Based on the European Commission’s Final Report: “Mobilization of Industrial Capacity Building for Advanced Biofuels” (DG RTD, 2nd February 2026)
The Core Question
Can Europe actually build the industrial ecosystem needed to meet its own renewable fuel targets? That is the question at the heart of a substantial new European Commission study, executed by a consortium of EXERGIA, Politecnico di Torino (POLITO), and BEST (Bioenergy and Sustainable Technologies). The short answer is yes, but very nuanced: it will take a coordinated, multi-technology build-out and substantial public financial support that currently isn’t in place.
The study looks at 20 different industrial pathways for producing advanced biofuels. It then evaluates each one based on three main factors:
- How mature the technology is
- Whether enough feedstock exists to scale it
- How much it could realistically contribute to the fuel market
From there, the study builds financial models for the most promising pathways and proposes a collective financing plan to support them. The analysis focuses on two key periods, 2025–2030 and 2030–2040, while keeping the broader goal of EU climate neutrality by 2050 in view.
The conclusion is clear: no single pathway will deliver more than 50% of the fuels needed. Europe requires a portfolio of technologies – from hydrotreatment to anaerobic digestion to pyrolysis to gasification and synthesis – drawing on the full range of available feedstocks and serving road, aviation, and maritime simultaneously.
Twenty Pathways, Four That Matter Now
Starting from a longlist of 20 industrial value chains (IVC), the study applied four key performance indicators to narrow the field:
🔹Greenhouse Gas (GHG) savings of at least 65% compared to fossil fuels (as required by RED III)
🔹Technology Readiness Level (TRL) of 9 at least five years before the target period
🔹Feedstock availability sufficient to cover at least 10% of the relevant sectoral target
🔹Expected production deployment covering at least 10% of the EU advanced biofuels target
For the 2025–2030 period, only four IVCs met all four conditions above:
- Transesterification → Fatty Acid Methyl Ester (FAME) biodiesel
- IVC2 – Hydrotreatment of Lipids → HVO and HEFA-SPK, a sustainable aviation fuel.
- IVC7 – Biomethane from Anaerobic Digestion → biomethane
- IVC13a – Pyrolysis and Co-processing in Refinery → biogenic content fuels
For 2030 – 2040, the list expands to 13 IVCs as emerging technologies reach commercial maturity. The critical additions include cellulosic ethanol-to-jet, biomass gasification to methanol and methane, Fischer-Tropsch synthesis, and stand-alone pyrolysis upgrading.
HVO: The Most Viable Option, With Caveats
Why HVO Leads
Of all the advanced biofuel pathways assessed, Hydrotreated Vegetable Oil (HVO) (produced via IVC2) stands out as by far the most commercially mature and cost-competitive. This is not a surprise to industry observers, but the study quantifies the gap with precision.
The study gives HVO a TRL of 9, which means the technology is fully mature and ready for large-scale market deployment. It also has the lowest production cost of all the liquid biofuel pathways assessed, at around €103/MWh. FAME biodiesel is close at €119/MWh and, according to the study, can also compete without extra operating support. But HVO still has a stronger overall market position. It works as a drop-in fuel, performs better in cold conditions, and can be used across road, aviation, and maritime applications.
This advantage also shows up in the business case. Among the near-term pathways, HVO is the only fuel that comes close to being commercially viable, assuming it can be sold at prices comparable to fossil fuels and with EU ETS carbon costs taken into account. And when maritime use is included, the case becomes even stronger, because FuelEU Maritime penalties improve the competitiveness of lower-carbon fuels.
The scale also matters. HVO plants are the largest in the study, typically with more than 700 MW of output. Their capital cost is around €1,035 per kW, which is much lower than the €2,500–3,500 per kW range seen for many other pathways. For a 500 kt/year facility producing a mix of HVO, HEFA, naphtha, and LPG, total investment is around €770 million.
Biggest constraint for HVO
The study is candid that feedstock security is the dominant risk for HVO/HEFA. Used cooking oil (UCO), currently the primary feedstock, is constrained in availability and faces increasing demand competition. Expanding to eligible oilseed crops (notably Brassica carinata and camelina, grown as intermediate crops) is the identified scaling pathway, but this requires overcoming a regulatory misalignment between the Common Agricultural Policy (CAP) and RED III.
The two frameworks do not talk to each other well. In practice, this creates unnecessary friction for farmers. Some crops that qualify under RED are not recognised in CAP crop registers. In some cases, farmers who use fallow land for biofuel crops may even risk losing direct payments. On top of that, there is no shared data system or harmonised audit process between the two frameworks. The result is more paperwork, more uncertainty, and less incentive for farmers to participate.
To address this, the study recommends a feed-in premium of €25–40 per tonne for eligible oilseeds to encourage uptake. It also says that aggregators — the actors responsible for collecting, certifying, and delivering feedstock — need support as well, especially for certification and group auditing costs. This is particularly important for smaller cooperatives, which often struggle to absorb the added compliance burden.
