Europe's Biofuels Market Enters a New Growth Phase

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July 31, 2026

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(ResourceWise) Europe's biofuels market entered 2026 expecting stronger demand. Six months later, those expectations have largely been confirmed.

Across the continent, consumption of renewable diesel (HVO) and biodiesel is accelerating under RED III, compliance obligations are increasing, and producers are operating in a market that is becoming both larger and more interconnected. Rather than struggling with a lack of demand, participants are increasingly focused on a different challenge: keeping pace with it.

That growing demand is now intersecting with higher oil prices, logistics constraints, planned refinery maintenance, and evolving global trade flows. These elements are creating a market that looks increasingly supportive of long-term investment across the biofuels value chain.

Demand Growth Is Becoming the Market's Defining Story

The strongest signal emerging from the first half of 2026 is simple. Europe's demand for renewable fuels continues to grow. Yet many market participants believe the full picture extends well beyond the official blending statistics.

For instance, Neste recently projected that RED III implementation could increase German HVO demand by approximately 1.5 million tons annually. Prima CarbonZero's own demand modeling suggests biodiesel and HVO demand across the EU could increase by roughly 2.5 million tons over the course of 2026.

Taken together, these indicators point toward a European market where demand growth is becoming increasingly structural rather than temporary.

Higher Energy Prices Are Reinforcing Biofuel Economics

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Following renewed uncertainty surrounding oil exports from the Persian Gulf, expectations for a near-term resolution to the US-Iran conflict have faded. As a result, crude oil and gasoil prices remain elevated.

For renewable diesel producers, that matters.

Higher gasoil prices raise the pricing floor for HVO, strengthening market economics even as production volumes increase. Rather than weighing on prices, stronger HVO sales throughout much of 2026 have generally been accompanied by firmer values. This reflects both stronger fossil fuel markets and tightening renewable fuel fundamentals.

Logistics Highlight the Value of Reliable Supply

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Reduced barge capacity limits the movement of renewable fuels to the locations where compliance obligations must be met. Consequently, logistics become an increasingly important component of market pricing. German traders have linked recent gains in the THG ticket market to these Rhine disruptions, illustrating how transportation bottlenecks can quickly influence compliance costs.

The situation also reinforces an important reality. As renewable fuel demand grows, dependable supply chains become just as valuable as production capacity itself.

High Utilization Leaves Little Room for Disruption

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Global Trade Is Following the Strongest Markets

International trade is evolving alongside these stronger fundamentals as well.

Recent revisions to US import tariffs have improved the economics of exporting European biodiesel and waste-based feedstocks to the United States, where renewable diesel margins remain attractive.

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Chinese biodiesel also remains part of the European supply picture. But anti-dumping duties, reduced operating capacity, and the B7 blending limit continue to constrain significant growth in import volumes.

A Market That Continues to Mature

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Europe's renewable fuels sector is no longer being supported by policy alone. It is being reinforced by sustained demand growth, improving market economics, and growing confidence across the value chain. READ MORE

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Why Europe Is Quietly Tightening the Global SAF Market (ResourceWise/SAF Magazine)

Excerpt from ResourceWise/SAF Magazine: Europe is pulling SAF into its orbit.

That shift is not happening through a single headline event, though. It is instead showing up through trade flows, contract coverage, mandate-driven procurement, and tightening availability from key supply regions. Recent Chinese export data offers one of the clearest examples yet.

According to ResourceWise’s latest SAF Snapshot report, Chinese SAF exports reached a three-month high of just over 75,000 tons in April. This marks a 15% increase from March. Nearly all of that volume moved to Europe, with Belgium accounting for about 40% of April exports and the Netherlands taking another 32%. Spain also represented a meaningful share, while smaller volumes moved to the United Kingdom and Australia.

From January through April, China exported over 260,000 tons of SAF, and Belgium alone accounted for nearly half of that total. For a market still working toward scale, these flows matter. They suggest European demand is increasingly shaping global SAF availability.

Europe’s Mandates Becoming Global Market Signal
Europe’s SAF demand is being driven primarily by policy.

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Europe is not just creating demand. It helps absorb the available supply.

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For producers, traders and airlines, this raises several questions:

• How much Chinese SAF will remain available to spot markets if European buyers continue locking in term volumes?

• Will other regions face more difficult procurement conditions as Europe’s compliance demand grows?

• How will emerging SAF markets respond if they must compete against mandate-backed European buyers?

Tight Supply Could Become Strategic Constraint
SAF market development is often discussed in terms of long-term capacity announcements. But near-term availability is just as important. Project pipelines do not immediately solve today’s procurement needs. New facilities take time to finance, build, commission and operate at scale. Meanwhile, airlines and fuel suppliers facing compliance obligations need physical fuel or credible procurement mechanisms right now.

That creates a tension between future supply growth and present market tightness. The Snapshot also shows that SAF FOB ARA prices held above $3,000 per ton in May. While pricing is influenced by multiple factors, including feedstock costs and broader market conditions, persistent demand from mandate-driven buyers can support a tighter pricing environment.

If European buyers continue securing international supply ahead of compliance deadlines, SAF markets may increasingly resemble other low-carbon fuel markets, seeing regional policy driving global arbitrage, feedstock competition and contract premiums for reliable supply.

Other Regions’ SAF Market Movement
Europe may be one of the strongest demand centers today, but it will not be alone for long. India is moving closer to binding SAF mandates, with proposed blending targets starting at 1% for international flights in 2027, rising to 2% in 2028 and 5% by 2030.

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SAF Market Becoming More Interconnected
The latest Chinese export data points to a broader shift in the SAF market. Regional policy decisions are no longer staying regional:

• European mandates are influencing Chinese export flows.

• Chinese supply availability is affecting European procurement.

• Emerging mandates in India and elsewhere could introduce new competition.

At the same time, feedstock markets remain under pressure, with waste-based inputs such as UCO and tallow continuing to strengthen in several regions. READ MORE