HVO briefing

HVO & Sustainability: Fuels for Ireland Briefing for Members, Customers, and Stakeholders

September 2025

Executive Summary

Hydrotreated Vegetable Oil (HVO) is a renewable diesel that can deliver immediate and significant greenhouse gas (GHG) emissions reductions in heating and transport. As the decarbonization of Ireland’s energy system accelerates, HVO plays a vital role—particularly for the 40% of Irish homes that still rely on liquid fuels for heat and for sectors of transport where electrification is not currently considered viable.

This note addresses concerns around the risk of fraud in the use of biofuel feedstocks, particularly Palm Oil Mill Effluent (POME), while reaffirming the important role that properly certified HVO plays in reducing emissions. HVO is a critical transitionary tool for some sectors and energy uses, and will play a long-term role for many others. Moreover, HVO is not the only low-carbon liquid fuel—national and EU policy should actively encourage the research, development and commercialization of others.

Biofuels are recognized by the EU as a cornerstone of transport decarbonization, delivering immediate emissions reductions across road, aviation, and shipping. Maintaining confidence in their sustainability is fundamental to achieving climate goals and to securing the long-term investment needed to scale them up.

Policy and Regulatory Context

The production and use of biofuels in the EU is governed by the Renewable Energy Directive (RED), currently in its third iteration (RED III). This directive sets strict criteria on greenhouse gas savings, biodiversity, land-use change, and feedstock origin. Central to the framework is Annex IX, which defines acceptable waste- and residue-based feedstocks for advanced biofuels.

Ireland’s Renewable Transport Fuel Obligation (RTFO) is the domestic implementation of RED. Obligated parties must blend increasing volumes of renewable fuels, and a sub-target exists for Annex IX Part A biofuels. In 2024 alone, the RTFO is estimated to have prevented approximately 1.2 million tonnes of CO₂ emissions (source: DCCAE 2025 Annual RTFO Report).

The so-called ‘blend wall’ reflects engine manufacturer limitations on how much conventional biodiesel (FAME) can be blended with fossil diesel without affecting warranty or performance. HVO, in contrast, is a fully compatible drop-in fuel, and thus is not subject to these restrictions—making it a key pathway for increasing renewable content in transport.

These regulations not only govern feedstock eligibility but also define the framework through which environmental attributes, including well-to-wheel carbon savings, are calculated and transferred to end users, enabling customers to confidently include them in Scope 1 and Scope 3 reporting.

Ireland has also updated its regulatory approach to address risk—removing POME's eligibility for additional renewable fuel certificates from July 2025, while still permitting its use under EU rules with double-counting provisions.

POME, Certification, and the Risk of Fraud

Palm Oil Mill Effluent (POME) is a waste residue from palm oil processing. It is listed under Annex IX Part A and is eligible for advanced biofuel status when properly certified. Alongside Used Cooking Oil (UCO), it is formally recognized in EU law as a sustainable waste and residue feedstock, assessed against strict sustainability principles and the EU waste hierarchy. Concerns have emerged regarding the risk of misclassification or fraud—where non-waste palm oil is passed off as POME to gain financial advantage. 
Fuels for Ireland does not dismiss these concerns. But fraud—real or suspected—should be tackled as it is in other critical sectors: through regulation, certification, and enforcement.

An instructive analogy is insulin. One of the most counterfeited medicines in the world, insulin is still indispensable. Authorities address the risk through licensing, auditing, and vigilance—not by restricting access to this life-saving drug. The same approach must apply to sustainable fuels.

Certified HVO is accompanied by clear chain-of-custody documentation, including proof of sustainability certificates, product transfer documentation, and, where applicable, participation in recognized schemes such as the Renewable Fuels Assurance Scheme, ensuring that customers can demonstrate full compliance with both EU and national sustainability requirements.

The Union Database is an EU‑managed registry that tracks all batches of certified renewable fuels across the supply chain—from origin through processing to final use—enhancing transparency and reinforcing traceability. Its scope and IT reliability should continue to be strengthened, including better integration with customs data and consistent enforcement across Member States.

Recent regulatory action shows these systems can be effective. For example, the European Commission concluded a formal investigation into alleged biodiesel fraud from China and, while identifying weaknesses in certification audits, did not confirm any fraud had occurred.

In addition to self-reported documentation, independent third-party audits—including compliance reviews of ISCC and other voluntary schemes—are foundational to verifying the integrity of certified HVO supply chains. Stronger, harmonized auditing standards across certification schemes will be essential to ensuring consistent application across the EU and with non-EU imports.

Even organizations critical of biofuels, such as Transport & Environment, recognize that fraud is best addressed through oversight and enforcement rather than prohibiting legitimate sustainable fuels.

Where fraud is identified, decisive enforcement and sanctions must follow—protecting compliant operators and ensuring that legitimate fuels are not undermined.

The Case for HVO

HVO is a renewable diesel that delivers lifecycle GHG savings of up to 90% compared to fossil diesel. It is fully compatible with existing vehicles and heating systems, avoiding the cost and disruption of equipment upgrades.

