Innovation Powering the Future of Renewable Fuels

December 16, 2025

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(Neste) Innovation has always been the engine behind renewable fuels. Today, it is more critical than ever – not only to scale up the production of renewable diesel and sustainable aviation fuel, but also to unlock the next generation of renewable raw materials. Partnerships, such as Neste’s collaboration with Rolls-Royce, are crucial in the innovation and go-to-market process.

From the breakthrough of hydrotreated vegetable oil (HVO) to the commercialization of sustainable aviation fuel (SAF), the renewable fuels industry has come a long way in just two decades. Yet, despite progress, the journey is still only beginning. The demand for renewable fuels is expected to grow as industries from aviation to heavy transport seek lower-GHG-emission alternatives to fossil fuels.

Scaling renewable fuels to meet the increasing demand globally requires continuous technological innovation – not only in production methods and raw materials use, but also in ensuring compatibility, efficiency, and cost-effectiveness.

“Perhaps the most important task for innovation is to expand and diversify the raw material pool. The raw materials that Neste currently uses are largely based on wastes and residues like oils and fats, which provide only a limited raw material base. We need to unlock new sources and develop technologies to turn them into fuels,” explains Petri Lehmus, Vice President of Research and Development at Neste.

He adds that as the competition for raw materials has become increasingly fierce, continuously developing the ability to process new raw materials is essential for maintaining a competitive edge in the lower-emission fuel market.

Innovation as the key to scale-up

Neste’s innovation journey began with its proprietary NEXBTL™ technology, which allows the conversion of a wide range of renewable raw materials into high-quality renewable fuels in a catalytic process. This breakthrough paved the way for renewable diesel and SAF production at commercial scale.

Today, the focus has shifted to scaling up and broadening the raw material base. New streams such as lignocellulosic biomass – forest and agricultural residues – could multiply the potential of renewable fuels.

“Lignocellulose could open up a market providing hundreds of millions of tons of new, scalable raw materials. That would multiply the renewable fuel business far beyond what fats and oils can achieve,” says Lehmus.

At the same time, advancements in pre-treatment and purification technologies are essential. Renewable raw materials typically come with impurities that must be removed to ensure consistent quality and compatibility with strict fuel specifications – especially in aviation.

Aviation push towards net-zero carbon emissions

The aviation industry, responsible for roughly 2–3% of energy-related global CO₂ emissions, has limited near-term alternatives to reduce aviation emissions. Astrid Sonneveld, Technical Lead of Neste’s Renewable products organization, says that aviation cannot decarbonize without SAF. “No matter which roadmap you pull up, SAF is the single biggest lever for reaching the aviation sector's commitment of net-zero carbon emissions by 2050,” Sonneveld says.

However, Sonneveld adds that reducing greenhouse gas (GHG) emissions alone is not enough to mitigate the climate impact of aviation. So-called non-CO₂ effects, such as contrails – the line-shaped exhaust clouds visible behind jet aircraft – must be addressed as well.

“Jet fuel in the future needs to be made not only from renewable sources, but it also needs to burn cleaner,” she says.

The advantage of SAF is that it’s a drop-in solution: every commercial aircraft today can fly on blends of SAF without modifications to the aircraft engines and fuel infrastructure. But going beyond blending with conventional jet fuel to 100% SAF use requires close cooperation with aircraft and engine manufacturers. This is where partnerships come in.

“For example, Rolls-Royce has been a frontrunner in redesigning aircraft engines for a net zero future. We have collaborated closely for many years on reducing emissions from both diesel and aircraft engines,” says Sonneveld.

Collaboration driving real-world solutions

Rolls-Royce’s Alastair Hobday, Associate Fellow, Fuels and Lubricants, describes innovation as central to the company’s approach.

“We are committed to demonstrating that our engines are capable of operating on 100% SAF. So, we undertook a significant program of ground and flight testing to prove that even if 100% SAF cannot be used commercially today, our technology is future-proof,” Hobday says.

One example of joint innovation is the ECLIF3 program, a collaboration between Rolls-Royce, Airbus, Neste, and the German Aerospace Center DLR. By flying an Airbus A350 powered by Rolls-Royce Trent XWB engines using Neste’s SAF, researchers could directly measure in-flight emissions and contrail characteristics. The results provided data on how SAF reduces not just CO₂ emissions but also the non-CO₂ impact of aviation.

This work continues through the PACIFIC project, which is deepening the industry’s understanding of aviation’s non-CO₂ effects.

Sonneveld notes the importance of such partnerships. “Our technical experts learn from Rolls-Royce, and vice versa. This is critical to driving innovation.”

From innovation to commercial use

Beyond technical innovation, affordability is vital. “Lower-GHG-emisson fuels are needed, but if their price is too high, they won’t take off,” Lehmus emphasizes. “Our task is to find the most impactful and cost-effective solutions that society can actually adopt at scale.”

For customers, the priorities are reliability, compatibility, and supply certainty. As Hobday points out:

“There is no need to modify existing engines to operate on SAF. We need drop-in solutions that work across fleets, from engines designed in the 1950s to those designed today.”

However, for Rolls-Royce, innovation is also about new engine architectures. “Our UltraFan engine is next-generation technology, designed to deliver significant efficiency improvements,” Hobday explains. “Combined with SAF and, in the future, eSAF, it will be a critical step forward.”

Renewable fuels: the next frontier

The road ahead for renewable fuels involves both incremental improvements and breakthrough innovations. Scaling up production capabilities and advancing favorable regulatory frameworks are critical future developments. On the horizon, e-fuels – made from renewable electricity and captured CO₂ – are in early stages of development but expected to increase costs. “Technically, they are possible,” Lehmus says. “But if fuel prices suddenly quadruple, society simply won’t adopt at scale.”

