Biofuels and feedstocks
Overview
Demand for biofuels is increasing significantly, driven by the need to decarbonise road transport as part of the energy transition. Global biofuels output is expected to rise by more than 3mn b/d in the next five years, and such rapid growth means that new challenges and opportunities are constantly emerging. Keeping on top of the ever-changing biofuels landscape requires accurate pricing, insightful analysis and access to the latest data.
The Argus biofuels solution provides in-depth pricing and market analysis across the entire global renewable fuel supply chain, from original feedstock to finished fuel, with prices and key insights into regional biodiesel, ethanol and feedstock markets.
Latest biofuels news
Browse the latest market moving news on the global biofuels industry.
Germany’s green rules open fuel tax loophole
Germany’s green rules open fuel tax loophole
Hamburg, 9 January (Argus) — The introduction of increasingly stringent rules aimed at reducing CO2 emissions in Germany has opened a tax loophole that creates scope for and may have already given rise to fraud, according to market participants. The country has led the way in Europe's drive to cut emissions: it has both a greenhouse gas (GHG) reduction quota and a CO2 levy, which combined add up to levies worth some €250/t for diesel in 2025, and which could reach €415/t or more in 2026, Argus calculates. The CO2 levy was €25/t CO2e in 2021, when it was first imposed. In 2025 it was €55/t CO2e, while in 2026 the obligation will be auctioned between €55/t CO2e and €65/t CO2e with a fallback non-auction price of €68/t CO2e. The GHG reduction obligation, meanwhile, was at 10.6pc of emissions in 2025 and has risen to 12pc this year. Under Germany's implementation of the EU's latest Renewable Energy Directive (RED III), the obligation will rise to 59pc by 2040, with increases every year. Most fuel suppliers build these costs into their prices at source. But the rules for payment of the levies do not make it compulsory to do so. The GHG and CO2 duties apply to sales of fossil diesel and gasoline within each calendar year, but do not have to be paid immediately — proof of GHG compliance was due on 15 July in previous years and is now due by 1 June of the year following actual fuel sales, while CO2 emissions certificates must be submitted by 30 September. In addition, it is not clear how quickly the authorities would take legal enforcement action should these deadlines be missed. The current regulatory framework creates, at minimum, a timing gap with regard to compliance obligations and, at worst, a serious loophole — a window of opportunity allowing businesses to sell discounted diesel with no GHG compliance or CO2 duties factored into the price, and exit the market ahead of compliance deadlines and ensuing legal enforcement. Clearly, the higher the renewable tax burden, the larger the financial value of exploiting the loophole becomes. The emergence of new suppliers in 2025 offering diesel at steep discounts to prevailing market prices is therefore raising questions. Since the start of 2025, established market players say a handful of new suppliers have regularly offered and sold diesel delivered by rail and for truck loading at specific import locations at discounts of up to €60/t (for truck loading), subtracted from the previous day's inland price assessments for finished-grade product. This equates at times to discounts of about 4pc to prevailing market levels, which have ranged on average from around €1,345/t to €1,549/t over the year. The actual volume of diesel sold at such discounts last year is around 30,000t, Argus estimates — the equivalent of about 1,000 truckloads of fuel. That is less than 0.1 pc of total German deliveries for the period, but because the sales occur only in specific regions they have had a disproportionate impact in local markets. Traders say it is difficult to see how such large discounts could be the result of factors other than delayed payment of greenhouse levies. Regular energy taxes must be paid monthly, and the only other variables in the price are the actual import cost of the fuel, and logistical expenses — storage and transportation. Some wholesalers and retailers say they are now declining to buy from suppliers who consistently offer steep discounts because of concerns about potential legal repercussions — fearing they might be held accountable if their supplier does not ultimately pay the CO2 duties and/or GHG compliance costs, or even concerned they might be regarded as accessories to fraud. A number of established players in the domestic diesel market have called on German customs authorities to be more