The UK biodiesel market stands at a critical juncture. With the 2030 petrol and diesel vehicle sales ban approaching and net-zero commitments driving policy, many assume biodiesel’s role will simply diminish. However, the reality is considerably more nuanced. While passenger vehicle electrification accelerates, biodiesel faces a complex landscape where heavy goods transport, agricultural machinery, and existing diesel infrastructure create sustained demand even as the overall fuel market contracts. This article examines three realistic scenarios for biodiesel market share through 2030, grounded in current policy trajectories rather than aspirational targets. These projections acknowledge that biodiesel’s future depends not on a single policy lever but on the interplay between feedstock economics, fleet transition speeds, and the practical limits of electrification in certain transport segments. Understanding these scenarios is essential for anyone making investment, operational, or strategic decisions in the UK energy sector today.

The Current Biodiesel Landscape in the UK

Market Position as of 2024-2025

Biodiesel currently represents approximately 3.5 to 4.2 per cent of the total UK road transport fuel mix by volume, though this figure masks significant complexity. The Renewable Transport Fuel Obligation requires fuel suppliers to ensure that a proportion of their fuel comes from renewable sources, with biodiesel fulfilling a substantial portion of this mandate. UK biodiesel consumption reached roughly 1.8 to 2.1 billion litres in 2024, with approximately 75 to 80 per cent derived from waste feedstocks such as used cooking oil and tallow, reflecting the RTFO’s emphasis on wastes and residues through its double-counting mechanism. Domestic production capacity sits at around 600 to 700 million litres annually, meaning the UK remains a substantial net importer of biodiesel, primarily from European producers who benefit from established supply chains and feedstock access. The heavy goods vehicle sector accounts for the majority of biodiesel consumption, with agricultural and construction machinery representing smaller but important demand segments.

Recent Policy Developments Shaping Trajectory

The Renewable Transport Fuel Obligation’s evolution continues to define biodiesel’s operating environment. Recent adjustments have increased the renewable fuel mandate whilst strengthening sustainability criteria and reinforcing the preference for waste-based feedstocks over crop-based alternatives. However, the UK’s post-Brexit regulatory independence has created both opportunities and uncertainties. While the government can theoretically tailor policy to UK-specific circumstances, the practical reality is that feedstock markets, technology supply chains, and investment capital remain deeply interconnected with European networks. The Transport Decarbonisation Plan acknowledges that liquid biofuels will play a transitional role, particularly in hard-to-electrify segments, but stops short of providing the long-term certainty that would catalyse major domestic production investment. This policy environment favours incremental adjustment over transformative change.

The Three Scenario Framework

Baseline Continuation Scenario (2025-2030)

Under this scenario, biodiesel market share remains relatively stable in percentage terms whilst absolute volumes decline modestly alongside the overall diesel market contraction. By 2030, biodiesel would represent approximately 4 to 5 per cent of a significantly smaller total fuel market. This trajectory assumes the RTFO mandate increases gradually as planned, reaching 12 to 14 per cent renewable content across all transport fuels, with biodiesel maintaining its current share of that renewable portion against competition from bioethanol and emerging alternatives. The key assumption here is that heavy goods vehicle electrification proceeds slower than some optimistic forecasts suggest, whilst the passenger diesel fleet declines predictably. Feedstock availability constraints limit production growth, with waste-based feedstocks approaching maximum sustainable collection rates and crop-based biodiesel remaining marginalised by sustainability concerns and economic viability. Import dependency continues, with domestic production growing minimally due to limited infrastructure investment in an uncertain long-term market. This scenario essentially describes managed decline with biodiesel serving a clearly defined niche role.

