Overview:

The Hydrotreated Vegetable Oil (HVO) market is undergoing significant growth as demand for low-carbon and sustainable fuels increases globally. The market’s estimated value stood at approximately USD 19.5 billion in 2023, experiencing considerable expansion to reach USD 21.8 billion in 2024, reflecting an 11.8% year-on-year increase.

Projections indicate a continued upward trajectory, with the market anticipated to reach USD 24.5 billion by 2025. Looking ahead, over the forecast period spanning 2025 to 2035, the global HVO sector is expected to demonstrate a robust Compound Annual Growth Rate (CAGR) of around 13.1%, culminating in a market valuation nearing USD 85.2 billion by 2035.

HVO has become recognized as an advanced biofuel, capable of significantly reducing greenhouse gas emissions, enhancing engine performance, and contributing to circular economy initiatives. Unlike traditional biodiesel, HVO is produced through hydroprocessing, a method that eliminates oxygen and impurities, leading to a fuel with superior stability, efficiency, and combustion properties. Government policies worldwide, such as blending mandates, tax incentives, and renewable energy targets, particularly in regions like Europe and North America, are key drivers promoting HVO adoption.

A primary factor propelling market expansion is the escalating utilization of renewable diesel in transport sectors, notably within heavy-duty road transport, aviation, and marine applications. Furthermore, heightened global awareness of climate change and the urgent need to decarbonize the energy supply chain are spurring substantial investments from both public and private entities into large-scale HVO production facilities.

The European Union has been a leader in mandating HVO use through strict emissions regulations and incentives, evident in policies such as the Renewable Energy Directive (RED II). Key contributing nations within Europe include Sweden, Finland, the Netherlands, and Germany.

North America is also rapidly scaling up its HVO consumption, with significant growth in the United States driven by regulations like California’s Low Carbon Fuel Standard (LCFS) and similar state-level initiatives. Interest in renewable diesel solutions is also growing in the Asia Pacific region, particularly in nations such as Japan and South Korea.

Major participants in the HVO market include Neste Corporation, TotalEnergies, ENI, Diamond Green Diesel, and Preem. These companies are increasing their refinery capacities and establishing strategic collaborations with feedstock suppliers to secure a consistent supply of materials such as used cooking oil, animal fats, and other residual lipids. Advancements in technology and the diversification of feedstock sources are enabling these firms to enhance production scale and reduce operational costs.

With increasing demand from sectors like aviation, logistics, and public transit, the range of potential HVO applications is broadening beyond conventional industrial uses. The blending of HVO with fossil diesel is considered a practical step towards achieving carbon neutrality targets.