MethodologyContact usSupportLogin
Hydrotreated Vegetable Oil, or HVO, is a 100% renewable fuel produced by treating oils and fats with hydrogen. The end-product is a fuel with similar properties to conventional diesel, meaning it can be used as a direct replacement (drop-in fuel) or blended into existing fuel systems without the limitations often associated with first-generation biodiesel (blend wall).
HVO uses a hydro-processing treatment to process the fatty acids in food and waste products, such as edible vegetable oils, used cooking oil (UCO), animal fat, and palm oil mill effluent. HVO provides efficiency improvements where fuel burns more cleanly and thoroughly, releasing up to 85% less carbon emissions compared with fossil fuel diesel as well as having a longer shelf life and performing well in cold weather.
HVO’s market value is shaped by feedstock choice, policy support, carbon intensity and regional supply-demand balances of these feedstocks.
Demand for HVO has increased in recent years as transport sectors look for practical ways to reduce emissions. It is used widely in road transport, commercial fleets, construction, marine and other sectors where electrification may be more difficult in the short term.
The European Union latest iteration of the Renewable Energy Directive (RED III), adopted in 2023, has introduced more ambitious binding targets for renewable energy consumption across Member States. As the EU seeks to achieve a 42.5% share of renewables in energy consumption, with the transport sector targets increasing from 14% in RED II to 29% renewable energy in 2030, the biofuels sector is expected to grow substantially to achieve these stricter targets.
The 7% cap on food and feed-based biofuels set out in RED II and RED III paves the way for further need to use advanced biofuels to achieve EU targets. HVO being a drop-in fuel and not limited by the 7% blend wall, European HVO demand is forecasted to grow four-folds between 2025 and 2030, reaching an estimated 16 million metric tonnes by 2030. As European production capacity ramps up over the period to fulfil mandated demand growth, supply growth is expected to struggle to keep pace, with some market projections indicating a supply deficit of 7-10 million metric tonne by 2030.
As the HVO market continues to grow, Fastmarkets are launching a suite of assessments to address the market need for further price transparency for both biofuels and biofuel feedstocks.
Fastmarkets will publish twelve HVO price assessments: HVO (Crop), HVO (UCO), HVO (Tallow), and HVO (POME) outright prices, HVO premiums against Fastmarkets ultra-low sulfur diesel FOB ARA, and HVO gross margins spreads which are calculated against their respective feedstocks.
These assessments reflect different feedstock pathways commonly used in the European market.
By launching separate HVO price assessments, Fastmarkets aims to better capture the differences in value between feedstock pathways, sustainability profiles and market demand.
The new prices will complement Fastmarkets’ existing biofuels and renewable fuels coverage, helping participants compare values across feedstocks, fuels and compliance markets.
The launch should be relevant to a broad range of market participants, including:
It may also be relevant to companies with exposure to diesel replacement costs or renewable fuel obligations.
The European HVO market has developed quickly in recent years, with growing demand, changing regulation and new supply entering the market. As the sector expands, the need for clear and trusted price references becomes more important.
HVO is often discussed as one product, but values can differ significantly depending on feedstock type, production route and regulatory treatment. Separate assessments for HVO (categorised by feedstock use can help market participants better understand those differences.
Transparent pricing can support procurement decisions, contract discussions, margin analysis and market planning. It can also help participants track how feedstock markets, policy changes and wider energy prices influence renewable diesel values over time.
If you have any questions relating to the launch, please contact us via the pricing@fastmarkets.com and biofuel@fastmarkets.com email addresses.