Accelerated Transition Scenario

This more optimistic projection sees biodiesel market share reach 6 to 7.5 per cent by 2030, driven by several reinforcing factors. Firstly, heavy goods vehicle electrification encounters more practical barriers than anticipated, including infrastructure rollout delays, battery technology limitations for long-haul applications, and total cost of ownership concerns that extend diesel’s economic viability. Secondly, successful development of advanced biodiesel production using agricultural residues and innovative feedstocks expands supply without competing with food production or exhausting waste streams. Thirdly, the government provides enhanced RTFO targets and introduces complementary policies that improve biodiesel’s competitive position, perhaps through carbon pricing mechanisms that better reflect lifecycle emissions advantages. This scenario also assumes moderate success in expanding domestic feedstock collection infrastructure and processing capacity, reducing import dependency from approximately 65 per cent to around 45 to 50 per cent. Importantly, this is not a best-case fantasy but reflects what could occur if current positive indicators around heavy transport diesel persistence and feedstock innovation strengthen moderately over the next five years.

Constrained Growth Scenario

This scenario addresses meaningful downside risks that could limit biodiesel penetration to 2.5 to 3.5 per cent market share by 2030. Accelerated battery technology improvements and charging infrastructure investment could enable heavy goods vehicle electrification to proceed faster than baseline assumptions, eroding biodiesel’s core market. Feedstock price volatility might intensify as competing demands from sustainable aviation fuel production, European biodiesel manufacturers, and industrial applications create supply pressures that undermine cost competitiveness. Policy uncertainty or shifts towards favouring other decarbonisation pathways, such as hydrogen for heavy transport or stricter sustainability criteria that disqualify certain feedstocks, could constrain the viable feedstock base further. Additionally, limited investment in UK production capacity due to perceived market risk would perpetuate import dependency just as European suppliers increasingly prioritise their domestic markets and aviation fuel mandates. This scenario recognises that biodiesel exists in an intensely competitive environment where multiple alternatives vie for the same decarbonisation opportunity.

Critical Variables Determining Actual Outcomes

Feedstock Economics and Availability

The practical constraints around feedstock represent perhaps the most critical determinant of biodiesel’s trajectory. Used cooking oil collection in the UK has already been extensively optimised, with most commercial sources captured by existing supply chains. Expanding collection into smaller hospitality venues and household sources offers only marginal volume increases at disproportionate cost. Animal fats from rendering operations similarly face practical limits, with the UK producing finite quantities whilst competing internationally for imports. The double-counting mechanism under the RTFO makes waste feedstocks economically attractive, but this policy advantage simultaneously intensifies competition for limited supplies. When sustainable aviation fuel mandates fully activate, they will compete directly for these same feedstocks, potentially bidding prices beyond levels where road biodiesel remains economically viable without subsidy. Advanced feedstocks from agricultural residues or purpose-grown energy crops could theoretically expand supply, but require significant processing infrastructure investment and face their own sustainability scrutiny regarding land use and lifecycle emissions. The feedstock picture therefore suggests a ceiling on biodiesel growth absent technological breakthroughs or policy interventions that fundamentally alter economics.

The Fleet Composition Question

Biodiesel’s market share ultimately depends on what it is sharing the market with. The passenger diesel fleet is clearly in managed decline, with new registrations falling sharply and the existing fleet aging towards retirement. However, heavy goods vehicles, buses, agricultural machinery, and construction equipment tell a different story. Battery electric solutions for long-haul articulated lorries remain economically and practically challenging, whilst the installed base of diesel equipment in agriculture and construction turns over slowly due to high capital costs and long operational lifespans. If this heavy diesel segment persists longer than electrification advocates expect, biodiesel retains a substantial addressable market even as total fuel volumes decline. Conversely, faster than anticipated progress in electric heavy goods vehicle technology, potentially catalysed by battery advances or policy interventions like electrified motorway infrastructure, would rapidly erode biodiesel’s core demand base. The fleet composition question is essentially about the speed and completeness of transport electrification across different segments.

