Lang
European Union biodiesel imports are in a steep decline, hitting 1.55 million tonnes in 2025, down from 1.99 million tonnes in 2024, and following a peak of 3.72 million tonnes in 2019. This downturn contrasts sharply with the surging demand for hydrotreated vegetable oil (HVO), which saw its imports reach 1.76 million tonnes in 2025, surpassing biodiesel for the first time, according to the European Biodiesel Board (EBB) statistical report.
The year 2025 marked the first full year of available HVO import data, thanks to the EU's introduction of specific 10-digit customs codes for the product. Significant volumes arrived from Asia (1.46 million tonnes) and North America (180,000 tonnes). This occurred despite strict countervailing duties imposed by the EU on imports from China and the US, reflecting high prices that created profitable arbitrage opportunities for exporters and underscored robust demand.
Market participants anticipate this strong HVO demand will persist into 2026, even though near-term biofuel demand is somewhat subdued by Middle East conflict-induced uncertainty and limited upward movement in biofuel prices, unlike fossil fuels. This has prompted some sellers to either blend their product directly or delay sales. HVO commands a substantial premium over biodiesel; Fastmarkets assessed renewable diesel HVO (UCO) fob ARA at $2,652.80 per tonne on July 9, significantly higher than UCOME outright fob ARA biodiesel at $1,599.75 per tonne on the same day.
Several factors are poised to further boost HVO imports: a decrease in demand for crop-based biofuels due to legislative changes, insufficient HVO and biodiesel production capacity within Europe, and a stagnant 'blendwall' for biodiesel. A European biodiesel producer and trader told Fastmarkets, 'People in the market are now a lot more interested in HVO than in biodiesel.'
Biodiesel demand within the EU weakened in 2025, with prices for key grades like UCOME and RME rising slower than their feedstocks, as buyers increasingly shifted to HVO. Even recent global events, such as the conflict involving the US, Israel, and Iran in early 2026, saw biodiesel prices react sluggishly to rising fossil fuel costs. Premiums for crop grades over gasoil even briefly turned negative between April 2-7, making certain biodiesel grades cheaper than fossil diesel, primarily due to a dramatic surge in gasoil and record jet fuel prices.
In contrast, HVO prices have remained well above biodiesel, with premiums significantly exceeding gasoil, despite similar volatility in underlying gasoil prices, signaling strong and sustained demand. A key advantage for HVO is its ability to meet mandate targets more quickly, as it is not constrained by a 'blendwall' – unlike conventional biodiesel, which typically has a standard limit of 7% in road diesel fuel mixes (B7), with provisions for up to 10% (B10) under the Renewable Energy Directive (RED III).
Biodiesel producers have long advocated for increasing the blendwall, with 10% widely accepted and even 20% deemed manageable for heavy goods vehicles and buses. However, few EU member states have transitioned from B7 to B10, and the UK, despite commissioning studies, has yet to make a decision.
HVO's flexibility stems from mandate targets being measured as an overall percentage of fuel delivered by an obligated party within an entire compliance year, rather than a percentage of biofuel at the pump. This allows mandates to be met more efficiently than with biodiesel alone.
While anti-dumping duties were introduced on Chinese biodiesel and HVO in 2024, the most significant shift in EU biofuel imports has been the dramatic reduction from Argentina. Under a 2019 five-year agreement, the EU imported 1-1.2 million tonnes of Argentine biodiesel annually. However, in 2025, despite an extension, imports plummeted to just over 300,000 tonnes. For January to March 2026, no Argentine biodiesel arrivals have been reported.
This decline is partly due to the EU's growing preference for HVO over biodiesel, not only for its higher blending potential but also because the majority of HVO, especially outside North America, is increasingly produced from non-crop feedstocks. RED III actively incentivizes biofuels made from waste-based and 'advanced' feedstocks, categorized in Annex 9 Lists A (wastes) and B (advanced).
The proposed abolition of 'double counting' by Germany and the Netherlands this year, as part of their RED III implementation, is expected to further boost demand for waste-based and advanced-feedstock biofuels, with HVO being a central component. Double counting previously allowed such biofuels to count twice towards a member state's mandate, unlike crop-based biofuels. Argentinian biodiesel, primarily derived from soybean oil, is increasingly restricted, with several EU states, including France, Germany, Spain, and the Netherlands, having effectively banned its use.
Another factor driving HVO import demand is the slow pace of European production, with several planned facilities facing delays or cancellations. Shell, for instance, formally cancelled its 800,000-tonne SAF and HVO project at its Pernis refinery in Rotterdam in September 2025. BP similarly abandoned its HVO/SAF facility plans in Rotterdam later that year.
Many other projects are behind schedule. Despite a total European HVO and SAF production capacity of 9.8 million tonnes for plants starting by 2026 (according to Fastmarkets), this figure includes SAF, doesn't account for actual run rates (often below capacity), and overlooks shutdowns like Neste's planned closure of its Porvoo facility this year. The EU will thus continue to rely on imports to meet its blending needs under RED III.
Biodiesel production has also faced acute challenges over the past year. In the UK, Greenergy announced the shutdown of its Immingham facility due to poor margins and market conditions, following Argent's Motherwell plant closure in 2024, prompting fears of further industry closures from the UK's Renewable Transport Fuel Association (RTFA).
Despite HVO's higher cost, its preferential qualities—specifically the absence of a blendwall and its predominant use of Annex 9 feedstocks—are likely to ensure its demand continues to outstrip biodiesel, further solidifying import reliance. Source: Fastmarkets