Hydrotreated Vegetable Oil Market Size & Outlook, 2026-2034

Hydrotreated Vegetable Oil Market Overview

The global hydrotreated vegetable oil (HVO) market size is valued at USD 8.25 billion in 2025 and is projected to reach USD 15.77 billion by 2034, growing at a CAGR of 7.5% during the forecast period. The market growth is primarily driven by increasing demand for renewable and low-carbon fuels, technological advancements in hydrogenation processes, and supportive government policies aimed at reducing greenhouse gas emissions in the transportation and industrial sectors. Rising corporate sustainability commitments, along with the growing adoption of HVO in aviation, marine, and heavy-duty vehicles, further accelerate market expansion.

Key Market Trends & Insights

• Europe dominated the market with a revenue share of 42% in 2025.
• Asia Pacific is anticipated to grow at the fastest CAGR of 8.5% during the forecast period.
• Based on Feedstock, the Waste and residue oils segment held the highest market share of 45% in 2025.
• By Product Type, the Sustainable aviation fuel (SAF) segment is estimated to register the fastest CAGR growth of 9.0%.
• Based on Application, the Road Transport category dominated the market in 2025 with a revenue share of 50%.
• Based on Distribution Channel, the B2B contracts for industrial power generation and marine fuelsegment is projected to register the fastest CAGR of 8.1% during the forecast period.
• Germany dominates the market, valued at USD 1,302.00 million in 2024 and reaching USD 1,378.43 million in 2025.

Germany Hydrotreated Vegetable Oil Market Size (USD Million)

Source: Straits Research

Market Revenue Figures

• 2025 Market Size: USD 8.25 billion
• 2034 Projected Market Size: USD 15.77 billion
• CAGR (2026-2034): 7.5%
• Dominating Region: Europe
• Fastest-Growing Region: Asia Pacific

The global HVO market encompasses renewable diesel and jet fuel derived from vegetable oils, waste fats, and other bio-based feedstocks. These fuels are primarily used in the transportation sector, including commercial vehicles, aviation, and maritime shipping, and are increasingly used in industrial power generation. HVO serves as a drop-in solution for diesel engines, offering superior performance, reduced emissions, and compatibility with existing infrastructure. Key growth drivers include increasing environmental regulations, growing awareness of carbon reduction initiatives, continuous process innovation, and expanding distribution networks for renewable fuels.

Latest Market Trends

Sustainability-Driven Adoption in Transportation

The global push toward lower-carbon transportation fuels is accelerating the adoption of hydrotreated vegetable oil (HVO) as a renewable diesel alternative. Governments are tightening carbon emission standards for heavy-duty vehicles while promoting low-emission fuels through incentives and regulations. Fleet operators are increasingly preferring HVO due to its high cetane number, excellent cold-flow performance, and full compatibility with existing diesel engines, without any blending limits. These advantages enable operators to reduce emissions without requiring modifications to their infrastructure or vehicles.

Integration with Circular Economy Initiatives

HVO production is increasingly aligned with circular economy principles through the use of waste-based feedstocks such as used cooking oil and animal fats. This approach reduces dependence on virgin vegetable oils and helps address waste management challenges. Utilising waste materials reduces environmental impact while enhancing long-term feedstock security. This integration supports sustainable fuel production, reduces lifecycle emissions, and enhances market resilience. Circular sourcing strategies also strengthen regulatory acceptance and support broader HVO adoption in regions focused on sustainability goals.

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Market Drivers

Regulatory Support and Government Incentives

Strong regulatory support is a key driver of the HVO market. Governments promote renewable fuels through carbon reduction mandates, tax incentives, and fuel blending requirements. These policies encourage fleet operators, industrial users, and fuel distributors to transition toward low-emission alternatives. Clear regulatory frameworks provide long-term visibility into demand, supporting investment in production capacity and supply infrastructure. As decarbonization targets expand across transportation and industry, regulatory backing continues to play a central role in accelerating HVO adoption and market expansion.