Regional and Sectoral Variations Within the UK Market

National projections necessarily obscure important regional variations driven by differing economic structures, policy environments, and infrastructure inheritance. Scotland’s substantial agricultural sector and rural geography create different biodiesel demand patterns compared to England’s motorway-centric heavy goods transport. Wales and Northern Ireland face distinct feedstock availability profiles and potentially different policy priorities as devolved administrations exercise their competencies. Production capacity is unevenly distributed, with established facilities concentrated in specific regions whilst others lack domestic supply infrastructure entirely. These regional variations matter for practical planning even if national statistics suggest uniform trends. Similarly, sectoral distinctions prove important. Road transport, non-road mobile machinery, and the emerging sustainable aviation fuel sector involve different feedstock requirements, sustainability criteria, and competitive dynamics. Biodiesel or its derivatives might thrive in agricultural applications whilst losing ground in road transport, or vice versa. Recognising these granular distinctions prevents oversimplified analysis.

Quantitative Projections and Confidence Intervals

Translating qualitative scenarios into quantitative projections requires acknowledging inherent uncertainty whilst providing useful planning parameters. Under the baseline scenario, biodiesel market share likely ranges between 3.8 and 5.2 per cent by 2030, with absolute volumes between 1.4 and 1.8 billion litres annually, down from current levels as the total fuel market contracts. The accelerated scenario suggests 5.5 to 7.5 per cent market share with volumes potentially maintained at 1.6 to 2.0 billion litres if diesel market contraction slows. The constrained scenario points towards 2.3 to 3.5 per cent share with volumes falling to 1.0 to 1.4 billion litres. Confidence in these projections decreases significantly beyond 2028, as compounding uncertainties around policy, technology, and market conditions multiply. The variables introducing greatest uncertainty include heavy vehicle electrification speed, feedstock availability and pricing, policy stability, and competing renewable fuel mandates, particularly for aviation.

Implications for Stakeholders

These scenarios translate into concrete strategic implications across stakeholder groups. Biodiesel producers contemplating capacity investments face a market where moderate growth scenarios justify incremental expansion but transformative investment carries substantial risk. Fleet operators developing fuel strategies should plan for biodiesel availability continuing but not necessarily expanding, making dual-fuel capability or gradual electrification transition more prudent than betting entirely on biodiesel persistence. Policymakers must recognise that current frameworks likely deliver outcomes in the baseline to constrained range unless complemented by targeted interventions around feedstock development or heavy transport decarbonisation. Investors evaluating the sector face an asset class where stable but unspectacular returns seem more probable than high growth, with downside protection depending heavily on policy stability and feedstock security. The overarching message is that biodiesel represents a transitional solution with a clearly defined but time-limited role rather than a long-term growth opportunity. Strategic decisions should therefore emphasise flexibility, risk management, and realistic timeframes rather than ambitious expansion predicated on optimistic assumptions.

The consensus narrative around biodiesel paints a picture of managed decline. Battery electric vehicles appear poised to dominate light transport, whilst hydrogen or ammonia solutions target heavy industry and shipping. First-generation biodiesel faces mounting sustainability concerns over land use and food security, and second- and third-generation alternatives struggle with production economics that remain stubbornly unattractive despite decades of research investment. Against this backdrop, suggesting biodiesel might maintain commercial relevance past 2040 seems almost contrarian. Yet hybrid bio-electric architectures – where biodiesel serves not as a standalone fuel but as an integrated component of battery-primary systems – create a technical niche that capitalises on biodiesel’s genuine strengths whilst mitigating its most significant weaknesses. This integration may well extend biodiesel’s viable market presence for another generation, though in forms quite different from today’s applications.

The Headwinds Facing Standalone Biodiesel

Squeezed Between Electrification and Fossil Fuels

Biodiesel currently occupies an uncomfortable middle ground in transport energy markets. From one direction, battery electric technology captures increasing shares of passenger vehicle sales, with improving energy density, falling battery costs, and expanding charging infrastructure progressively eliminating the range and convenience objections that initially limited adoption. From another direction, conventional diesel maintains its dominance in heavy transport, long-haul logistics, and off-road applications through sheer incumbency advantages – established global distribution infrastructure, familiar maintenance requirements, and energy density characteristics that remain difficult to match with alternative technologies.