vigilant and thoroughly audit new suppliers to prevent any possible CO2 tax or GHG compliance-related fraud. The authorities could also order obligated fuel suppliers to provide a bank assurance for the payment of CO2 tax and the GHG quota, some companies suggest. Officials with German customs authorities have told Argus that they are aware of the concerns but declined to comment on what steps they are taking or might take in response. Non-payment of CO2 levies on 30,000t of diesel would have cost the government about €5.2mn in 2025, Argus calculates, while the non-compliance with GHG savings targets would reduce GHG savings demand by 14,000t of CO2e, worth around €2.2mn, reducing biofuels demand and undermining Germany's energy transition goals. Cases of proven fraud involving diesel have been reported in a number European countries in recent years, including Italy, Spain, Portugal and Romania as well as Germany, often involving designer fuels schemes or VAT fraud. Widespread fraud relating to non-compliant biofuels with faked credentials has also been of concern. But the rise in Germany's CO2 taxes and GHG obligations since 2021, and the way the government has framed the rules, may well have created a whole new set of problems. These problems may replicate themselves in other EU countries, as governments in the Netherlands and elsewhere move to emulate Germany's lead in setting emissions reductions targets. Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
US E15 talks continue as funding crunch looms
US E15 talks continue as funding crunch looms
New York, 7 January (Argus) — Energy groups are still negotiating legislation to expand access to a higher-ethanol gasoline blend and rein in refiners' ability to skirt biofuel mandates, as a looming funding impasse adds urgency to the talks. Negotiations that include the American Petroleum Institute (API) and the ethanol advocates Growth Energy and the Renewable Fuels Association continue, three people familiar with the talks told Argus . The hope is to reach some compromise on a bill that could revamp retail fuel markets in the US and convince lawmakers to add it to a larger package, potentially legislation to fund the government after 30 January. The powerful oil group withdrew support for a slimmer bill last year that would have allowed year-round sales of gasoline with 15pc ethanol (E15) and is pushing instead for a broader package that would make it harder for small refineries to win hardship exemptions from annual biofuel mandates. President Donald Trump's administration granted dozens of those hardship requests last year and floated making companies without exemptions blend more biofuels to compensate , unnerving oil majors and reshuffling the E15 debate. Smog rules separately limit summertime sales of E15 in most of the country without emergency waivers, which advocates say has deterred retailers from investing in new infrastructure. Most US gasoline is sold as a 10pc ethanol blend. The API and the ethanol groups agree on the general framework of a bill that would authorize E15 year-round and limit future exemptions from biofuel mandates, including by preventing larger refiners that own small units like Delek and Par Pacific from requesting relief. The groups plan to support adding new exemption provisions to existing E15 bill text rather than push lawmakers to scrap that draft, two people familiar with the talks said. But there are still thorny issues to resolve — such as the effective date for any changes — and some provisions risk riling energy and farm interests otherwise on board with reining in exemptions. Adding to, rather than replacing, the current E15 bill would, for instance, keep a provision effectively compensating some small refineries for past biofuel mandates. That draft would return compliance credits to certain refiners and — unlike current rules where credits expire — allow their use in future years. Even small facilities can spend tens of millions of dollars each year buying enough credits to comply with the mandates, and returned credits usable indefinitely would be even more valuable. Eligibility is limited to small refineries that retired credits to meet biofuel mandates in 2016, 2017 or 2018 and had hardship petitions outstanding to start December 2022, as well as companies that complied with 2018 quotas and had petitions denied before July 2022. EPA exemption data those years is limited, making it unclear which companies would benefit. Calling on Congress The groups working on revised bill text have another challenge: convincing Congress to act. Growth Energy, the Renewable Fuels Association and dozens of other farm and biofuel groups urged Congress to pass