Growing Demand for Low-Emission Fuels in Aviation

HVO is gaining traction as a sustainable aviation fuel due to its ability to significantly reduce lifecycle carbon emissions compared to conventional jet fuel. Airlines are increasingly adopting sustainable fuels to meet environmental commitments, regulatory requirements, and corporate sustainability targets. Growing pressure to decarbonise air travel is encouraging airlines and fuel suppliers to expand the use of sustainable fuels. This trend supports increased production capacity and positions HVO as a key contributor to decarbonising the aviation sector.

Market Restraint

Feedstock Availability Constraints

Limited availability of sustainable feedstocks presents a challenge to scaling HVO production. Waste oils, animal fats, and non-food crops are in finite supply and face competition from food, chemical, and other biofuel industries. Supply constraints can increase feedstock prices and create uncertainty for producers planning capacity expansion. Geographic imbalance in feedstock availability further complicates supply chains. These limitations can restrict production growth and delay the initiation of new projects.

Market Opportunity

Expansion in Emerging Markets

Emerging economies in the Asia Pacific and Latin America present strong growth opportunities for the HVO market, driven by rising demand for transport fuels and an increasing focus on environmental regulations. Local production using regionally available feedstocks can reduce dependence on imported fossil fuels and improve energy security. Growing urbanisation, logistics activity, and public transport expansion further support demand for cleaner fuels. As governments introduce sustainability policies and invest in renewable energy infrastructure, the adoption of HVO is expected to accelerate.

Regional Analysis

Europe dominated the market in 2025, accounting for 42% market share, supported by strong environmental regulations, carbon reduction targets, and widespread adoption of renewable fuels. Sustainability mandates, carbon pricing mechanisms, and low-carbon fuel standards encourage the use of HVO across transportation, industrial, and aviation sectors. The region benefits from a mature production ecosystem, advanced hydrogenation technologies, and efficient fuel distribution networks. Investments in feedstock collection, refinery upgrades, and fuel blending infrastructure further strengthen supply stability.

• Germany is the leading national market in Europe, driven by stringent climate policies, low-emission transport regulations, and strong adoption by commercial fleets and logistics operators. Government incentives and urban low-emission zones encourage fleet conversion, while close collaboration between refiners, feedstock suppliers, and transport companies ensures supply reliability. Germany’s advanced industrial base and sustainability focus position it as a key driver of HVO demand in Europe.

Asia Pacific Market Insights

Asia Pacific is emerging as the fastest-growing region with a CAGR of 8.5% from 2026-2034, driven by rapid urbanisation, industrial expansion, and rising fuel demand in transportation and aviation. Governments across the region promote renewable diesel and sustainable aviation fuel through policy support, incentives, and clean energy targets. The availability of agricultural feedstocks such as palm, soybean, and rapeseed oil enables cost-efficient production. The expansion of public transport systems, growth in logistics, and airline decarbonization efforts further support the adoption. Partnerships between global producers and local distributors improve market access, making Asia Pacific a key growth region for HVO.

• China is the primary growth engine in Asia Pacific due to high fuel consumption, expanding logistics networks, and strong government backing for low-carbon energy. Renewable diesel is increasingly adopted in industrial fleets, shipping, and aviation. Policies promoting green transport and carbon reduction accelerate market uptake, while digital fuel platforms and centralized procurement improve access for regional fleet operators.

Source: Straits Research

North America Market Insights

North America represents a high-value market supported by strong fleet adoption and well-defined low-carbon fuel regulations. Renewable fuel standards and regional blending mandates encourage the use of HVO in heavy-duty transport, aviation, and industrial power generation. The region benefits from advanced logistics infrastructure, large-scale refining capacity, and long-term supply agreements between producers and fleet operators. Stable policy frameworks and high fuel consumption levels make North America a mature yet expanding market for renewable diesel and sustainable aviation fuel.