HVO is particularly valuable in:
- Long-haul and heavy-duty transport.
- Agriculture and off-road equipment.
- Home heating in rural areas and in homes where its cost prohibitive to upgrade, and 

- Energy requirements in hard-to-electrify areas.

SEAI has recognized that HVO “can be part of our climate solution,” and its use is explicitly encouraged in the 2025 Programme for Government, which commits to “support the use of low-carbon liquid fuels such as HVO to decarbonize transport and heating during the transition.”

The blend wall limits the percentage of conventional biodiesel (FAME) that can be used in fossil diesel. HVO, as a drop-in fuel, bypasses this limitation, making it essential for meeting renewable fuel targets.

Certified HVO supply chains are designed to withstand independent sustainability audits, with documentation and verification processes that meet the requirements of specialist consultancies and corporate due diligence programmes.

Common Customer Questions

- Why is HVO more expensive than regular diesel? — The price difference reflects the cost of producing a renewable fuel that delivers up to 90% lifecycle GHG savings instantly, without requiring capital investment in new equipment. For many, this is the most cost-effective route to meeting carbon reduction targets in the short term.

- Why is HVO not qualifying for the Diesel Rebate Scheme? — This is a policy gap. The scheme currently only applies to mineral diesel, and Fuels for Ireland is actively engaging with policymakers to ensure sustainable fuels are not disadvantaged.

- Is HVO just a stopgap until electrification? — HVO will be a bridging fuel for some existing transport uses, but an essential one for deep, immediate emissions cuts, particularly in sectors where electrification is not yet practical. Current policy, investment, and production trends indicate HVO will remain important for at least the next decade, and will likely be a long-term solution for many hard-to-electrify applications.

- How can I prove to clients that switching to HVO makes a difference? — ISCC certification and delivery documentation provide verified data for sustainability reporting.

- What about fraud risk? — Feedstock origin is verified through certification and the EU’s Union Database, allowing each litre to be traced back to its certified source. Fraud risk is addressed through oversight and enforcement, not by removing the product from the market.

- Can HVO be supplied without palm oil wastes? — Customers may express a preference for HVO with no palm oil derivatives. While supply availability varies, certified HVO sourcing decisions are ultimately driven by sustainability documentation and traceability. Where feasible, Members will work with customers to meet such preferences, within the bounds of supply chain integrity.

What Fuels for Ireland Supports

We support:
- Affordable decarbonization through practical, available technologies.
- Regulation, certification and enforcement as tools to address fraud.
- Alignment with EU policy and international best practice.
- Continued use of certified Annex IX feedstocks, including POME, when properly verified.
- Integration of low-carbon liquid fuels as a technology neutral solution alongside other decarbonization pathways.
- Investment in R&D for alternative low-carbon liquid fuels to broaden future options.
- Maintaining rigorous internal controls to ensure that Proof of Sustainability documentation and associated CO₂e reductions are allocated exclusively to one customer, preventing any risk of double counting.
- Ensuring policy certainty and avoiding retroactive or unilateral measures that would fragment the EU market, undermine investor confidence, and slow the energy transition.

6. Looking Ahead

Fuels for Ireland is committed to:
- Supporting the effective implementation of the Renewable Transport Fuel Policy 2025–2027.
- Collaborating with Government to strengthen fraud detection via the Union Database and other tools.
- Advocating for technology-neutral, evidence-based climate policy.
- Ensuring our Members meet the highest standards of sustainability and compliance.

We also caution that unilateral regulatory action by Ireland—outside of the EU framework—will have no material environmental benefit, given the small size of our market, but will increase fuel costs for Irish consumers and businesses. This is particularly unwelcome at a time when Ireland already has among the highest fuel taxes in Europe.

We recognize that our customers increasingly require clear, verifiable documentation to demonstrate the sustainability of the fuels they purchase, including proof of certification, feedstock traceability, and assurance of exclusive environmental attribute ownership. Fuels for Ireland Members supply HVO in accordance with recognized international certification schemes, maintain records to prevent double counting, and provide appropriate evidence to customers to support their sustainability reporting obligations.

7. Conclusion

HVO is not a silver bullet, but it is a powerful and available tool in Ireland’s decarbonization toolkit. Properly certified and appropriately regulated, it plays a vital role in reducing emissions—today.

Ireland must continue to support its use, not by ignoring concerns, but by addressing them. As with other critical products subject to fraud risk, the response must be stronger oversight—not unnecessary prohibition.

We recognize that customers’ documentation needs may vary, and Fuels for Ireland Members are committed to working with them to provide the necessary evidence within the framework of recognized certification and sustainability schemes.

8. Further Information

- Fuels for Ireland: www.fuelsforireland.ie
- SEAI on Renewable Heating: www.seai.ie
- Union Database: energy.ec.europa.eu
- Programme for Government 2025: www.gov.ie
- DCCAE RTFO Annual Report 2025: www.gov.ie
- Renewable Fuels Assurance Scheme: www.rfasscheme.org
- International Sustainability & Carbon Certification (ISCC): www.iscc-system.org