MethodologyContact usSupportLogin
The European Union (EU) and the United Kingdom are leading the global transition to renewable fuels, leveraging ambitious policy frameworks, robust trade defenses, and innovative market strategies. Their efforts are not only transforming domestic energy landscapes but also setting new standards for climate action and industrial competitiveness.
At the core of this transformation are powerful regulatory frameworks. The EU’s Renewable Energy Directive III (RED III) raises the renewable energy target to 42.5% of gross final energy consumption by 2030. It offers Member States flexible compliance pathways, either through increasing renewable energy’s share in transport or by reducing the carbon intensity of fuels. This dual approach empowers tailored national strategies while maintaining a unified push toward decarbonization.
The UK’s Renewable Transport Fuel Obligation (RTFO) mandates at least 14.6% of fuels used in road transport and non-road mobile machinery be renewable by 2025. The RTFO incentivizes advanced fuels from waste and residues, offering double rewards for those meeting strict sustainability criteria. Suppliers can comply by blending, purchasing Renewable Transport Fuel Certificates (RTFCs), or paying a buy-out price, ensuring flexibility and market responsiveness.
For aviation, the EU’s ReFuelEU Aviation Regulation and the UK’s SAF Mandate set the pace for decarbonizing one of the hardest-to-abate sectors. Starting in 2025, fuel suppliers must ensure a minimum of 2% of aviation fuel supplied at EU airports to be sustainable aviation fuel (SAF), with targets rising to 70% by 2050. The UK’s SAF Mandate follows a similar trajectory, beginning at 2% in 2025 and rising to 22% by 2040, with a special focus on synthetic fuels made from renewable electricity and captured carbon.
To protect domestic industries from unfair competition, the EU and UK have intensified already imposed anti-dumping and countervailing duties against biodiesel and renewable diesel imports, specifically FAME (fatty acid methyl ester) and HVO (hydrotreated vegetable oil) from China, the US, Canada, Argentina, and Indonesia. FAME is a type of biodiesel made from vegetable oils or animal fats, while HVO is a renewable diesel produced by treating vegetable oils with hydrogen. These trade measures refine biomass-based diesel definitions and clarify exemptions, ensuring a level playing field.
For example, the EU has imposed provisional anti-dumping duties on Chinese imports and closed loopholes by extending duties to Canadian imports, following findings of tariff evasion. For Argentina and Indonesia, the EU has refined countervailing duties to ensure the correct classification of soybean oil and palm oil based FAME biodiesel. The UK’s Trade Remedies Authority (TRA) has similarly imposed anti-dumping and countervailing duties, with rates as high as 54.64% for non-cooperating Chinese exporters and up to 33.4% for Argentinian biodiesel.
Sign up to Fastmarkets’ SAF newsletter today for the latest news and insights.
A nuanced aspect of Europe’s trade defense is the differentiated treatment of SAF. While SAF produced via the HEFA (Hydroprocessed Esters and Fatty Acids) technology pathway shares characteristics with HVO and FAME, its exclusive use in aviation and distinct technical properties lead to varied tariff treatment. The EU excludes SAF from China within anti-dumping provisional duties to ensure supply for aviation decarbonization, while SAF from the US, Canada, Argentina, and Indonesia is included in duties to prevent tariff evasion. It is worth highlighting that Europe’s openness to SAF imports compared to FAME or HVO stems from the recognition that meeting its aviation decarbonization goals will require substantial volumes of imported SAF.
RED III caps conventional biofuels from food or feed crops at 7% of each Member State’s transport energy, driving a shift toward advanced biofuels from waste and residues. However, supply remains constrained, especially as countries like China consume more of their own used cooking oil. In the UK, domestic biomass-based diesel production surged to 950,000 tons in 2024 but faces pressure from imports. Some facilities are suspending operations due to market volatility. Despite these challenges, blending rates are projected to rise, and the overall market outlook remains positive.
The EU’s biomass-based diesel supply is dominated by biodiesel production, with renewable diesel and imports contributing less. The total supply peaks around 2024 then slightly declines, reflecting falling demand for biomass-based diesel. This fall is attributed to a slow decrease in conventional diesel usage due to policy and technology changes.
The UK’s biomass-based diesel supply remains steady between 1.5 and 2 million tons, with biodiesel dominating the early years. From 2024, renewable diesel imports rise significantly, shifting the supply mix.
Investment uncertainty is a recurring theme. The evolving policy landscape, robust trade defenses, and shifting regulatory definitions introduce volatility which deters long-term investment. Producers must balance scaling up capacity, securing feedstock supply, and maintaining profitability in a rapidly changing environment.