some E15 fix "as soon as possible" in a joint letter to House and Senate leaders on Wednesday, a nod to the looming deadline to fund the government before a potential shutdown later this month. E15 legislation is unlikely to pass on its own, so lobbyists are closely tracking the legislative calendar for opportunities to add it to larger packages. The letter does not mention the API talks, which are proceeding separately. Small refiners worried about losing access to relief — at the same time as the Trump administration readies what could be record-high biofuel quotas for the next two years — will also press sympathetic lawmakers. Notably, a statement accompanying a bipartisan appropriations bill draft released this week recommends that EPA rethink "policies and procedures" for exemptions in response to a 2022 Government Accountability Office analysis that criticized the agency's approach. That watchdog report questioned EPA's argument that small refineries can easily pass on the costs of meeting biofuel mandates in fuel sales. Energy lobbyists noted that the statement's recommendations are nonbinding and that similar language around exemptions has appeared in past statements accompanying appropriations bills. But it signals that some members of Congress might oppose any changes to fuel policy that could raise costs for refineries in their districts and states. By Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
Viewpoint: SAF market length puzzle persists
Viewpoint: SAF market length puzzle persists
London, 5 January (Argus) — The sustainable aviation fuel (SAF) market faces the same supply puzzle in 2026 — the gap between perception and reality. Analysts broadly agreed the global market was structurally long in 2025, reinforced by shelved projects including a $1bn write-down by Shell. Yet SAF premiums hit two-year highs in mid-November — roughly double first-half levels — before easing in December. The case for a well-supplied market is compelling. Demand from the EU, the world's largest SAF consumption centre due to its size and its blending mandate, will be largely unchanged, with the bloc's quota steady at 2pc in 2026. Global voluntary demand remains fickle and liable to retreat when prices become unfavourable or if climate-sceptic headwinds undermine company commitments. New SAF plants in Europe, Asia-Pacific and North America will add supply. Chinese exports are likely to rise after Beijing approved more licences in October. And unlike in the second half of 2025, when several SAF producers entered maintenance at the same time, supply disruptions are unlikely to align at the same scale. But several factors in 2026 could trim the perceived surplus. European hydrotreated vegetable oil (HVO) demand will rise under new legislation in Germany and the Netherlands. This will trim some SAF capacity, as both fuels share production units, balancing the ratio of each according to demand. The UK's SAF mandate will nearly double to 3.6pc in 2026, from 2pc in 2025. And London's Heathrow Airport plans to ramp up its incentive scheme, which should spur extra voluntary buying in the UK. Singapore's levy-funded SAF procurement scheme could phase in towards the end of 2026, adding some demand from Asia-Pacific. Administrative hurdles that delayed SAF buying until partway through 2025 — such as certification issues for producers, midstream terminals and blending facilities — have largely been resolved. This should allow obligated parties to spread purchases more evenly across 2026 and reduce the risk of late buying pressure. Yet trading strategies and behavioural patterns may prove harder to shift. The 12-month obligation cycle reduces urgency for early deals and tempts buyers to wait for cheaper or opportunistic offers later in the year. This dynamic contributed to fourth-quarter price spikes in HVO in 2024 and SAF in 2025, suggesting a seasonal pattern may be emerging. If market participants anticipate an avalanche of supply and cheaper prices later in 2026, they could fall into the same trap as 2025 — creating price volatility even in a well-supplied market. Participants again predict structural length in the SAF market for 2026, and the perfect storm of 2025 looks unlikely to repeat in full to support prices in the same way. That said, the mandate changes, and the incentive and procurement schemes, could tighten the market. And after forecasts of oversupply flattered to deceive, most obligated parties are likely to tread cautiously in 2026. By Aidan Lea Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
Viewpoint: Waste feedstock demand grows with RED III
Viewpoint: Waste feedstock demand grows with RED III