Processing materials for HVO also require attention. Hydrogen, catalysts (requiring nickel and molybdenum), and bleaching earths are critical inputs. Catalysts are typically sourced outside of Europe, and supply could become critical at scale. Hydrotreatment Engineering, Procurement and Construction (EPC) companies exist but are currently capacity-constrained due to simultaneous project commitments.
The 2030 – 2040 Expansion
Good to know: by 2040, the list of essential biofuel pathways expands from 4 to 13, with required volumes reaching around 42 Mtoe per year, about 50% higher than 2030 levels.
Overall, the study suggests that a coordinated, system-wide approach is necessary to support the entire sector, rather than addressing individual projects separately.
A key point from the study is that industry feedback pushed cost estimates up significantly for some of these technologies, especially for aviation fuels. And for the synthetic fuel routes, commercial viability depends heavily on much cheaper green hydrogen; something that still looks uncertain.
The Financing Gap: What It Actually Costs
The study’s most policy-relevant output is its estimate of the total financing support required across the four distinct IVCs to meet 2030 targets:
| Support Category | Annual Requirement (2030) |
| Upstream (farmers/feedstock mobilization) | €700–1,245 million/year |
| Industrial units (production support) | €3,849–7,499 million/year |
| Total | €4,548–8,744 million/year |
By 2040, the financial support needed becomes much larger. The study estimates €13,290–20,526 million/year (€13.3–20.5 billion per year) will be required. This is mainly because the next generation of biofuel technologies are more expensive and less mature, and they need to be built at much larger scale.
To make these fuels competitive, the study proposes using a Feed-in Premium (FiP). This means producers receive a payment for every unit of fuel they produce so that the final price can compete with fossil fuels. Europe used the same idea before to help solar and wind energy scale up.
Most of this support — about 85% — would go to the fuel producers operating the plants. The study argues that this is not really “new” cost for the system. In practice, the money simply compensates the gap between renewable fuel costs and fossil fuel prices. Without it, consumers would end up paying more directly through higher fuel prices.
The remaining 15%, €700–1,245 million/year (around €700 million to €1.25 billion per year), would go to farmers and feedstock suppliers. This part is different because it would require new funding, mainly to support farmers growing biofuel crops and the systems needed to collect and certify those feedstocks.
The Skills and Infrastructure Gap
Beyond financing, the study points to another important constraint: Europe does not yet have enough experienced developers to deliver advanced biofuel projects at scale.
The technical knowledge exists. The equipment is available. And many of the skills can come from the refinery and chemical sectors. But what is still limited is the ability to take these projects all the way from concept to delivery, especially for more complex pathways such as gasification, Fischer-Tropsch, and methanol synthesis.
Right now, most of the market attention is going to HVO and HEFA. Other pathways have far fewer companies actively pushing them forward. In biomethane, for example, some developers are focused more on building projects to sell them, than on creating strong long-term business cases. And for newer technologies, the number of EPC companies able to deliver first-of-a-kind plants is still very small.
The picture across Europe is also uneven. Most advanced biofuel activity is concentrated in northern and western Europe, particularly in countries such as Finland, the Netherlands, France, Italy, and Sweden. Meanwhile, south-eastern and central-eastern Europe may have the feedstock potential, but they often lack the industrial base, financing tools, and policy support needed to turn that potential into actual projects.
That is why the study argues that future growth cannot rely only on national approaches. It will require cross-border and regionally connected value chains if Europe wants to scale advanced biofuels more evenly.
What this means in practice is fairly straightforward.
The EU already has most of the building blocks. The technologies exist. The feedstocks exist (From the feedstock suppliers’ perspective particularly agricultural and forestry operators supplying lignocellulosic biomass). And, at least in principle, the financial tools also exist. What is still missing is a joined-up system that supports the sector as a whole rather than treating each project in isolation.
In the near term, HVO is the clearest opportunity because it is the most mature and needs the least support. But HVO alone will not be enough. It cannot cover the needs of road, aviation and maritime on its own, and relying too heavily on it would slow down the development of the lignocellulosic and synthetic pathways Europe will need after 2030. It would also risk concentrating most of the industrial activity in a small group of countries.
That is why the study argues for investment across the full portfolio. Not because every pathway is equally strong today, but because only a mix of pathways can deliver the volumes, serve different sectors, and make use of the range of available feedstocks.
This is based on the European Commission Final Report “Mobilization of Industrial Capacity Building for Advanced Biofuels,” published by DG Research and Innovation (Horizon Europe Programme), 2026. Authors: EXERGIA, POLITO, BEST. Edited by Maria Georgiadou (EC), Theodor Goumas (EXERGIA), David Chiaramonti (POLITO).