Global Hydrotreated Vegetable Oil (HVO) Market Research Report: Forecast (2024-2030)

Market Insights & Analysis: Global Hydrotreated Vegetable Oil Market (2024-30):

The Global Hydrotreated Vegetable Oil Market is estimated to grow at a CAGR of around 12.4% during the forecast period, i.e., 2024-30. The global shift toward reducing carbon footprints and embracing renewable energy sources is a pivotal factor set to propel the demand for hydrotreated vegetable oil (HVO) in the forthcoming years. Positioned as an eco-friendly alternative to fossil diesel, HVO offers distinct advantages, notably lower greenhouse gas emissions, aligning with diverse industries' sustainability targets encompassing transportation, power generation, and heat production. Government-led initiatives worldwide, including mandates for biofuel blending, ambitious carbon reduction goals, and financial incentives, present a conducive environment for the uptake of HVO oil, spurring the global hydrotreated vegetable oil market.

Moreover, heightened awareness among consumers regarding the environmental impact of traditional fuels has prompted both individual vehicle owners and commercial fleet operators to actively seek cleaner and more sustainable fuel alternatives. This growing demand is fueling market expansion and providing opportunities for HVO fuel providers. Besides, governments around the world have recognized the importance of transitioning from fossil fuels to renewable energy sources in order to combat climate change and enhance energy security. Accordingly, incentives and mandates are often provided to encourage the production, distribution, and use of renewable fuels such as HVO.

Countries such as the US, the UAE, the UK, etc., have been largely focusing on the adoption of low-carbon fuels in recent years. These initiatives have been in line with the reduction of greenhouse gas emissions across the industrial sectors. Hence, to improve the adoption of low-carbon fuels like hydrotreated vegetable oils, the government has introduced initiatives to reduce the challenges in the supply chain of Hydrotreated vegetable oils across their respective countries. For instance, in 2022, the US Secretary of State for International Trade announced its decision to lift anti-dumping duties and countervailing measures on Hydrotreated Vegetable Oil (HVO) imported from the US into the UK.

Moreover, governments of the European Union, the US, China, Denmark, etc., are increasingly mandating the blending of biofuels to promote the use of biofuels as renewable fuel, reduce greenhouse gas emissions, and achieve climate neutrality. As nations worldwide prioritize sustainable energy solutions, the demand for biofuels, including hydrotreated vegetable oil, is on the rise.

Additionally, with the global automotive market expanding, hydrotreated vegetable oil (HVO) has gained accelerated adoption over conventional fuels due to its cost-effective maintenance, reduced degradation risks, and seamless blending capabilities with regular diesel in any quantity. As a result, the automotive sector is anticipated to increasingly favor HVO in the coming years.

Global Hydrotreated Oil Market Driver:

Adoption of Hydrotreated Vegetable Oil in Transportation Sector to Boost Market Growth – In recent years, countries like the UK, France, the US, etc., have been largely focused on reducing their carbon emissions, which has substantially increased due to the rapid industrialization & soaring usage of diesel-fueled vehicles. These emissions resulted in climate changes & numerous health hazards. As a result, the transportation sector across these countries has been transitioning toward renewable fuels like hydrotreated vegetable oil, aiming to reduce the overall carbon emissions.

Furthermore, railway companies & operators in Europe and Asia are increasingly adopting HVO fuel in trains as an alternative to traditional diesel. This is mainly due to compatibility with existing infrastructure and carbon reduction plans. For instance, in 2023, British Train Operating Company Chiltern Railways announced the launch of hydrotreated vegetable oil-powered trains on its network. Thus, the growing integration of HVO fuel in the railway sector is estimated to drive the Hydrotreated Vegetable Oil Market in the forthcoming years.

Global Hydrotreated Oil Market Opportunity:

Surging Usage of HVO for Power Generation to Uplift Market Growth – Nations such as the UK, Brazil, India, France, and others heavily rely on the import of fossil fuels from other countries such as Norway, Saudi Arabia, etc. This dependence arises from the maturation of domestic oil fields, restrictions on mining activities, and limited reserves of oil & gas. These countries actively engage in significant imports of fossil fuels to meet various needs, including power generation and transportation.

However, the rising geopolitical tension between countries like Russia & Ukraine led to uncertainty in trade activities and generated an energy crisis in the European countries. Therefore, to mitigate the reliance on the import of fossil fuel, the governments of countries like the UK, France, Brazil, India, and others are encouraging the usage of renewable biofuel for power generation rather than conventional fossil fuel. Moreover, the government is also aligning its efforts to generate electricity using clean energy. Therefore, the demand for hydrotreated vegetable oil would be uplifted in the forthcoming years for power generation purposes. 

Global Hydrotreated Oil Market Challenge:

Growing Sustainability Concerns on Feedstock Usage to Hamper the Market – Sustainability concerns pose a significant challenge for the Global Hydrotreated Oil Market. The growing usage of feedstock has raised environmental & ethical questions due to deforestation, habitat destruction, and human rights issues associated with feedstock production, such as palm oil. This has led to increased scrutiny & regulations, potentially affecting the long-term viability of some feedstock for renewable fuels. Thus, growing restrictions and limitations on the usage of some feedstock could reduce the available options for HVO production.

Further, changing regulations & increasing scrutiny of feedstock choices could introduce uncertainty into the market growth in the coming years. Businesses could face challenges in long-term planning & investment as they navigate evolving sustainability requirements and potential shifts in feedstock preferences.