Biodiesel sits awkwardly between these forces. It requires similar distribution and storage infrastructure to fossil diesel, limiting its ability to leverage entirely new delivery models. Yet it delivers approximately eight to twelve per cent lower volumetric energy density than petroleum diesel, meaning more frequent refuelling for equivalent work output. Production costs typically exceed fossil diesel by margins that render biodiesel economically unviable without policy support mechanisms, whether through blending mandates, tax incentives, or carbon pricing. This dependency on regulatory favour creates perpetual uncertainty around long-term market viability.

The Feedstock Sustainability Dilemma

The environmental case for biodiesel – once straightforward – has become considerably more nuanced as lifecycle analysis methodologies have matured. First-generation biodiesel from crops like rapeseed or palm oil faces legitimate concerns around indirect land use change, where biofuel crop cultivation displaces food production onto previously uncultivated land, potentially releasing more carbon than the biodiesel ultimately saves. The sustainability credentials that supposedly justified policy support have proven far more conditional than early advocates anticipated.

Second-generation biodiesel from waste feedstocks addresses some sustainability concerns but confronts supply constraints – there simply are not enough waste cooking oils or animal fats to supply transport fuel markets at scale. Third-generation approaches using algae or synthetic biology remain largely laboratory curiosities, with production costs that make current biodiesel look economically competitive by comparison. These feedstock challenges suggest biodiesel needs a fundamentally different value proposition beyond simple fossil fuel displacement if it is to maintain relevance in increasingly carbon-constrained energy systems.

Understanding Hybrid Bio-Electric Architecture

Hybrid bio-electric systems represent a distinct departure from both conventional hybrids and pure electric vehicles. Unlike traditional diesel-electric hybrids where the internal combustion engine frequently drives the wheels directly and a small battery provides modest efficiency gains, hybrid bio-electric architectures position the battery as the primary energy source with the biodiesel component serving exclusively as range extension through electrical generation. Think of it as a battery electric vehicle with an integrated generator rather than a conventional vehicle with a large battery added.

In practical terms, this means the biodiesel engine never directly powers vehicle propulsion, marine propulsion, or machinery operation. Instead, it operates purely as a generator, running only when battery state of charge falls below programmed thresholds and operating exclusively within optimised efficiency windows. This fundamental architectural difference transforms the operational profile completely. A heavy goods vehicle might complete ninety per cent of daily operations purely on battery power charged from the grid overnight, with the biodiesel range extender activating only during occasional long-distance runs or when unexpected operational demands exceed typical battery capacity.

Marine applications demonstrate the concept particularly clearly. A hybrid bio-electric coastal vessel might operate harbour manoeuvres, loading operations, and short coastal runs entirely on battery power – crucial for meeting increasingly stringent port emission regulations – whilst the biodiesel generator provides extended range for occasional longer voyages. Agricultural machinery presents similar opportunities, with electric operation during field work where instant torque response and quiet operation provide genuine operational benefits, and biodiesel generation ensuring continuous operation during intensive harvest periods when stopping to recharge would prove economically damaging.

Technical Synergies That Transform the Value Proposition

Optimal Engine Operating Windows

Decoupling the biodiesel engine from direct propulsion fundamentally alters its operational efficiency profile. Traditional vehicle engines spend the majority of operating time at partial loads where thermodynamic efficiency deteriorates dramatically. A conventional diesel engine in road transport might operate at twenty to forty per cent of rated power output for extended periods, with thermal efficiency falling to perhaps twenty-five to thirty per cent in these regimes compared to peak efficiency approaching forty-two per cent at optimised load points.

Hybrid bio-electric systems eliminate this inefficiency by design. The biodiesel generator operates only at predetermined load points engineered for maximum thermal efficiency, typically between seventy and ninety per cent of rated output where combustion temperatures, air-fuel ratios, and mechanical efficiencies align optimally. When power demand drops below the generator’s optimal output range, the system simply switches to battery power and shuts down the biodiesel engine entirely rather than operating it inefficiently.

