AOM Biodiesel Deals Hit 2-Year High in January

Why It Matters

The shift signals tighter compliance pressures across Europe, boosting demand for physical biodiesel and reshaping the feedstock mix, which could affect pricing and supply chains industry‑wide.

Key Takeaways

• January AOM trades reach two‑year high since 2023
• RED III mandates push renewable content to 29% by 2030
• Germany bans ticket carry‑over, forcing physical biodiesel purchases
• RME leads trades; price down 40% YoY to $1,198/t
• Buyers shift toward HVO to meet higher GHG targets

Pulse Analysis

The European biodiesel market is entering a new compliance‑driven era as the Renewable Energy Directive’s third iteration (RED III) tightens renewable content requirements to 29 % by 2030. This policy escalation raises the overall demand for certified biofuels, prompting traders to lock in physical supplies earlier in the year. By targeting a 14.5 % greenhouse‑gas reduction, RED III not only raises the volume of biodiesel needed but also intensifies competition for high‑quality feedstocks, making market timing and inventory management critical for both producers and end‑users.

Germany’s recent legislative change, which eliminates the carry‑over of surplus GHG reduction certificates, has amplified the urgency for physical biodiesel purchases. Previously, firms could rely on excess tickets to meet future obligations, but the clean‑slate approach forces them to source actual fuel each compliance year. Coupled with the EU’s decision to end double‑counting for waste‑derived biofuels, the regulatory landscape now favors crop‑based fuels such as rapeseed methyl ester (RME) and advanced drop‑in options like hydrotreated vegetable oil (HVO). This shift reshapes the supply chain, encouraging producers to prioritize sustainable feedstock cultivation and refining capacity upgrades.

RME remains the dominant grade, yet its price has slumped 40 % year‑on‑year to $1,198 per tonne, reflecting a surplus from a robust 2023 rapeseed harvest and strategic buying pauses. Meanwhile, buyers are increasingly turning to HVO, which bypasses blend‑wall constraints and offers a versatile solution for meeting higher renewable mandates. The evolving policy mix and price dynamics suggest a more volatile but opportunity‑rich market, where agile traders who can navigate regulatory nuances and secure diversified feedstock portfolios will likely capture the greatest upside.

AOM biodiesel deals hit 2-year high in January

16 Feb 2026 17:07 GMT · By Christian Hotten and Simone Burgin

London, 16 February (Argus) — European biodiesel trades initiated on Argus Open Markets (AOM) rose to a two‑year high for the month in January (see chart), driven by tightened rules on the carry‑over of renewable fuel tickets and by sharp policy shifts as some EU member states rolled out the bloc's revised Renewable Energy Directive (RED III).

Trade in January is often tepid, as firms tend to focus on closing out the past year's compliance balances. But this year, trading activity increased in January due to higher mandates and the removal of double counting for waste‑and‑residue‑based biofuels in key European markets under the transposition of RED III.

Initiated trades for the month were only bettered in the eight years of Argus data by January 2023.

Transport mandates under RED III rise sharply, to a 14.5 % GHG emissions reduction, or 29 % renewable energy content, by 2030, driving increased trade as more supply is required to cater to these targets.

In the longer‑term view, the [German cabinet] passed a law in 2024 that scrapped the option to carry over surplus greenhouse‑gas (GHG) reduction certificates from 2024 into 2025 and 2026, starting both of those years with a clean slate. This pushed buyers to secure more physical product to meet yearly targets instead of relying on excess tickets.

The German move came after a surge of Chinese waste‑based biodiesel imports in 2023, which was eligible to be counted twice and had listed strong GHG savings under the German scheme, yielding a large oversupply of tickets across 2024. Many firms chose cheaper tickets over physical fuel, but starting from scratch brought back the need to use actual biofuels to meet the GHG reduction quota.

Why not last year?

The ticket carry‑over was set at zero in 2025 and in 2026, but last year the expected increase in buying was countered by uncertainty surrounding US biofuel policy.

Buyers held back while seeking guidance on the 45Z clean fuel production tax credit, which rewards US biofuel makers on a carbon‑intensity basis and was only issued with formal guidance in the final weeks of the Joe Biden presidency. After taking office, Donald Trump halted funding for 45Z, and rules around which feedstocks would be eligible — alongside constantly changing tariff rates — came up for debate. This led to prolonged uncertainty for the European market, which competes with the US for feedstocks from Asia‑Pacific.

The lack of clarity prevented many European participants from taking major positions at the start of 2025, instead pushing back trading to later in the year.

Some uncertainty remained in place throughout 2025 and into the start of 2026, but lessened as the US biofuel policy under Trump became clearer.

RME leads the pack

Trade initiated in rapeseed methyl ester (RME) rose the most on the year in January, and it remained the most traded grade due to the German transposition of RED III.

The end of double‑counting for advanced waste feedstocks in Annex IX part A of RED is set to steer buyers toward crop‑based biodiesel in 2026. Germany plans to scrap double counting, pushing firms to buy more physical biofuels to meet the GHG reduction quota.

Market participants are likely to lean more on hydrotreated vegetable oil (HVO) than used cooking oil methyl ester (UCOME) to fill the cap on Annex IX part B fuels, which includes used cooking oil (UCO). HVO, as a drop‑in fuel, sidesteps the blend wall that restricts how much biodiesel can be blended into diesel, which means it is necessary to meet higher targets.

Some buyers are turning to lower‑priced and more abundant crop‑based biodiesel to meet rising mandates, as the crop cap is much higher than the 9B cap in Germany. RME's low cold filter plugging point (CFPP) — the lowest heat at which diesel flows through a filter without clogging — raised demand through the winter.

Still, RME's trading activity in 2026 sits below 2024 levels. High supply in 2023, driven by a strong rapeseed crop harvest and firm production margins, led buyers to hold off for early 2024 in hopes of lower prices.

The average Argus‑assessed RME outright value dropped in January 2024 by 40 % on the year to $1,198/t.