Used Cooking Oil (UCO) has rapidly emerged as a critical feedstock for biofuels, especially as Sustainable Aviation Fuel (SAF) becomes the primary growth driver for the biofuels market over the coming years. Both US and European biofuel policies increasingly favor non-food-based feedstocks, positioning UCO prominently within efforts to reduce fuel-pool carbon intensity and dependency on agricultural commodities.
The UCO supply chain begins locally at restaurants, hotels, and food processors, where specialized recyclers collect and transport waste oil to facilities that clean and refine it into SAF and other biofuels. Yet, surging SAF demand has reshaped global supply flows: the United States, once a net exporter, became a net importer of UCO after 2021 to meet rising domestic consumption driven by aviation-sector sustainability targets.
As supply chains globalize, American SAF producers have increasingly relied on international sources, notably China, to bridge emerging feedstock gaps. However, this dependency amplifies exposure to geopolitical risks, notably disruptions due to escalating trade tensions. The ongoing US-China trade war, along with policy frictions such as the early-2025 imposition of a 10% tariff on Canadian biofuels (excluding SAF), has rattled investor confidence and highlighted the vulnerability of cross-border UCO flows. These uncertainties underline the critical importance of accurate forecasting and strategic planning to mitigate supply risks and sustain stable feedstock access for SAF production.
In June 2025, the US Environmental Protection Agency (EPA) introduced a final rule that will reduce RIN (Renewable Identification Number) generation for biofuels produced with imported feedstocks as of October 1, 2025. This rule marks a turning point for the SAF and renewable diesel industries, reshaping sourcing strategies, cost structures, and investment priorities.
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.
Demand–supply dynamics
Strong policy support for biofuels derived from low-carbon feedstocks has substantially elevated UCO’s strategic value. Policies promoting renewable fuels increasingly emphasize feedstocks with lower carbon intensity profiles over traditional, food-based oils. Consequently, US demand for UCO has soared, driven by policies incentivizing renewable diesel and other biofuel production. Fastmarkets estimates total UCO usage in the US in 2024 at 8.4 billion pounds, an increase of 42% over the year, underscoring the importance of supportive regulatory frameworks in accelerating demand for sustainable feedstocks.
However, UCO collection infrastructure struggles to match soaring demand. Fastmarkets estimates UCO collection to be at 3.3 billion pounds in 2024, which is insufficient to meet the US biofuel industry’s demand for 5.7 billion pounds of feedstock in the year. The Biden Administration’s ambitious SAF targets of 3 billion gallons by 2030 amplify concerns about potential feedstock shortages.
China has become the dominant supplier of US UCO for biofuel production. In 2024, the US imported approximately 2.8 billion pounds of UCO from China, making it by far the most significant external source of this key low-carbon feedstock. This dependence exposes the US biofuels sector to significant geopolitical risk. Trade tensions, such as the imposition of high US tariffs on Chinese UCO, or broader diplomatic frictions, could abruptly disrupt supply flows.
Additionally, early-2025 guidance on Section 45Z (the Clean Fuel Production Credit) disqualified imported feedstocks—including Chinese UCO—from generating tax credits under the program. With UCO imports ineligible for 45Z credits, the incentive to source foreign oils weakened, contributing to a sharp plunge in US import volumes in April 2025.
Replacing China as a supplier is not a simple task. While countries like Canada, Malaysia, and members of the European Union also export UCO to the US, the scale is significantly smaller. In 2024, Canada exported around 613 million pounds, while all EU member states combined accounted for just over 440 million pounds. Malaysia and the United Kingdom contributed 335 million and 221 million pounds, respectively. These figures pale in comparison to China’s 2.8 billion pounds. Building alternative supply chains of this magnitude would require years of investment in UCO collection infrastructure and trade logistics. With limited global availability and rising demand, few suppliers can match China’s volume and cost efficiency in the near term, putting other low-ci feedstocks on the table as substitutes. Replacing Chinese UCO in the context of the current Trade War depends not only on UCO availability, but also the suppliers’ diplomatic relations with the US.
Among low-carbon-intensity feedstocks, UCO stands out as the only one with significant potential for scalable supply growth. Unlike tallow or other animal fats, which are byproducts limited by livestock production and thus structurally constrained, no one raises cattle to produce tallow; its availability is capped by meat demand. In contrast, UCO production is a function of how much UCO collecting infrastructure there is[MC1] .
