Further delays to RED III implementation talks in Germany stun market

Biofuel feedstocks traders have reported lower-than-usual trade over the past few weeks, with market participants holding off from actively trading first-quarter 2026 positions in the expectation of long-awaited clarity on policy changes. And Fastmarkets understands that biodiesel activity in Germany has also been quiet, given the uncertainty.

“It’s getting ridiculous,” a source based in Europe said. “The EU countries had so much time to implement RED III and now, when it is due on January 1, they keep delaying the final decisions, making trade nearly impossible.”

The original deadline for the implementation of RED III, which sets a target for Europe to increase the share of renewable energy in its overall energy mix to at least 42.5% by 2030, was set at the EU level and passed on May 21 this year.  However, no member state met this deadline, and some then set out to implement by January 1, 2026.

“The timeframe to reach the January 1 implementation date is getting smaller and smaller,” a second source told Fastmarkets. “And the plan seems to be that it will be agreed early next year, with most of the regulations implemented retroactively.”

The source acknowledged that while not everything could be backdated if implementation was further delayed – pointing to the exclusion of palm oil mill effluent (POME) and witness audits, neither of which will become valid until 2027 – “all the other regulations, especially the ban on [feedstock] double counting, could be introduced retroactively.” 

Other market participants raised concerns about the prospect that RED III implementation could be delayed for another year, because the German market, which is a major biofuel-producing hub, would then remain in the same “poor condition” for longer.

“If Germany wants to become greener in transport, it has to set the correct scene to allow for additional investment,” a third source told Fastmarkets.

Unclear policy guidance and delays in RED III transitioning to become national law could increase import flows of advanced biofuels from third countries, raising concerns about its legitimacy and creating competition within the German market, other sources said.

“The option of double-counting advanced biofuels must be eliminated as quickly as possible, as proposed in the draft legislation. It is precisely this option that incentivizes fraudulent activity,” according to German waste biofuels association MVaK.

MVaK has consistently said the fraud prevention measures, which are part of the draft legislation and focus on the import of advanced biofuels, must be implemented as soon as possible, because “market participants must know immediately what obligations they have to fulfil under the greenhouse gas reduction quota in 2026 and what options are available to them.”

Calls for swift action

Earlier this week, Torsten Krawczyk, the chairman of the German Union for the Promotion of Oil and Protein Crops (UFOP), expressed concerns about the delays to RED III implementation and called for swift action, describing the delay in inter-ministerial coordination as “incomprehensible and irresponsible.”

UFOP has called on the German parliament and the second chamber for immediate action on sustainable certification for imported biofuels, feedstock use regulation, including catch crops and the cultivation of degraded land, as well as sustainable aviation fuel (SAF) production.

At a recent industry event in Sweden, Fastmarkets found a widespread lack of clarity about progress on the implementation of RED III and a biodiesel and feedstocks industry shrouded in uncertainty after the recent collapse of the International Maritime Organization (IMO) talks.

Joachim Elm, a feedstocks trader at Swedish energy firm ST1, which produces hydrotreated vegetable oil (HVO) and SAF, said last month that a lack of clarity was problematic. “Some countries are implementing [RED III] next year, while others are not and that affects us quite a lot,” he said. “How do you supply feedstock in an uncertain and unsure regulatory environment? How do you know what type of feedstock you need to buy and if you can form partnerships or if you need to go to the spot market?” 

In late July, the European Commission announced that it would take action against 26 member states for failing to communicate the measures they had adopted to implement the latest iteration of RED III.

While several member states have taken steps toward introducing the transport element of the directive, legislation implementing the whole framework remains limited, with many countries not yet even providing a definitive timeframe for the full adoption of RED III. 

In the Netherlands, a debate on RED III and vote in the Senate are expected in early December, once the state secretary responds to questions from the Senate, making the Netherlands’ original target for transposition of January 1 as still achievable, Fastmarkets understands.  

But any delays next door in Belgium could hinder progress in the Netherlands because implementation would give the Belgians an “unfair competition advantage,” sources said.

For those trading in the biofuels and feedstocks market, we capture pricing across the complex marketplace, including biodiesel, glycerin, renewable identification numbers (RINs), California’s Low-Carbon Fuel Standard (LCFS) credits and related certificate markets in Europe. Learn more.