This operational discipline transforms biodiesel’s effective efficiency. A litre of biodiesel consumed at thirty-five per cent thermal efficiency in a conventional engine delivers substantially less useful work than the same litre consumed at forty per cent efficiency in a generator running optimised cycles. The emissions profile improves correspondingly – combustion at optimised temperatures and air-fuel ratios minimises particulate matter formation and nitrogen oxide production, addressing two persistent criticisms of conventional biodiesel use.

Downsized Batteries, Extended Range

The most compelling economic argument for hybrid bio-electric architecture emerges from battery right-sizing rather than battery elimination. Current battery costs and material constraints make pure electric solutions challenging for applications requiring either very long range or highly variable power demands. A pure electric heavy goods vehicle might require a battery pack exceeding seven hundred kilowatt-hours to achieve comparable operational flexibility to a diesel truck, imposing significant weight penalties, capital costs, and material consumption.

Hybrid bio-electric design allows battery sizing based on typical operational patterns rather than worst-case scenarios. If daily operations typically consume three hundred kilowatt-hours but occasional long-haul runs require eight hundred kilowatt-hours, the system can employ a four hundred kilowatt-hour battery with biodiesel range extension rather than an eight hundred kilowatt-hour pure electric configuration. This reduces battery costs and weight whilst eliminating range anxiety for exceptional operational demands.

The material implications merit particular attention given mounting concerns around lithium, cobalt, and nickel availability. Hybrid bio-electric systems allow more vehicles to electrify with constrained battery material supplies compared to pure electric approaches. This transitional advantage may prove strategically significant during the next two decades as battery production scales up but material constraints persist.

Infrastructure Compatibility as Strategic Advantage

Biodiesel’s compatibility with existing fuel distribution networks provides a genuine bridging advantage that hydrogen or other novel energy carriers cannot match. Fleet operators considering electrification face binary infrastructure decisions – build comprehensive charging infrastructure or maintain conventional refuelling capabilities. Hybrid bio-electric systems require both, admittedly, but at different scales and with different risk profiles.

Charging infrastructure serves daily operational requirements, which are relatively predictable and can often be met with depot-based charging using existing electrical connections upgraded to appropriate capacities. Biodiesel refuelling handles exceptional requirements, leveraging existing distribution infrastructure that imposes minimal additional investment. This dual-infrastructure approach provides operational resilience and risk management that pure electric alternatives cannot offer, particularly valuable during the transitional period when charging infrastructure reliability remains uncertain.

Economic and Market Dynamics Favouring Integration

Reducing Total Cost of Ownership Through Right-Sizing

Total cost of ownership calculations for hybrid bio-electric systems reveal nuanced competitive positioning that varies significantly by application. The capital cost sits between pure electric and conventional diesel alternatives – higher than diesel due to dual powertrains, lower than pure electric due to smaller batteries. Operational costs similarly occupy middle ground – lower fuel costs than conventional diesel through improved efficiency, higher than pure electric due to some continued liquid fuel consumption.

The economic case strengthens considerably in applications where pure electric solutions require substantial battery oversizing. Long-haul transport, where a vehicle might cover one hundred thousand kilometres annually with occasional six hundred kilometre daily runs, exemplifies this sweet spot. A hybrid bio-electric configuration avoids perhaps sixty to seventy per cent of the battery capacity a pure electric truck would require whilst still electrifying the majority of actual operational kilometres. When battery costs remain above eighty pounds per kilowatt-hour and diesel costs hover around one pound twenty per litre, this optimisation can yield payback periods under five years despite biodiesel’s premium pricing.

Market Segmentation and Realistic Adoption Pathways

Hybrid bio-electric systems succeed by targeting applications where pure electrification faces genuine technical barriers rather than merely infrastructure or cost challenges. International shipping presents perhaps the clearest example. Battery-electric propulsion works admirably for coastal ferries and short-sea shipping, but transoceanic container vessels require energy densities that current battery technology cannot remotely approach. Biodiesel or renewable diesel in hybrid configurations offers a technically viable pathway towards significant emissions reductions without requiring revolutionary advances in energy storage technology.