Global UCO supply is expected to grow in the following years, fueled by strong policy incentives and increasing demand from SAF and renewable diesel producers. This growth is expected to come from improved collection efficiency, the formalization of previously untapped sources, and investments by biofuel producers integrating upstream into the waste oil value chain. Companies like Neste have already moved to secure feedstock through acquisitions and partnerships with collectors, recognizing UCO’s central role in SAF economics.
Still, even with ambitious growth projections, global UCO volumes may fall short of meeting total biofuel demand. That’s why stakeholders must treat UCO as both a strategic opportunity and a bottleneck risk, optimizing its use while developing complementary feedstocks. The coming years will favor players who move early to secure scalable low-CI feedstock supply, and UCO is the most viable path forward in that race.
UCO price dynamics and forecast
Fastmarkets’ price assessment of UCO in the US Gulf has shown a strong upward trend since 2020, reflecting tightening supply and rising demand from renewable fuel producers. In early 2020, prices hovered in the mid-20 cents per pound range. By late 2022, they had moved into the mid-30s, and by the end of 2023, prices consistently reached the 40s. In 2024, this trend accelerated further, with prices climbing above 50 cents per pound by the end of the year and remaining elevated through early 2025. This sustained price strength highlights the combination of expanding SAF production capacity, robust policy incentives for low-carbon fuels, and limited availability of alternative low-CI feedstocks.
Volatility was a defining feature of the UCO market in both 2024 and early 2025. Monthly spreads between the highest and lowest reported prices regularly exceeded 8 cents per pound, with some months approaching a 14-cent range. These sharp swings reflect a market that is highly sensitive to shifts in policy, trade disruptions, and speculative movements. In 2024, for instance, fluctuations in Chinese export volumes, investigations into UCO origin verification[MC2] , and shifting expectations around SAF tax credits all contributed to abrupt pricing changes. In 2025, the continuation of this volatility has been fueled by ongoing uncertainty about the future of biofuel policy in the US, including the potential revision of SAF tax credits[MC3] , and geopolitical friction affecting UCO trade flows.
Looking ahead, Fastmarkets forecasts prices for the rest of 2025 to remain in the low to mid-50s cents per pound range[MC4] , with a brief dip projected mid-year before a gradual recovery into early 2026. However, these forecasts are highly sensitive to policy direction and trade conditions. If the proposed changes to the 45Z credit are approved, allowing crop-based oilseed feedstocks to generate credits on par with low-CI alternatives, it could significantly reduce demand for low-CI feedstocks in the US, potentially putting downward pressure on UCO prices in the coming year.
In this context, price volatility is likely to persist, and stakeholders across the SAF value chain will need to closely monitor political developments and maintain flexible procurement and pricing strategies to manage feedstock risk effectively.
UCO global market outlook and strategic implications
The evolving policy environment, industry commitments to decarbonization, and competition for feedstocks are reshaping the UCO market landscape. Government mandates and sustainability targets have effectively created a stable demand floor for UCO-based renewable fuels. However, inherent limits on UCO availability mean that the market faces structural constraints, necessitating strategic diversification of feedstocks and intensified investment in alternative technologies.
SAF producers and aviation stakeholders must increasingly treat UCO as a strategic resource, securing stable supplies through long-term agreements, vertical integration, and partnerships. They should also engage proactively with policy development to foster supportive frameworks. Additionally, exploring complementary feedstocks and innovative technologies will be essential for long-term viability.
Conclusion
UCO has transitioned from a simple waste byproduct to a critical component of the aviation sector’s decarbonization efforts. The next few years will further highlight the strategic importance and inherent challenges of relying on UCO. Supply constraints, logistical complexities, price volatility, and evolving sustainability standards are significant factors that industry stakeholders must manage effectively.
Accurate forecasting and strategic planning will be crucial for navigating this complex landscape. Fastmarkets’ market insights and price forecasts offer essential tools for stakeholders, providing clarity on emerging supply bottlenecks, pricing trends, and regulatory impacts. Utilizing such data enables airlines and biofuel producers to make informed procurement and investment decisions, optimizing their strategies to secure cost-effective and sustainable SAF supplies.
Given these dynamics, stakeholders should actively leverage comprehensive market intelligence and strategic foresight to ensure a robust and resilient SAF supply chain. UCO’s central role in the aviation industry’s sustainability journey underscores the need for careful resource management, proactive risk mitigation, and strategic innovation to maintain momentum toward a cleaner aviation future.