Compared to e-fuels, the use of lignocellulosics is a much more readily available solution. Vast amounts of lignocellulosic waste and residues from existing forest industry and agricultural production remain underutilized. Neste and Chevron Lummus Global are currently validating a novel technology for processing these raw materials and targeting readiness to scale up the technology to commercial scale.

From expanding raw material pools to developing new propulsion technologies and collaborating across industries, innovation is the compass guiding Neste and its partners toward a lower-emission transport future.

As Sonneveld puts it, cooperation and innovation must go hand in hand: “Success in decarbonizing hard-to-abate industries can only be achieved together.” READ MORE

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Excerpt from Neste: Neste needed to increase its R&D efforts in catalytic processes to replace fossil-based raw materials with renewable raw materials.

SOLUTION

Neste and VTT signed a strategic agreement involving the installation of test equipment for hydrotreating renewable raw materials, consisting of several parallel reactors, and the development of related expertise.

BENEFITS

The VTT research facility accelerated the testing of catalysts cost-efficiently. Choosing the correct catalyst for an industrial process can save up to tens of millions of euros annually.

Development of lower-emission solutions requires extensive catalyst testing

Catalysts are essential in refining of both fossil and renewable fuels as they accelerate and direct chemical reactions throughout the refining process – selectively transforming various raw materials into diverse high-quality fuel products. One of these chemical processes is hydrotreatment, where impurities, such as sulphur, nitrogen and oxygen, are removed from raw materials.

In 2019, Neste identified the need to enhance the testing of catalysts so that they would better serve the expanding use of different types of renewable raw material streams. As VTT had made the decision to invest in a research environment for catalytic processes at its Bioruukki pilot centre in Espoo, Finland, Neste and VTT agreed on a strategic partnership fostering the joint use and development of research infrastructures in Finland. READ MORE

Excerpt from Neste: Forestry and agriculture create large amounts of unused plant waste and residue that can be repurposed, for example as raw material for biofuels and chemicals production. But what exactly are we talking about and how can we make the most of this material?

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Forestry, forest products industry, and agriculture produce waste and residue at several stages of their respective value chains. When a forest is harvested for saw log or pulp wood production, treetops and branches are usually left behind. While it's important to leave enough residues in the forest to maintain nutrients and support biodiversity, there is plenty of surplus raw material to be utilized globally. Pre-commercial thinning, a process commonly used in forest management, removes small and low-quality trees to allow the remaining trees more room to grow. In addition, wood processing such as sawmilling creates sawdust and bark residue. Similarly, agricultural processes leave behind crop residues such as stalks, straw or leaves. And finally, end-of-life wood products such as old pallets or wood used on construction sites often end up in the waste stream.

All this waste and residue from forestry and agriculture has plenty of potential as a raw material for renewable fuels.

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Forestry and agricultural wastes and residues consist mainly of lignocellulose – a collective term for the components that give plant cell walls their rigidity: cellulose, hemicellulose and lignin. But what makes lignocellulose from plant waste a good candidate as a raw material for lower-emission renewable fuels and chemicals?

The main advantage is that there is a lot of lignocellulosic waste and residue available. “Based on Neste's estimate, the global available volume that could be sustainably used corresponds to at least 350 million tonnes of oil equivalent,” says Nieminen (Juha-Erkki Nieminen, Head of Lignocellulose at Neste). That is a large untapped resource.

Another advantage is that lignocellulosic components already have the carbon backbone that is required for renewable fuels, so they are a good starting point. But the chemistry of converting lignocellulose to renewable fuels is not a straightforward process. Lignocellulose polymers have more oxygen atoms than the oils and fats that are commonly used in renewable fuel production. This excess oxygen needs to be removed. Another challenge is that lignocellulose is a solid material. “We need to do a fair amount of processing to turn it into a liquid hydrocarbon,” says Nieminen.

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Life cycle assessment is an established method to quantify the environmental impact of a product. However, while the LCA methods are widely used to report on environmental sustainability, there are some aspects in the methodology that are not yet standardized. “What was still missing is how specific features of bio-based products, mainly the carbon uptake from the atmosphere, are handled in this process,” says Leinonen.

That was the driving force behind the Bio-LCA project, which further developed the LCA methodology and demonstrated it in case studies. For example, a new report shows how different methods of forestry management, such as pre-commercial thinning, affect greenhouse gas emissions of forestry products.

Neste also participated in this life cycle assessment analysis. “Sustainability is a fundamental building block of our business,” says Nieminen, “so we wanted to understand in more detail what the impact is over the lifecycle of the forest if some of the harvesting residues are collected.”

As part of the study, the Bio-LCA team found that collecting harvesting residues for use as raw material for biofuels creates a net benefit for the climate when replacing fossil fuels and chemicals. Even though the collection of harvesting residues leads to some reduction in carbon sequestration in the soil, this reduction has a relatively small effect when compared to the climate benefits of lignocellulose-based fuels and chemicals.

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“There is currently still limited commercial production of renewable fuels from solid biomass,” says Nieminen. While the chemistry of the conversion processes is robust, the challenge lies in large scale operation.

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Nieminen is optimistic about the future: “The ambition is that in the 2030’s we will be producing fuel products, including renewable diesel and sustainable aviation fuel, from forestry and wood processing waste and residues, as well as from agricultural waste and residues and end-of-life wood products.”