Agricultural and construction equipment represents another defensible niche. These applications often operate in locations without grid access, face highly variable power demands that would require enormous battery capacity for pure electric operation, yet increasingly face regulatory pressure around emissions and noise. Hybrid bio-electric configurations allow electric operation during high-precision work or in emission-sensitive locations whilst maintaining operational flexibility for intensive periods or remote deployment.

By focusing on these defensible segments rather than attempting to compete across entire transport sectors, biodiesel in hybrid applications establishes a strategic position that persists even as battery technology improves. Some applications will likely transition to pure electric solutions as battery energy density improves and costs fall, but others face fundamental operational requirements that favour hybrid approaches regardless of battery advancement.

Policy Frameworks and Strategic Positioning Beyond 2040

Evolving policy frameworks increasingly favour technology-neutral emissions reductions over prescriptive fuel mandates, creating opportunities for efficient biodiesel integration. Carbon pricing mechanisms reward lifecycle emissions improvements regardless of the specific technology pathway, and hybrid bio-electric systems that consume biodiesel at high efficiency whilst displacing fossil fuel consumption in hard-to-electrify applications can demonstrate competitive carbon intensity compared to alternatives.

The UK’s Renewable Transport Fuel Obligation and similar European mechanisms have begun recognising efficiency improvements in their sustainability calculations. Biodiesel consumed in a hybrid bio-electric system operating at demonstrably higher efficiency than conventional use could potentially receive preferential treatment within such frameworks, creating economic incentives for this specific integration pathway. Moreover, as carbon pricing becomes more sophisticated and comprehensive, the ability to demonstrate verifiable emissions reductions across complete operational profiles rather than just direct combustion becomes increasingly valuable.

Strategic positioning around net-zero commitments matters as much as technical performance. Policymakers recognise that achieving 2050 net-zero targets requires addressing emissions from long-lived capital equipment and hard-to-abate sectors, not merely electrifying passenger vehicles. Hybrid bio-electric systems offer pragmatic solutions for exactly these challenging applications, positioning biodiesel as an enabling technology for decarbonisation rather than a competitor to electrification.

Conclusion

Biodiesel’s continued relevance beyond 2040 depends not on defending market share as a standalone transport fuel but on strategic repositioning into high-value integration niches. Hybrid bio-electric systems create precisely such opportunities, allowing biodiesel to operate where its strengths – energy density, infrastructure compatibility, and established supply chains – genuinely complement battery electric propulsion’s advantages whilst mitigating biodiesel’s efficiency and emissions weaknesses through optimised operational profiles.

This future looks quite different from biodiesel’s current market position. Volumes may well decline compared to peak blending mandate periods, but value propositions strengthen considerably through technical and economic synergies unavailable to standalone applications. The energy transition rarely proceeds through wholesale replacement of existing technologies, instead reshaping and repositioning them into optimised niches where their genuine advantages justify continued deployment. Hybrid bio-electric integration offers biodiesel exactly this evolutionary pathway – a smaller but more defensible market position extending relevance well into the middle of this century.

If you follow the energy debate closely and keep track of the arguments pro and against fossil fuels, you will be well acquainted with the term “biofuels” by now. And while they produce excellent results in reducing carbon emissions, the industry has yet to outgrow its infancy stage. I am afraid things will remain the same in 2023. Why is that?

Biofuels Are Losing The PR Battle

EVs – or electric vehicles – are the new shiny toy everybody has fallen in love with. People across the Western hemisphere have proclaimed the dawn of a new era and the dying of this inveterate dinosaur – the internal combustion engine. Common-sense arguments that the world economy does not produce enough aluminium, nickel, and lithium – all vital for the construction of EVs – or that the strain on the electric systems will cause their collapse are optimistically brushed aside.

The reason is simple – EVs have captured the imagination of the public mind. They are clean, they are the future, and they will save the planet – all great slogans that would make Don Draper proud. Biofuels can hardly compete with that. They reduce carbon emissions – but they do not eliminate them entirely. And fractions and percentages do not sound that sexy or convincing.