The Hague, 5 January (Argus) — European waste feedstock demand is set to rise in 2026, supported by higher targets under the EU's new Renewable Energy Directive (RED III) and the Netherlands' shift to greenhouse gas (GHG)-based mandates. The Netherlands is moving to a GHG savings target without multipliers, while Germany is phasing out double-counting of certain fuels made from feedstocks listed in Annex IX Part A (9A) of RED III. As a result, GHG savings of biofuels and their feedstocks will become the key compliance driver in both countries next year. Caps on Annex IX Part B (9B) feedstocks — such as used cooking oil (UCO) and tallow categories 1 and 2 — are pushing obligated parties towards 9A feedstocks, broadening and fragmenting the sourcing pool. UCO supply and pricing outlook Demand looks well supported heading into 2026, driven by rising mandates and EU-wide frameworks outside RED III, such as ReFuelEU Aviation and FuelEU Maritime, now entering their second year. Hydrotreated vegetable oil (HVO) and sustainable aviation fuel (SAF) producers are expected to dominate UCO procurement this year, with strong margins and firmer obligations pulling more feedstock into hydrotreated esters and fatty acids (HEFA) pathways. Most market participants expect UCO prices to remain broadly stable into the first quarter of 2026, with negotiations pointing to similar levels as late 2025. Some upside risk could emerge if China brings online a planned 500,000 t/yr of SAF capacity in 2026, boosting domestic UCO demand and pushing seaborne prices higher. At the same time, additional Chinese SAF supply — not subject to EU anti-dumping duties unlike HVO and biodiesel — could pressure European prices lower, tightening the SAF/UCO spread and squeezing margins. UCO's high GHG savings continue to underpin demand even as double-counting disappears from Dutch compliance, though it remains in Mediterranean countries in 2026. European UCO methyl ester (Ucome) producers will be squeezed if UCO costs rise, but Germany's removal of double-counting for most 9A feedstocks could support some domestic Ucome demand. Advanced feedstocks gain traction Higher RED III 9A sub-targets are accelerating advanced biofuel uptake and reshaping a fragmented feedstock landscape. Buying interest for 9A-listed food waste oil (FWO) rose in the fourth quarter of 2025, alongside steady demand for soapstock acid oils (SSAO). Forestry-based crude tall oil (CTO) is gaining traction on strong Nordic supply and new co-processing investments, including Neste's European Commission-funded project in Finland . Technical corn oil (TCO), a high GHG-savings ethanol by-product, continues to expand beyond Germany, where it is classified as advanced and eligible for quota generation. But treatment remains uneven across the EU — TCO is not listed as advanced in the Netherlands, with the Dutch Emissions Authority yet to clarify its status. Cashew nut shell liquid (CNSL) is also drawing attention as a marine blendstock and co-processing feed. Regulatory uncertainty persists over cover and intermediate crops — such as camelina and carinata — as their use depends on how member states classify them under RED III during national transpositions. Tighter Pome oil outlook Palm oil mill effluent (Pome) oil faces regulatory pressure across Europe, including in Ireland, Germany, Portugal and the Netherlands, as authorities deepen investigations into traceability and origin verification. Ireland excluded Pome-based advanced biofuels from receiving additional renewable fuel certificates from 1 July last year, while Portugal removed ISP energy-tax exemption for Pome oil and empty palm fruit bunches, though both retained double-counting status. Germany's cabinet-approved RED III draft allows crediting of Pome-based biofuels placed on the market before 2027, reversing expectations of a full exclusion in 2026. The additional year could stimulate compliance-driven buying, levelling the playing field across feedstocks. This regulatory change may lead to firmer demand in the Amsterdam-Rotterdam-Antwerp (ARA) hub, a key entry point for feedstock flows into Germany. Supply uncertainty remains. Indonesian policies to divert material into the domestic biodiesel pool have already firmed prices, with further constraints expected as the country moves toward a B50 biodiesel blend programme in the second half of 2026 and advances plans to scale waste-based SAF output to 1mn kl/yr by 2030. With limited new collection capacity and sustained European demand, Pome oil is expected to stay structurally tight in 2026, supporting a higher price floor. By Anna Prokhorova Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
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