demand due to strong policy support, while North America and Asia are emerging as high-growth markets. Key applications include heavy-duty transport, marine fuels, and industrial power generation where HVO's high energy density and low carbon intensity (up to 90% reduction in lifecycle emissions) provide significant advantages. However, feedstock availability and production costs remain key challenges for market expansion.

MARKET DYNAMICS

MARKET DRIVERS

Stringent Environmental Regulations to Accelerate HVO Fuel Adoption

Governments worldwide are implementing rigorous carbon reduction policies, driving demand for sustainable fuel alternatives. The European Union's Renewable Energy Directive (RED II) mandates a 14% renewable energy share in transport by 2030, with advanced biofuels like HVO playing a pivotal role. Countries are progressively banning fossil diesel - France will prohibit its use in public transport by 2025, while California's Low Carbon Fuel Standard creates strong incentives for HVO adoption. These regulations create a favorable environment for HVO's expansion, with the transport sector accounting for nearly 60% of global HVO consumption in 2024.

Superior Performance Characteristics Drive Commercial Fleet Adoption

HVO's technical advantages over conventional biodiesel (FAME) and petroleum diesel are transforming commercial transportation. With a cetane number exceeding 70 (compared to 40-55 for conventional diesel), HVO provides better combustion efficiency and cold weather performance down to -32°C. Major logistics companies have reported 5-15% reductions in maintenance costs after switching to HVO due to reduced engine deposits. Notably, DHL's European fleet achieved a 90% greenhouse gas reduction using HVO while maintaining identical vehicle performance. This "drop-in" replacement capability eliminates expensive fleet modifications, accelerating adoption across road, marine, and industrial applications.

➤ Scandinavian countries demonstrate HVO's potential, where over 30% of diesel consumption is now renewable - primarily HVO. Norway's public buses achieved full carbon neutrality through HVO adoption in 2023.

MARKET RESTRAINTS

Feedstock Volatility Creates Supply Chain Vulnerabilities

While HVO offers environmental benefits, its reliance on vegetable oils and waste fats presents significant supply challenges. Global vegetable oil prices fluctuated between $900-$1,400 per ton in 2023, creating unpredictable production costs. Waste oils - a preferred feedstock - account for only about 15% of current HVO production due to limited collection infrastructure. The EU's push for waste-based biofuels conflicts with increasing Asian demand for used cooking oil, driving prices up 40% since 2021. Producers face difficult choices between securing sustainable feedstocks and maintaining cost competitiveness against conventional diesel.

Other Restraints

Production Capacity Bottlenecks
Current global HVO production capacity of approximately 12 million tons annually falls far short of potential demand. Even with 35 new projects announced through 2026, analysts project a 20-30% supply gap by 2030. This constraint is exacerbated by 3-4 year lead times for new biorefineries requiring investments exceeding $500 million each.

Consumer Awareness Gaps
Despite superior performance, 60% of European fleet managers in a 2023 survey remained unfamiliar with HVO specifications. This knowledge gap slows adoption even in regions with established distribution networks.

MARKET CHALLENGES

Technological Scaling Hurdles in Emerging Markets

Expanding HVO production faces significant technological barriers outside established markets. The hydrotreatment process requires specialized catalysts that account for 15-20% of production costs, with limited suppliers controlling the technology. Emerging producers in Asia and South America report 20-30% lower yields during initial operations compared to European facilities due to feedstock variability. Smaller scale plants below 100,000 ton capacity struggle to achieve profitability, creating a challenging environment for new market entrants despite growing demand.

Carbon Accounting Controversies Impact Investor Confidence

Disputes over lifecycle carbon calculations create uncertainty in HVO markets. Recent studies show wide variations (30-90% GHG reduction claims) depending on feedstock origin and processing methods. Indirect Land Use Change (ILUC) concerns have led some jurisdictions to restrict crop-based HVO, eliminating 65% of potential feedstock. The lack of universal certification standards complicates cross-border trade and corporate carbon reporting, deterring some potential users despite the fuel's technical merits.

MARKET OPPORTUNITIES

Marine Sector Decarbonization Creates $12 Billion Potential

The International Maritime Organization's 2030 emission targets are driving unprecedented demand for marine biofuels. HVO's high energy density (35-37 MJ/kg) and storage stability make it ideal for shipping, with trials showing 80% particulate matter reduction. Major ports from Rotterdam to Singapore now offer HVO bunkering, creating a potential 8 million ton annual market by 2030. Cargo giants like Maersk have committed to 25% biofuel blends across fleets, representing a $1.2 billion annual procurement opportunity for HVO producers.