• The U.S. is the largest HVO market in North America, driven by emissions regulations, carbon intensity targets, and widespread adoption of fleet electrification alternatives. Renewable diesel is increasingly used in logistics, public transport, and aviation. Long-term supply contracts with industrial users and transport operators ensure stable demand, while the adoption of sustainable aviation fuel by airlines strengthens market growth.

Latin America Hydrotreated Vegetable Oil Market Insights

Latin America shows steady HVO market growth supported by industrial expansion, rising transport demand, and favorable renewable energy policies. Countries across the region promote sustainable fuels through blending mandates, fiscal incentives, and decarbonization strategies. A strong agricultural base provides abundant feedstocks such as soybean and palm oil, enabling cost-effective production. Growing urban logistics activity, fleet modernization, and aviation sector expansion support rising consumption.

• Brazil leads the Latin American market due to its established biofuel industry and abundant agricultural feedstock supply. Renewable diesel adoption is supported by blending mandates, sustainable aviation initiatives, and transport sector modernisation. Direct supply agreements with logistics and industrial operators ensure consistent demand.

Middle East and Africa (MEA) Market Insights

The Middle East and Africa HVO market is developing steadily, driven by fuel diversification strategies, transport modernisation, and sustainability initiatives in key economies. Gulf countries are leading the adoption due to high fuel consumption, advanced infrastructure, and growing interest in renewable diesel and sustainable aviation fuel. Access to major ports, logistics hubs, and regional trade routes supports scalable deployment.

• The UAE is the leading HVO market in MEA, supported by sustainability policies, high transport fuel demand, and aviation sector growth. Renewable diesel and sustainable aviation fuel adoption is expanding through partnerships with global producers. Strong storage, blending, and distribution infrastructure enhances market readiness, while incentives for low-carbon fuels support fleet adoption.

Feedstock Analysis

Waste and residue oils dominated the market with a revenue share of 45% in 2025. Their popularity stems from low-cost availability, strong environmental credentials, and alignment with circular economy initiatives. Industrial users and commercial fleets prefer waste-derived HVO to meet sustainability targets without competing with food production. Companies investing in collection networks for used cooking oil and animal fats are expanding capacity and reducing feedstock costs, further supporting this subsegment’s dominance.

Vegetable oil-based HVO is the fastest-growing at a CAGR of 8.0%. Rising global demand for renewable diesel and SAF has prompted expansion in the processing of palm, rapeseed, and soybean oil. The segment benefits from stable supply chains in Southeast Asia and Europe, government blending mandates, and premium pricing for certified sustainable feedstocks, which drive consistent adoption in both the transportation and aviation sectors.

Product Type Insights

Renewable diesel holds the largest market share of 60% in 2025. Its compatibility with existing diesel engines and infrastructure, along with lower emissions compared to conventional diesel, makes it the most widely used HVO product. Commercial fleet operators, public transport authorities, and logistics companies are increasingly switching to renewable diesel to meet sustainability mandates and reduce carbon taxation burdens.

Sustainable aviation fuel (SAF) is the fastest-growing product type with a CAGR of 9.0%. Airlines and aviation authorities are adopting SAF to comply with the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) and corporate sustainability targets. Technological improvements in HVO-based jet fuel production have increased yields and reduced costs, making it more attractive for commercial aviation.

By Application Market Share (%), 2025

Source: Straits Research

Application Insights

Road transport dominates the market with a 50% share in 2025. HVO is widely used in heavy-duty trucks, buses, and commercial fleets due to its drop-in compatibility with diesel engines and its significant reduction in emissions. Increasing investments in infrastructure and bulk supply agreements enhance accessibility and reliability, consolidating road transport as the primary application segment for HVO globally.

Aviation is the fastest-growing application segment, expected to grow at a CAGR of 9.2% from 2025 to 2034. Airlines are under mounting pressure to reduce carbon footprints and comply with international emission regulations. HVO-derived SAF offers a low-carbon alternative for commercial flights and military aviation. The segment’s growth is fueled by government incentives, corporate ESG mandates, and technological advancements in fuel conversion and distribution networks.