Global Hydrotreated Oil Market Trend:

Growing Adoption of Hydrotreated Vegetable Oils in the Power Generators – Hydrotreated Vegetable Oils (HVOs) are gaining momentum in power generators due to environmental regulations, sustainability goals, and increasing demand from consumers & businesses. Major power generator manufacturers like Cummins, Caterpillar, and MTU, are actively endorsing the usage of paraffinic fuels, specifically HVO, in their generator sets. For instance, in 2022, Cummins approved the utilization of paraffinic fuels (EN15940), including hydrotreated vegetable oil (HVO), in its entire line of diesel generators. Thus, growing approval of HVO in diesel generators by manufacturers, fuelled the demand for hydrotreated vegetable oil in the past few years.

Moreover, data centers across the globe are increasingly adopting HVO fuel for backup generators, aiming to replace traditional diesel as part of their carbon footprint reduction initiatives. Further, the move towards HVO is driven by its commitment to high performance without requiring the replacement or customization of existing diesel gensets. For instance, in 2022, Vantage data centers planned to power some of its UK and US diesel generators with biofuel. This widespread adoption of biofuels within the data center industry is expected to drive the expansion of the Hydrotreated Vegetable Oil Market.

Global Hydrotreated Oil Market (2024-30): Segmentation Analysis

The Global Hydrotreated Vegetable Oil Market study by MarkNtel Advisors evaluates & highlights the major trends & influencing factors in each segment & includes predictions for the period 2024–2030 at the global, regional, and national levels. In accordance to the analysis, the market has been further classified as:

Based on Feedstock:

• Rapeseed
• Sunflower
• Soybean
• Palm
• Others (Jatropha, Coconut Oil, etc.)

Palm oil is experiencing substantial demand as the feedstock for the production of HVOs, and is estimated to capture the potential share of the Hydrotreated Vegetable Oil Market in the years ahead. This demand is primarily attributed to the high palm oil yield per hectare of cultivation compared to other vegetable oils. The existing infrastructure & processing facilities for palm oil production are well-developed, providing a logistical advantage for HVO producers. The established supply chain and processing capabilities make it easier for industries to integrate palm oil into their biofuel production processes.

Also, palm oil is a cost-effective vegetable oil, making it economically viable for large-scale biofuel production. Hence, companies like Cepsa & Eni are observed to prefer palm oil to produce hydrotreated vegetable oils. For instance, in 2023, Cepsa announced to construction of a 500,000 tons per year second-generation hydrotreated vegetable oil (HVO) plant in southern Spain. This plant's feedstock supply would be secured for palm oil refineries of Apical. Hence, the growing adoption of palm as prime feedstock for HVO production by manufacturers due to its cost-effectiveness, logistical advantages, etc., could supplement palm oil share across the market in the coming years.

Based on Application:

• Transportation
  • Road Transport
  • Aviation
  • Others (Agricultural, Railway, etc.)
• Power Generation

The Transportation Sector is experiencing considerable growth in the Global Hydrotreated Vegetable Oil Market. This is primarily due to the readiness of the majority of existing engines to use low-carbon fuels like hydrotreated vegetable oil instead of conventional diesel. Moreover, several logistic companies, like FedEx, Speedy, etc., are also planning to use HVOs in their fleets to reduce carbon emissions from their operations. For instance, in 2023, FedEx Express Europe announced that it is testing the usage of hydrotreated vegetable oil (HVO) renewable diesel for five of its company-owned trucks in the UK. Hence, as logistics companies adopt HVO in their fleets, the transportation segment would experience further growth across the market in the coming years.

Global Hydrotreated Oil Market (2024-30): Regional Projection

Geographically, the Global Hydrotreated Vegetable Oil Market expands across:

• North America
• South America
• Europe
• The Middle East & Africa
• Asia-Pacific

North America is poised to lead the Hydrotreated Vegetable Oil Market in the forecast period, accounting for a substantial market share. According to the US Environmental Protection Agency, in 2021, the combustion of fossil fuels such as gasoline and diesel to transport people and goods was the largest source of CO2 emissions, accounting for around 28% of the total US greenhouse gas emissions. To combat this, initiatives like the Renewable Fuel Standard and provincial mandates in Canada promote renewable fuels, including hydrotreated vegetable oil (HVO), as part of a comprehensive strategy to cut the carbon footprint in transportation.

Further, as environmental consciousness rises among consumers, there is a growing preference for sustainable products, including biofuels. This shift in consumer awareness and preferences could drive demand for this renewable and environmentally friendly fuel option, thus enhancing the North America Hydrotreated Vegetable Oil Market size in the forthcoming years.

Global Hydrotreated Vegetable Oil Recent Development:

• 2023: Neste Oyi successfully expanded its Singapore hydrotreated vegetable oil (HVO) and sustainable aviation fuel (SAF) refinery, doubling production capacity to around 2.6 million tons per year, with about 1 million tons per year dedicated to sustainable aviation fuel (SAF).
• 2023: Eni SM collaborated with LG Chem to set up a joint HVO plant at its production base by 2026 in Daesan, Seoul. The factory is estimated to process around 400,000 tons of bio-feedstocks every year.

Gain a Competitive Edge with Our Global Hydrotreated Vegetable Oil Market Report

• Global Hydrotreated Vegetable Oil Market Report by MarkNtel Advisors provides a detailed & thorough analysis of market size, growth rate, competitive landscape, and key players. This comprehensive analysis helps businesses gain a holistic understanding of the market dynamics & make informed decisions.
• This report also highlights current market trends & future projections, allowing businesses to identify emerging opportunities & potential challenges. By understanding market forecasts, companies can align their strategies & stay ahead of the competition.
• Global Hydrotreated Vegetable Oil Market Report aids in assessing & mitigating risks associated with entering or operating in the market. By understanding market dynamics, regulatory frameworks, and potential challenges, businesses can develop strategies to minimize risks & optimize their operations.