Despite challenges, Europe and the UK are demonstrating resilience and adaptability. Advanced SAF technologies such as Power-to-Liquids (PtL) gain traction, offering pathways to deep decarbonization. PtL is a SAF technology pathway which converts renewable electricity and captured carbon into liquid fuels, which are referred to as eSAF. As of mid-2025, 41 large-scale eSAF projects are under development across Europe, with a total potential capacity of 2.8 million tons per year.
Policy support remains crucial. The next five years will be pivotal as regulatory frameworks mature, demand for low-carbon fuels intensifies, and producers and policymakers work together to ensure supply resilience, environmental integrity, and economic viability. Current policy, however, contains key risks, including limited feedstock availability, double counting, enforcement gaps, and high costs for advanced fuels. The UK and EU both face challenges in verifying the origin and sustainability of waste-derived feedstocks, and the dominance of HEFA fuels raises concerns about scalability and fraud.
The transition from conventional biofuels to advanced biofuels is not just a regulatory requirement in Europe. As RED III and the RTFO tighten restrictions on crop-based fuels, the spotlight turns to waste and residue-based feedstocks. However, the supply of these is inherently limited, and competition is fierce across sectors. For example, used cooking oil (UCO) availability is constrained, and concerns about fraud and traceability are mounting, particularly imported feedstocks.
Certification schemes such as ISCC EU (International Sustainability & Carbon Certification) are critical for ensuring only approved biofuels receive incentives. These schemes verify greenhouse gas savings, feedstock eligibility, and proper application of multipliers. The EU’s Union Database (UDB), the EU’s central system for tracking and verifying the origin and sustainability of biofuels, aims to address these issues, but full implementation and cross-border integration remain a work in progress.
SAF is emerging as a cornerstone of Europe’s and the UK’s strategies to decarbonize transport. Ambitious blending mandates through ReFuelEU and the UK’s SAF Mandate accelerate investment in advanced technologies, including HEFA, Power-to-Liquid (PtL), and eSAF. Note the sharp rise in Sustainable Aviation Fuel (SAF) production and consumption in Western Europe from 2020 to 2030. Consumption, based on defined mandates, consistently exceeds production, highlighting a growing supply gap. This trend underscores the urgency for scaling SAF output to meet increasing demand and support decarbonization goals. By 2030, total SAF production is expected to reach around 4 million tons, with both domestic production and imports required to meet the growing demand from mandates.
While the forecast does not specify the amount of eSAF production is included in the analysis, scaling eSAF production remains a significant challenge. High costs and the need for extensive infrastructure investment are major hurdles. PtL depends on breakthroughs in green hydrogen production and carbon capture to become viable at scale.
Trade measures are a double-edged sword. While protecting domestic industries from unfair competition, these can also introduce market volatility and investment uncertainty. The EU and UK must continually refine their approaches to ensure these trade measures do not stifle innovation or hinder the adoption of advanced fuels, particularly in the short term. Strategic exemptions, such as the EU’s decision to exclude Chinese SAF from duties, reflect a pragmatic approach to balancing supply security with market integrity.
Western European countries are rapidly advancing the biomass-based diesel and SAF sectors through ambitious mandates and evolving regulations. Flexible compliance options under RED III and RTFO require careful navigation of national strategies and certificate systems, while trade defense measures such as anti-dumping and countervailing duties are reshaping import flows and protecting domestic producers, though they also introduce market volatility.
SAF mandates are accelerating, with strategic exemptions in place to ensure supply for aviation decarbonization and ambitious targets set through 2050. At the same time, feedstock constraints, particularly for waste and residue-based biofuels, are intensifying competition and raising concerns about fraud and traceability. Investment uncertainty remains high due to shifting policies, market volatility, and the ongoing need for robust certification and verification systems.
Advanced technologies are gaining traction, but scaling production remains challenged by high costs and infrastructure requirements. Stakeholders who proactively engage with certification schemes, policy changes, and supply chain innovation will be best positioned to capitalize on growth opportunities in the evolving energy landscape.
At Fastmarkets, the Renewable Fuels & Feedstocks Outlook (available to subscribers) with forecasts through 2035, helps businesses navigate complex policies, secure reliable supply chains, and achieve compliance with confidence.Our data-driven insights and tailored solutions empower you to stay ahead. Connect with our team today to learn how we can help you turn compliance into a catalyst for growth.