Analysts expect a shortage of raw materials in the European biofuel sector in the near future

The biofuel sector in the EU - one of the world's largest markets - may experience a shortage of raw materials due to increased demand and stricter environmental requirements, according to CME Group experts.

Increasing demand for renewable raw materials from biofuel producers creates risks of supply disruptions, which, against the backdrop of the decarbonization process, increases price volatility and reduces margins.

According to Argus Media, in 2025, biofuel consumption in the EU will increase by 10% compared to 2024 to 30.6 billion liters.

The latest version of the Renewable Energy Directive (RED III) sets a target of 42% renewable energy by 2030. For the transport sector, the target is 29% renewable energy and a 14.5% reduction in greenhouse gas emissions. Compared to RED II, the overall renewable energy target has been increased from 32% to 42.5%, but the deadline for implementation has been left unchanged at 2030.

Raw material markets are poised for structural transformation: expanding mandatory quotas and strict sustainability requirements are driving a shift towards domestic production and the use of waste as raw materials. At the same time, certain types of vegetable raw materials are being phased out, increasing the dependence on rapeseed oil, used cooking oil (UCO) and other wastes required in aviation and maritime transport. In the heavy-duty truck sector, where a biofuel blending program is in place, biodiesel consumption is increasing.

Increasing raw material shortages will contribute to increased price volatility. The availability of used cooking oil (UCO) will decrease as domestic consumption in Asia increases. Without the emergence of new sources of raw materials or increased UCO collection, shortages could occur as early as 2028-2030.

Additional raw materials will also be needed in aviation, where demand for sustainable aviation fuel (SAF) is growing rapidly, although it currently accounts for only 2% of the aviation fuel market, but by 2050 the share will grow to 70%.

Argus Media estimates that in 2025, renewable diesel and SAF production capacity in Europe will grow to 6.3 million tonnes, with another 0.7 million tonnes under construction. Compared to 2024, SAF production will grow by 17% to 2.4 million tonnes, and biodiesel production will grow by 16% to 4.5 million tonnes.

These trends will intensify competition for raw materials. According to Argus Media, by 2030, the combined volume of traditional and waste raw materials will be 43 million tons, but demand from biodiesel and SAF producers will continue to grow.

Against the backdrop of increasing demand in the EU, rapeseed production for biodiesel will continue to grow, so farmers are actively sowing rapeseed both in the EU and in Ukraine.

According to a report by Expana, the area sown to rapeseed in the European Union in the 2026/27 MY will reach 6.46 million hectares, which will be the maximum in the last 16 years and will exceed last year's figure by 7%, and the five-year average by 11%.

At the same time, analysts do not take into account the impact of the growth in sales and use of electric cars, which will continue to significantly reduce demand for fossil fuels.