Distribution Channel Insights

Direct supply to fleet operators holds 55% market share in 2025. Industrial users and large transport companies prefer contractual agreements for guaranteed HVO supply, price stability, and logistical support. Long-term contracts enable HVO producers to optimise production planning and maintain consistent revenue streams. Fleet operators benefit from predictable pricing and compliance with sustainability policies, making this the largest distribution channel for HVO globally.

B2B contracts for industrial power generation and marine fuel are growing at a CAGR of 8.1%. Industrial and shipping sectors are increasingly adopting HVO as a low-carbon fuel alternative to heavy fuel oil. The segment’s growth is supported by sustainability mandates, energy security concerns, and the need to reduce emissions in industrial operations.

Competitive Landscape

The hydrotreated vegetable oil (HVO) market is moderately fragmented, characterized by a mix of legacy energy majors, diversified renewables specialists, and emerging regional producers. Established global players dominate through extensive refining infrastructure, long-term supply agreements with commercial fleets and aviation operators, and robust R&D capabilities focused on process efficiency and feedstock flexibility. Mid-tier and new entrants are competing by developing localized production capacity, leveraging waste and residue feedstock streams, and pursuing sustainability certifications to meet corporate and regulatory decarbonization goals.

SkyNRG: A Sustainable Fuel Innovator

SkyNRG has established itself as an innovative player in the HVO-based sustainable aviation fuel (SAF) segment, focusing on bridging supply with airline demand for low-carbon jet fuels. SkyNRG’s core strengths lie in its sustainability-centric business model, expertise in SAF certification pathways, and ability to structure long-term contracts that de-risk investment for both producers and carriers. It primarily appeals to environmentally conscious commercial and cargo airlines, distinguishing itself through bespoke supply agreements and a strong commitment to transparent lifecycle emissions reporting.

Latest News:

• In June 2025, SkyNRG highlighted that supplied SAF volumes doubled in 2024 and demand is projected to reach approximately 2 million tonnes this year, indicating a busy period for securing supply capacity.

List of key players in Hydrotreated Vegetable Oil Market

1. Neste
2. Shell
3. TotalEnergies
4. BP (biofuels division)
5. Chevron
6. ENI
7. Preem
8. ConocoPhillips
9. Phillips 66
10. Valero Energy
11. REG (Renewable Energy Group)
12. Diamond Green Diesel
13. HIF Global
14. Eni Sustainable Mobility
15. EDP Biofuels
16. UPM Biofuels
17. Cargill Renewable Fuels
18. Raízen
19. Varo Energy
20. SkyNRG
21. World Energy
22. Chevron Lummus Global
23. AB Volvo (fuel partnerships)
24. Daimler Truck AG (fuel integration strategies)
25. UOP Honeywell (technology supplier)

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Strategic Initiatives

• December 2025 - TotalEnergies confirmed that its Grandpuits "Zero-Crude" platform is on track to be commissioned in mid-2025. It will process 400,000 metric tons/year, producing 210,000 tons of SAF and 50,000 tons of HVO.
• November 2025 - Enilive, along with PETRONAS and Euglena, held a groundbreaking ceremony for a new biorefinery in Pengerang, Malaysia. The facility will have a capacity of 650,000 tonnes/year of HVO and SAF, targeted to start in 2028.
• October 2025 - Neste is currently completing a 2.5 billion Euros investment in its Rotterdam refinery expansion. Once fully ramped up, it will solidify Rotterdam as a global leader in SAF and HVO production.
• September 2025 - Shell officially launched its branded Renewable Diesel (HVO) and R33 blend in key global hubs (including Hong Kong and the US). Marketed as "Shell Renewable Diesel," it targets heavy-duty fleets and promises up to 90% CO2e reduction.