Aviation Industry Partnerships Open New Revenue Streams

Hydroprocessed Esters and Fatty Acids (HEFA) fuels derived from HVO technology are gaining traction in sustainable aviation. With airlines committing to 10% SAF blends by 2030, Neste and other producers are retrofitting HVO plants for jet fuel production. The first commercial-scale HEFA facility in Singapore can produce 1 million tons annually, enough for 3% of global aviation demand. Industry estimates suggest HVO-derived jet fuel could capture 40% of the emerging SAF market, creating a $8-10 billion opportunity by 2035.

Segment Analysis:

By Production Type

Stand-Alone Biorefineries Segment Dominates Due to Higher Production Efficiency and Scalability

The market is segmented based on production type into:

• From Stand-Alone Biorefineries

• From Co-Processing Plants

By Application

Automotive Fuels Segment Leads Owing to Widespread Adoption in Commercial Vehicles

The market is segmented based on application into:

• Automotive Fuels

  • Subtypes: Heavy-duty vehicles, Light commercial vehicles

• Marine Fuel

• Industrial Fuels

• Others

By Feedstock

Waste and Residue Segment Gains Traction Due to Sustainability Advantages

The market is segmented based on feedstock into:

• Vegetable Oils

  • Subtypes: Rapeseed, Palm, Soybean

• Animal Fats

• Waste and Residues

  • Subtypes: Used cooking oil, Fish processing waste

By Distribution Channel

Direct Sales Channel Prevails Through Strong Manufacturer-Customer Relationships

The market is segmented based on distribution channel into:

• Direct Sales

• Distributors

• Online Platforms

COMPETITIVE LANDSCAPE

Key Industry Players

Strategic Expansion and Technological Innovation Drive Market Competition

The global HVO fuel market exhibits a moderately consolidated structure, dominated by established energy giants alongside agile renewable fuel specialists. Neste emerges as the undisputed market leader, commanding approximately 28% of global HVO production capacity in 2024. The Finnish company's dominance stems from its vertically integrated supply chain, proprietary NEXBTL technology, and strategic partnerships with feedstock providers across Europe and Asia.

Renewable Energy Group (U.S.) and TotalEnergies (France) follow closely, jointly accounting for nearly 22% of market share. These players are making significant inroads through acquisitions - evidenced by TotalEnergies' 2023 acquisition of a biofuel plant in La Mède, France - and continuous R&D investments to improve cold flow properties of HVO blends.

Meanwhile, the competitive dynamics showcase regional strongholds. While European players like UPM Biofuels and Preem dominate the EU market with their compliance-driven production, North American competitors including Diamond Green Diesel (a joint venture between Valero and Darling Ingredients) are scaling rapidly to meet growing demand from the transportation sector.

The competitive intensity is further amplified by new entrants from Asia-Pacific, particularly EcoCeres and Haixin Energy Technology, which are leveraging local feedstock advantages and government incentives to establish regional production hubs. However, these emerging players face substantial barriers in matching the technical expertise and distribution networks of established Western competitors.

List of Key HVO Fuel Producers Profiled

• Neste Oyj (Finland)

• Diamond Green Diesel (U.S.)

• Renewable Energy Group (U.S.)

• UPM Biofuels (Finland)

• 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 (U.K.)

• Certas Energy (U.K.)

• EcoCeres (China)

• Haixin Energy Technology (China)

• Junheng Industrial Group Biotechnology (China)

HVO FUEL MARKET TRENDS

Decarbonization Initiatives Driving Transition to Renewable Diesel Alternatives

The global push toward decarbonization is accelerating adoption of Hydrotreated Vegetable Oil (HVO) fuels, with the market projected to grow at 18.7% CAGR through 2032. Unlike conventional biodiesel, HVO's hydrocarbon structure eliminates oxygen content through hydrogenation, delivering up to 90% lower lifecycle emissions than fossil diesel while maintaining full compatibility with existing engines. Recent policy developments like the EU's Renewable Energy Directive (RED III) mandating 29% renewable content in transport fuels by 2030 are creating unprecedented demand. Major oil companies are responding - TotalEnergies converted its Grandpuits refinery to produce 400,000 tons/year of HVO, while Neste expanded Rotterdam capacity to 1.4 million tons annually.

Other Trends

Waste-to-Fuel Innovations

The industry is pivoting toward advanced feedstocks like used cooking oil (UCO) and animal fat residues, which now comprise over 40% of HVO production inputs. This circular economy approach addresses both cost competitiveness and sustainability concerns, with waste-based HVO achieving 83-95% CO2 reduction versus fossil alternatives. Technological breakthroughs in pretreatment systems have enabled processors to handle increasingly contaminated feedstocks, with leading biorefineries achieving 98% conversion efficiency from low-grade waste oils.

