The year 2025 was, to say the least, a mixed one for the European biofuels sector in terms of market dynamics.
On the positive side, European authorities finally began acting to protect domestic production against the influx of imported products from Asia (particularly China) by imposing anti-dumping measures on Chinese HVO and strengthening controls. Discussions around the progressive transposition of RED III in Member States also provided greater visibility on blending mandates for those countries that completed transposition, and confirmed a trend toward limiting double counting of advanced biofuels—thus supporting demand. Product prices rebounded, benefiting upstream producers but at the expense of consumers. Finally, recent European Commission proposals under the Automotive Package (still to be debated in Parliament and Council) aim to preserve a role for sustainable fuels in the automotive sector even in the long term, and likely pave the way for better recognition of biofuels in heavy-duty vehicle regulations as well.
On the negative side, 2025 saw a wave of announcements delaying or canceling major biofuel production projects: Shell and BP both abandoned projects of several hundred thousand tons planned in Rotterdam; TotalEnergies officially postponed the start-up of its Grandpuits unit and scaled down its volume ambitions; and Repsol also delayed its flagship Puertollano project. While Shell and BP’s cancellations reflect broader strategic shifts—moving away from new energy activities to refocus on core Oil & Gas under shareholder pressure—they nonetheless highlight the challenges facing European upstream players: rising feedstock costs, import competition (despite protective measures), and uncertain demand growth in the short to medium term despite incentive policies, given persistent regulatory uncertainties. The postponed IMO vote on the Net Zero Framework—a mechanism to implement global emission reduction trajectories for shipping, similar to FuelEU Maritime in Europe—is one example. Another is the uncertainty surrounding RED III transposition implications for different biofuel segments (see our article on the French case: link).
For 2026, we will closely monitor:
- Regulatory developments and discussions impacting biofuels at the EU level, notably RED III transpositions in Member States
- Follow-up on the Commission’s Automotive Package proposals and their potential medium-term impact on biofuel demand
- Market dynamics specific to SAF, with cascading effects on the road HVO market
- Regulatory developments outside Europe and their potential impact on European supply-demand balance
E-CUBE has developed strong expertise on biofuels and sustainable fuels through its recent projects and the experience of its consultants. We would be delighted to discuss these market perspectives and opportunities with you. Please feel free to contact the experts below to schedule a conversation on the topic.
