May 17, 2021

Global Hydrotreated Vegetable Oils Market Snapshot

The global market for Hydrotreated Vegetable Oils

The last decade has seen the development of advanced production processes for biomass-derived alternatives to conventional refined products, driven by advancing regulatory requirements on emissions, feedstock origin and the need to raise the proportion of bio-content in fuels beyond the “blend walls” associated with first generation biofuels. Commercial development has been led by the hydrotreating of vegetable and animal-based feedstocks, the output of which is collectively known as hydrotreated vegetable oil (HVO) or hydroprocessed esters and fatty acids (HEFA). HVO processes are currently chiefly used to produce bio-based diesel fuel (commonly known as green or renewable diesel) but are also able to produce bio-based aviation fuel and bio-based naphtha.

The key characteristic of these products is their suitability for use as drop-in alternatives to petroleum-derived products, with no technical limit on the levels at which they can be blended into conventional fuels. In addition, HVO have a high degree of feedstock flexibility compared to the first generation biodiesels (FAME etc) that have dominated biodiesel supply until now. Furthermore, HVO offers improved reductions in both GHG and other emissions compared to both conventional diesel and ME biodiesels.

Accordingly, HVO has the potential to address most of the key concerns that have arisen with regard to biodiesel (and other biofuel) use; food versus fuel competition, feedstock sustainability, life-cycle emissions and blending challenges. In addition, HVO’s suitability as a jet fuel alternative – an area in which emissions reduction efforts have so far been limited – and the potential for retrofitting conventional oil refineries for HVO production have made it something of a “holy grail” for governments, biofuel producers, airlines and oil refiners alike.

HVO Demand – North West Europe demand for HVO has risen sharply over the last decade, as the production process has been scaled up commercially by pioneering operators. As governments begin to consider the means by which they can make good on ambitious environmental pledges, and the global aviation industry seeks to tackle its contribution to global emissions, it is likely that demand will continue to grow. Meanwhile, long term fundamentals and one-off events such as the COVID-19 pandemic continue to reshape the market for petroleumderived products. As oil refiners face increasing challenges from oversupply and faltering demand, many are turning to the idea of converting existing capacity to produce low carbon fuels, and HVO is a readily available option, both technically and commercially.

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Market Insights: Hydrotreated Vegetable Oils - 2021 is one in a series of reports published as part of NexantECA’s Markets & Profitability program. NexantECA’s upcoming Market Insights report provides a comprehensive review of the global market for hydrotreated vegetable oil (HVO), including the markets for renewable diesel, bio-based aviation fuel and bio-based naphtha.

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