Marine Sector Emerges as Key Growth Frontier

While automotive applications dominate current HVO consumption, maritime fuel regulations are unlocking new opportunities. The International Maritime Organization's 2023 GHG strategy targeting 30% emissions reduction by 2030 has spurred trials of HVO blends in shipping. Early adopters like Maersk reported 20% immediate carbon cuts without engine modifications. Ports in Rotterdam and Singapore now offer HVO bunkering, with marine fuel demand projected to exceed 5 million tons annually by 2027. However, price premiums exceeding 30% over VLSFO remain a barrier for widespread adoption.

Regional Analysis: HVO Fuel Market

North America
North America is rapidly adopting HVO fuel as part of its renewable energy transition, driven by strict emission regulations like California’s Low Carbon Fuel Standard (LCFS) and Canada’s Clean Fuel Regulation. The U.S. is a key market, boosted by corporate sustainability commitments from fleet operators and incentives such as the Renewable Fuel Standard (RFS) program. Major producers like Neste and Renewable Energy Group are expanding production capacities to meet demand. However, feedstock availability and cost remain challenges, despite growing investments in waste-oil collection infrastructure. Technological advancements and partnerships between energy companies and logistics providers are expected to further accelerate market growth.

Europe
Europe leads the global HVO market, accounting for over 50% of consumption, with the Nordic countries and Germany at the forefront. The EU’s Renewable Energy Directive (RED III) mandates a 14% renewable share in transport by 2030, creating a strong regulatory push. Countries like Finland and Sweden have fully integrated HVO into their fuel distribution networks, supported by tax incentives. However, competition for sustainable feedstocks and high production costs pose hurdles. Still, expansions by key players like Preem and Repsol, along with increasing use in aviation (e.g., Neste’s partnership with airlines), signal robust long-term prospects.

Asia-Pacific
Asia-Pacific is emerging as a high-growth market, driven by China’s carbon neutrality goals and India’s focus on cleaner fuels. Japan and South Korea are investing in HVO for marine and industrial applications, leveraging stricter emissions standards. China’s push for waste-to-energy solutions is boosting domestic production, though cost sensitivity favors biodiesel blends over pure HVO. Infrastructure bottlenecks and policy inconsistencies, however, slow adoption compared to Europe. Pilot projects in Southeast Asia—such as Malaysia’s palm oil-derived HVO—hint at future scalability if sustainability concerns around feedstock sourcing are addressed.

South America
South America’s HVO market is nascent but holds promise due to abundant feedstock availability, particularly soybean and waste oils in Brazil and Argentina. Brazil’s RenovaBio policy encourages biofuel adoption, though economic instability limits large-scale investments. Argentina’s focus on biodiesel exports leaves little incentive for domestic HVO development. While regional demand grows slowly, international partnerships—such as Argentine firms supplying feedstocks to European refiners—highlight its role in the global supply chain. Regulatory clarity and stable investment frameworks are needed to unlock potential.

Middle East & Africa
The Middle East & Africa region shows uneven progress, with the UAE and Saudi Arabia piloting HVO projects as part of diversification strategies. Africa’s potential lies in jatropha and waste-oil feedstocks, but underdeveloped infrastructure and low regulatory pressure delay commercialization. South Africa’s biodiesel mandates are a rare bright spot. Long-term opportunities exist in decarbonizing mining and logistics sectors, though reliance on fossil fuels and funding gaps will constrain near-term growth. Strategic collaborations with European technology providers could accelerate local capacity building.

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 HVO Fuel Market?

-> The Global HVO Fuel market was valued at USD 21,380 million in 2024 and is projected to reach USD 69,270 million by 2032 at a CAGR of 18.7%.

Which key companies operate in Global HVO Fuel Market?

-> Key players include Neste, Diamond Green Diesel, Renewable Energy Group, UPM Biofuels, Eni, TotalEnergies, BP, and Repsol, among others.

What are the key growth drivers?

-> Key growth drivers include rising demand for renewable fuels, stringent carbon emission regulations, and compatibility with existing diesel engines.

Which region dominates the market?

-> Europe leads the market with over 45% share due to strong regulatory support, while North America shows the fastest growth.

What are the emerging trends?

-> Emerging trends include waste-to-fuel conversion technologies, co-processing plant expansions, and marine fuel applications.