Introduction
According to Fortune Business Insights, the hydrotreated vegetable oil market was worth USD 16.27 billion in 2022. Between the years 2023 and 2030, the market's compound annual growth rate (CAGR) is projected to be 12.95%. This will take the hydrotreated vegetable oil market to a potential value of USD 35.19 billion by 2030. In 2019, global hydrotreated vegetable oil production touched a massive volume of 14.2 billion litres. In the EU alone, output reached 2.8 billion litres in 2018 and an estimated 4.5 billion in 2020.
In 2022, Europe dominated the hydrotreated vegetable oil market, with new capacity additions and incentives for the biofuels industry, taking HVO and biodiesel production to new heights. Government regulations and policies like the Renewable Fuel Standard, Renewable Identification Numbers prices, and biodiesel blender credit in the United States are boosting the North American market. Meanwhile, in the Asia Pacific, China, India, Malaysia, and Indonesia are driving the market.
What's all the HVO fuss about?
Amongst the leading biofuels globally (second to only ethanol and biodiesel), hydrotreated vegetable oil fuel is often blended in fossil diesel (petroleum diesel) and sold directly at fuel filling stations as a mixture.
Hydrotreated vegetable oil, or HVO, for short, is a paraffinic bio-based liquid fuel. It is also called renewable diesel or hydro-processed esters and fatty acids (HEFA), and refers to a range of straight chain hydrocarbons with the chemical structure CnH2n+2.
HVO is produced from myriad raw materials or feedstock like acid oil, waste cooking oil, animal fats, fatty acid distillate, and palm oil mill effluent (POME) - essentially, any biological raw material containing triglycerides and fatty acids. HVO is produced via the catalytic hydroprocessing of any of these feedstocks - specifically, this refers to the processes of either hydrogenation or hydrocracking.
Hydroprocessing yields very high-quality bio-based diesel fuels, all without compromising on engines, fuel logistics, exhaust emissions, or exhaust after-treatment devices. HVOs produced in this way contain no sulphur, oxygen, or aromatic hydrocarbons. They have high storage stability, low water solubility, and high cetane numbers, the latter being a good indicator of fuel quality.
Hydrotreated vegetable oil vs diesel
Hydrotreated vegetable oil can be used in conventional diesel engines, either in its pure state or blended with petroleum diesel, without modifications to the engine. This is because there are some similarities between the two.
For starters, HVO has similar chemical properties as fossil diesel. Additionally, the absence of oxygen and sulphur compounds makes HVO low in lubricity. This means that a lubricating additive will help to protect the injection system, as is the case with conventional diesel.
Regardless, there are some differences in characteristics and behaviour that fuel the hydrotreated vegetable oil vs diesel debate.
First, the higher hydrogen content of HVO gives it a higher heating value per mass.
The high difference between the cetane numbers of conventional diesel and HVO means that engine control must be adjusted to make up for the fact that the green fuel will ignite earlier in the cycle.
HVO's paraffinic nature and low boiling point give it a lower density.
Depending on the feedstock and the reaction conditions, HVO's cloud point (CP) and cold filter plugging point (CFPP) may also differ. This is an important differentiator of HVO - since its cold properties can be controlled, they can be adjusted to meet local climactic requirements by modifying the processing severity or by adding additional steps like isomerisation.
What's driving the growth of the hydrotreated vegetable oil market?
In the hydrotreated vegetable oil vs diesel conversation, the former offers benefits on many fronts.
Generally, the need for HVO and other green, renewable, and sustainable fuels developed due to the increasing demand for transport and industrial fuels and rising crude oil prices. As fossil fuel reserves deplete, it has become imperative to find alternatives that are sustainable not only environmentally but also economically.
The climate crisis, worsening air pollution, and increasing consumer awareness have also given the HVO market a major push. Research has shown that HVO combustion delivers more than 50% reductions in greenhouse gas (GHG) emissions compared to conventional diesel. This sustainable alternative also has 80% lower lifecycle emissions and doesn't contribute to air pollution as much as petroleum diesel due to lower CO2, PM, and NOx emissions. In future, emissions regulations are likely to get more and more stringent. Given these pressures, both environmental and regulatory, it is good business sense for companies to start getting into the HVO business sooner rather than later.
When comparing hydrotreated vegetable oil vs diesel, the former has low maintenance. This is because its low water solubility translates to long-term storability with low to zero deterioration in quality. The expansion of the hydrotreated vegetable oil market is also driven by its high favourability amongst consumers because it has no odour and offers good performance in cold weather.
Most crucially, the growth of the HVO market is supported by the fact that it doesn't call for overwhelming infrastructure changes. HVO is compatible with all diesel engines. When it comes to production, the HVO pre-treatment process is very similar to oil refining, meaning that massive equipment modifications need not be made. In fact, in Europe, many refineries have made necessary adjustments to treat plant- and animal-based feedstocks instead of fossil feedstocks. ENI has converted its refinery in Italy into an HVO plant producing 0.4 billion litres annually. HVO plants are also in the works by St1 in Sweden, by Total in France, and in Finland and Italy.
Hydrotreated vegetable oil can be used as fuel in cars, airplanes, trucks, boats, diesel generators, and boilers. It is no surprise then that the growth of the HVO market is driven primarily by transportation, with industrial power generation coming in a close second.
Why isn't the hydrotreated vegetable oil market leading the alternative fuel space?
Bioethanol and biodiesel (fatty acid methyl ester, or FAME) are popular sustainable alternatives to fossil-derived diesel. This is because of the relative ease with which FAME and ethanol can be produced. In fact, expansion in the use of these first-generation fuels has hampered the growth of the HVO market. The high capital costs of hydrotreating equipment compared to biodiesel and ethanol don't help either.
Nonetheless, second-generation biofuels like HVO have certain benefits that could propel the HVO market to the top of the ladder in the coming years. Unlike FAME biodiesel, HVO doesn't cause problems like increased NOx emission, deposit formation, storage instability, or rapid ageing of engine oil. Due to its poor cold properties and high viscosity, biodiesel has also been associated with engine deterioration. Certainly, biodiesel has many advantages, but challenges like competition with food sources for feedstock, poor oxidation stability, low calorific value, and poor operability in the cold mean that HVO has a chance to take biodiesel's place as the leading alternative fuel.
Future trends in HVO production and research
As with biodiesel, depending on the choice of feedstock, HVO production may also conflict with food sources in an increasingly food-insecure world. To avoid such conflicts, in the future, non-food oils like jatropha oil and algae oil will lead the industry when it comes to HVO feedstock. Waste cooking oils and by-products of the oil processing industry will also continue to be used.
Additionally, so far, most research has examined the use of HVO in heavy-duty engines. This has resulted in a gap in data regarding the use of HVO in the light-duty engines of small passenger cars. There is also a gap in data about the use of HVO in transient conditions, with most studies focusing on HVO use under steady-state operation. Lastly, the use of HVO has only been studied in existing engines without modification. Since HVO is a paraffinic fuel and has properties different from conventional diesel, the default engine settings may not be optimum for HVO combustion. Appropriate research could help adjust engine settings and achieve better exhaust emissions. With more detailed studies to plug these information gaps, HVO could be deployed in city buses, mine vehicles, and even indoor forklifts to make green fuels the go-to choice for any vehicular or industrial application.
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