Traders expect German HVO100 demand to roughly double this year compared with 2025, mainly because it is being traded nationwide at a discount to B7 diesel for truck loading, prompting consumers to increasingly switch to the cheaper fuel.
HVO100 is 100pc pure hydrotreated vegetable oil, a synthetic paraffinic diesel that can be used as a direct replacement for conventional fossil diesel without requiring engine modifications.
B7 is a diesel blend with a maximum biodiesel content of 7pc, and typically cheaper than HVO100. But German average inland B7 diesel prices rose by as much as 48pc after 27 February following the outbreak of the Iran war. HVO has been less affected by this development because the fuel is not produced from crude oil and driven by different pricing mechanisms.
As a result, since mid-August, HVO100 has for the first time been traded nationwide at a discount to B7 diesel. This wholesale price advantage of HVO100 over B7 diesel is now increasingly being passed on to consumers. While HVO100 had long been sold at German filling stations at premiums of more than €0.20/l compared with fossil diesel, market participants now report a much smaller gap. Premiums have fallen to around €0.04-0.08/l in many locations, while at some sites HVO100 is already being sold at a lower price than conventional diesel.
With fuel prices generally remaining high, consumers have become more price-sensitive and are increasingly opting for the cheaper renewable diesel alternative, with traders reporting that consumers have shown significantly stronger interest in HVO100 this year than last. Customers from the agricultural sector and commercial fleet operators in particular have increased their purchasing volumes.
One trader in southern Germany reported that HVO100 sales volumes during the first nine months of 2026 had already clearly exceeded the total volume sold in the whole of 2025. Other market participants also describe trading activity as considerably more dynamic and expect overall market activity in 2026 to double compared with 2025.
Argus Analytics estimates that German HVO consumption will increase to around 2.41mn t this year from around 1.01mn t in 2025. The vast majority of HVO volumes are blended into conventional fossil diesel, while market participants estimate that HVO100 accounts for around 25pc of the overall market.
HVO demand in Germany has been boosted by the abolition of the double-counting mechanism for advanced biofuels in the country. Previously, advanced biofuels produced from waste and residue feedstocks could be counted twice towards Germany's greenhouse gas (GHG) reduction quota. With double-counting removed, higher physical biofuel volumes are required this year to meet quotas, increasing demand for drop-in fuels such as HVO.
The trend has been supported by historically high revenues from the trading of GHG quota compliance. Companies generate the compliance by placing eligible renewable fuels that deliver greenhouse gas reductions compared with fossil fuels on the market. These GHG revenues can be used to lower wholesale HVO prices and improve the product's competitiveness. Revenues generated from the marketing of advanced HVO reached record highs in recent weeks and remain elevated.
These higher GHG revenues are largely the result of persistently low water levels on the Rhine. A significant share of Germany's biofuel supply is transported from the Amsterdam-Rotterdam-Antwerp (ARA) hub into Germany, meaning that low river levels have restricted domestic biofuel availability. As a result, physical compliance with the GHG quota has become more difficult, forcing obligated parties to rely increasingly on purchasing GHG reductions instead. This increase in demand has pushed up the value of GHG reductions and, despite reduced product availability, improved the economics of marketing HVO.
