U.S. Hydrotreated Vegetable Oil (HVO) Market Size, Share & COVID-19 Impact Analysis, By Type (Pure HVO and Co-processing), and By Application (Transportation, Industrial Power Generators, and Others), and Country Forecast, 2023-2030

The U.S. hydrotreated vegetable oil (HVO) market was worth USD 6.73 billion in 2022 and is projected to grow at a CAGR of 12.55% during the forecast period. 

Hydrotreated vegetable oil (HVO) is a renewable diesel produced with various vegetable oils and fats containing triglycerides and fatty acids. The term HVO is used for renewable diesel fuels derived from hydrogenation & hydrocracking of feedstocks, including tall oil, rapeseed oil, waste cooking oil, and animal fats. Hydrotreated Vegetable Oil (HVO) market growth is boosted by the growing awareness of carbon emissions reduction and the shift toward renewable energy sources. HVO fuel proposes a quick and simple step in achieving a net zero target with no CAPEX requirement, thereby reducing greenhouse gas emissions by 90%, becoming a sustainable replacement for fossil diesel. The feedstock utilized to produce HVO is completely drawn from waste and environmentally unharmed sources.

The COVID-19 pandemic significantly affected commercial operations worldwide. Almost every nation worldwide witnessed a steep increase in affected populations since the beginning of 2020. The staggering inventory surplus built up during the pandemic took time to work off from global oil stocks. Additionally, due to the outbreak of the coronavirus pandemic, the world economy was severely impacted by a significant drop in mobility and reduced road transport. Furthermore, the impact of COVID-19 has also resulted in lower demand for HVO.

U.S. Hydrotreated Vegetable Oil (HVO) Market Trends

Inclination of Aviation Industry toward Utilizing HVO

Industries around the world are under pressure to eliminate their carbon emissions, and aviation is not behind. The focus is on exploring technically feasible and economical ways to incorporate sustainable options for petroleum-based jet fuel. Hydrotreated vegetable oil is used as a sustainable fuel in aviation, and its extensive adoption is evolving as a critical trend for market growth. For instance, the HVO plant under construction in Plock will permit PKN ORLEN to offer low-carbon aviation fuel to airlines starting in 2025.

U.S. Hydrotreated Vegetable Oil Market Growth Factors

Increasing Demand from the Automotive Sector to Stimulate Market Growth

The automotive industry has a pre-established infrastructure for distributing diesel fuel and vehicles. HVO has become a perfect replacement, as its compatibility and easy acceptance make it a preferred choice for the automotive sector. HVO proposes clean combustion, resulting in an impressive reduction of up to 80% in overall emissions, including nitrogen oxide emissions and CO2 emissions-marking a 90% decrease compared to fossil diesel. Many of the engines developed today are already compatible with hydrotreated vegetable oil.

RESTRAINING FACTORS

High Costs Related to HVO and Increased Use of Biodiesel May Hamper Market Growth

Biodiesel, named FAME (Fatty Acid Methyl Ester), is the first launched biofuel utilized by various industries in recent years. An upsurge in the use of biodiesel and ethanol is the main factor affecting the growth of the market. The increasing use of biodiesel due to the benefits of low emission when compared to fossil fuels is predicted to hamper market growth. Moreover, the initial cost of hydrotreating equipment is higher when compared with that of other equipment used to produce biodiesel ethanol.

U.S. Hydrotreated Vegetable Oil (HVO) Market Segmentation Analysis

By Type Analysis

Based on type, the market is segmented into pure HVO and co-processing. The pure HVO segment held the largest market share in 2022 owing to its ability to reduce Greenhouse Gas Emissions (GHG) and became the perfect substitute for biodiesel.

• HVO fuel has inculcated some of the same chemical & physical properties as diesel fuel. However, its composition and low carbon content have made it a tempting sustainable fuel option, differentiating it from diesel. It also possesses approximately 7% less fuel density, less sulfur content and higher cetane when compared with diesel fuel. This means HVO is less prone to bacterial growth than biodiesel, making it a great choice in applications.

By Application Analysis

Based on application, the market is segmented into transportation, industrial power generators and others. The transportation segment held the largest U.S. hydrotreated vegetable oil market share in 2022, owing to the increasing adoption of emission-free vehicles.

• The HVO possesses the capability to reduce NOx emissions by up to 90%, making it the most sustainable fuel that is used across various applications. The emissions regulations are becoming rigorous, positioning HVO as a convenient option for a greener future in the transportation sector. For instance, Trane Technologies, a climate innovator company has passed the approval of using HVO, a fossil-free fuel, as an alternative to diesel in Thermo King cold chain solutions, which includes refrigerated truck and product lines.

List of Key U.S. Hydrotreated Vegetable Oil (HVO) Market Companies

In terms of the competitive landscape, the market portrays the presence of recognized and emerging hydrotreated vegetable oil companies. Neste is one of the leading companies profiled in this market, followed by Valero Energy. The company's apex position is attributable to the strong sales performances of its flagship fuel offering, pure hydrotreated vegetable oil, coupled with greater emphasis on adopting HVO as an alternative to diesel fuel. This focus on the greater adoption of HVO has allowed the company to streamline their acceptance, which has significantly improved its sales and volume shipments accelerating the U.S. HVO market growth.

LIST OF KEY COMPANIES PROFILED:

• Neste (Finland)


• Valero Energy (U.S.)


• Eni (Italy)


• Cepsa (Spain)


• Total (France)


• Repsol (Spain)


• Chevron (U.S.)


• Diamond green diesel (U.S.)


• Green Biofuels Limited (U.K.)


• UPM Biofuels (Finland)

KEY INDUSTRY DEVELOPMENTS:

• May 2023: Eni entered into a partnership with class society RINA to grind together on initiatives based on green fuel, especially in the maritime bunkering market. This collaboration focused on using HVO manufactured by Eni in Gela and Venice bio-refineries. Eni’s HVO is prepared from feedstocks that can't compete with food and feed crops, such as waste and agricultural residues.


• January 2023: Italian oil company Eni launched a new company that unites its existing biomethane operations along with other products related to the segment of sustainable transport. Eni incorporates bio-refining and biomethane assets in Italy and overseas, including refineries in Italy.


• June 2022: Neste Corporation announced the final investment decision to invest in new renewable products production capacity in Rotterdam. The decision is based on the demand for renewable products growing substantially with customers' higher climate ambitions. Neste’s current 1.4-million-ton capacity for renewable products in Rotterdam is the largest in Europe. The Rotterdam refinery expansion investment of approximately EUR 1.9 billion is expected to expand Neste’s overall renewable product capacity by 1.3 million tons per annum, generating the total renewable product capacity in Rotterdam to 2.7 million tons annually, of which sustainable aviation fuel (SAF) production capability will be 1.2 million tons. The company’s target is to start up the new production unit during the first half of 2026.

REPORT COVERAGE

The report provides a detailed analysis of the market. It focuses on key aspects such as an overview of the technological advancements, the prevalence of biodiesel in the U.S., pricing analysis, and the impact of COVID-19 on the market. Additionally, it includes an overview of the market size scenario, the net zero targets in the U.S., the number of applications, new product launches, and key industry developments such as mergers, partnerships, and acquisitions. Besides, the report also offers insights into the market trends and highlights key industry dynamics. In addition to the aforementioned factors, it encompasses several factors that have contributed to the growth of the market over recent years.

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