European biofuel sector could face feedstock supply shortage

Increased demand for renewable products from biofuel producers was creating potential feedstock supply disruptions, CME Group’s senior director, research and product development, Paul Wightman, said in the 28 October report.

“The uncertainty over feedstock supply, which is likely to put further pressure on biofuel profit margins – combined with goals to decarbonise – are elevating price volatility,” he said.

According to a July Argus Media report, total European biofuel consumption was expected to total around 30.6bn litres in 2025, up 10% from 2024.

The latest version of the Renewable Energy Directive (RED III) set a renewable energy target of 42% by 2030.

In the transportation sector, REDIII set a target of 29% for renewable energy and a 14.5% reduction in greenhouse gas (GHG) intensity.

Although the overall energy target under RED III had increased from 32% to 42.5% compared with REDII, the target date for implementation remained at 2030, the report said.

“The feedstock markets appear primed for a period of structural transformation as expanding mandates and stricter sustainability criteria drive a shift towards domestically-produced and waste feedstocks,” Wightman said.

“At the same time, some crop-based feedstocks are being phased out, placing further emphasis on rapeseed oil, used cooking oil (UCO) and other waste feedstocks to meet the expanding needs from the aviation and maritime sectors.”

Renewable diesel demand was also increasing from the heavy-duty vehicle (HDV) sector due to an ambitious biofuels blending programme.

“Feedstock markets could experience further periods of tightness, creating higher levels of price volatility,” he added.

Argus Media expects UCO availability to tighten as consumption in Asia’s domestic markets continues to grow.

Without new feedstock sources or a sizeable uplift in UCO collections, tightness was expected by 2028-2030.

Increased feedstock volumes were also likely to be needed for sectors like aviation, where demand was set to rise, according to trading sources involved in the biofuels markets.

Although SAF currently made up about 2% of the total jet fuel market, this would reach 70% by 2050, Wightman said.

According to Argus Media estimates, Europe’s renewable diesel and SAF capacity will reach 6.3M tonnes in 2025, with a further 0.7M tonnes under construction.

SAF capacity in Europe was expected to reach 2.4M tonnes in 2025, up 17% from the previous year, while renewable diesel capacity was set to reach around 4.5M tonnes in 2025, a 16% increase on 2024 volumes.

This was all expected to tighten feedstock markets, with Argus Media projections showing that although conventional and waste-oil feedstock availability in 2030 could reach around 43M tonnes, demand for biodiesel, renewable diesel and SAF would increase.

Tags: used cooking oil, European Union, rapeseed oil, shortage, feedstock, biofuel, consumption, demand, renewable energy