Europe is accelerating its transition toward cleaner fuels with the rollout of ReFuelEU Aviation and FuelEU Maritime regulations.
These twin mandates are reshaping global biofuel markets pushing sustainable aviation fuel (SAF) and marine biofuels into the spotlight. Yet, while demand surges, a looming supply crunch and technical limitations threaten to disrupt the path forward.
On one hand, aviation is witnessing a rapid rise in SAF usage, driven by ambitious regulatory targets. But post-2030, bottlenecks in feedstock availability and slow progress in synthetic SAF (e-SAF) could create serious challenges. Meanwhile, the maritime sector is leaning on biofuels as a short-term compliance tool, with new market mechanisms like pooling offering some relief but not without risk.
In 2025, the EU mandates a 2% SAF blend equating to approximately 20,670 barrels per day. Most of this demand is being met by HEFA-based SAF (Hydroprocessed Esters and Fatty Acids), derived from waste oils and fats.
Companies like Neste, with a global capacity of 1.5 million metric tons annually, are largely covering these needs across the EU and UK. Other players, such as Total Energies and World Energy, are also contributing.But this success comes at a cost ; that is to say , competition for feedstocks is heating up, not just within aviation but across biodiesel and renewable diesel markets.
By 2030, the SAF mandate jumps to 6%, demanding over 85,000 barrels per day. Analysts are already flagging concerns that there simply won't be enough sustainable waste oils and fats to go around. Add to that the pressure of a 1.2% synthetic SAF sub-mandate, and the cracks begin to show not a single e-SAF project in the EU has reached Final Investment Decision (FID) to date.
The long-term vision is even more daunting. The EU’s target of 70% SAF by 2050 translates to more than 500,000 barrels per day, which could lead to a 15 million metric ton shortfall if current production trends continue.
One major barrier remains cost. While HEFA SAF currently trades around $1,736/mt, e-SAF costs are projected to exceed $8,000/mt. Energy giants like BP are calling for revenue certainty mechanisms to attract long-term investment. Meanwhile, key projects from Uniper, Neste, and BP have seen electrolyzer downsizing signaling slower hydrogen ramp-up and, with it, delayed e-fuel capacity.
Under FuelEU Maritime, shipowners now face a 2% GHG intensity reduction requirement. For many, biofuel blends like B24 are the most accessible compliance option. Despite high costs bio-blended fuels sit around $715/mt, compared to $560/mt for VLSFO ammonia and hydrogen alternatives remain years from viability.
Smaller vessel owners are increasingly using pooling schemes to share emissions credits and avoid expensive retrofits. Market intermediaries like CarbonLeap have begun facilitating surplus credit trades, though limited seller participation and pricing opacity pose challenges.Moreover, fixed-price contracts expose sellers to the volatility of fuel prices creating new financial risks in an already turbulent space.
By 2030, maritime players will need to cut GHG intensity by 6% a shift that will mirror aviation’s struggles. Biofuel supply chains will come under enormous strain unless alternative fuels scale up quickly.
Current SAF prices are nearly 165% higher than conventional jet fuel. In the UK, e-SAF buy-out prices are set at £6,250/mt, while the EU imposes a penalty of double the cost gap for failing to meet synthetic SAF quotas. These policy levers create both opportunity and risk for traders.
With SAF targets accelerating, Europe will likely turn to the US and Singapore for supplementary HEFA supply. Meanwhile, increased demand from both aviation and shipping could push biofuel prices even higher across sectors.
The US Inflation Reduction Act (IRA) is attracting EU-based SAF producers, pulling supply capacity away from Europe. Simultaneously, China and India, key exporters of waste oils, are under mounting pressure to meet rising global demand.
The EU’s push for biofuels is as ambitious as it is precarious. In the near term, HEFA and pooling mechanisms offer viable paths to compliance. But beyond 2030, feedstock shortages, e-SAF delays, and global market dynamics could derail the visio unless urgent action is taken.
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