Used Cooking Oil (UCO) Market 2026: The Global Scramble for SAF Feedstock

Executive Summary

Used Cooking Oil (UCO) has shifted from a low-value waste to a strategic feedstock for hydroprocessed esters and fatty acids (HEFA) Sustainable Aviation Fuel (SAF). As airlines commit to aggressive decarbonization targets and regulators tighten mandates, the UCO market is experiencing structurally higher prices, regional imbalances, and heightened sustainability scrutiny. At Energy Solutions , we model UCO flows, price ranges, and policy scenarios to understand where this niche feedstock remains accretive – and where it risks becoming a bottleneck for SAF scale-up.

• Indicative bulk UCO prices in 2025–2026 have risen into the 750–1,250 USD/t range in Europe and North America, with higher spikes above 1,400 USD/t in constrained import markets. This materially narrows the margin between UCO-based HEFA and vegetable-oil-based pathways.
• HEFA SAF derived from UCO typically lands at a 1,700–2,300 USD/t production cost (roughly 1.7–2.3 USD/litre), compared with 700–1,000 USD/t for fossil jet fuel. Policy support (mandates, tax credits, contracts-for-difference) is therefore a prerequisite for economic deployment.
• Energy Solutions modeling suggests that truly collectable UCO volumes can meet only 3–8% of projected SAF demand by 2030 under IATA-aligned scenarios, even assuming ambitious collection improvements. UCO is a bridge feedstock, not a long-term volume solution.
• Lifecycle greenhouse gas (GHG) savings for UCO-based HEFA SAF typically fall in the 70–90% reduction range versus fossil jet, translating into indicative abatement costs of 180–350 USD/tCO2e under current price and policy conditions.
• Strategically, early movers that lock in multi-year UCO offtake agreements with traceable supply chains can secure a valuable, low-ILUC feedstock – but are increasingly exposed to policy changes, competition from biodiesel, and accusations of “over-counting” waste streams.

What You'll Learn

• Technical Foundation: From Waste Oil to HEFA SAF
• Global UCO Market Overview & Trade Flows
• Benchmarks & Cost Data: UCO Prices and HEFA Economics
• Supply–Demand Balance: Can UCO Scale with SAF Mandates?
• Case Studies: Airlines, Producers, and Municipal Collection
• Policy Landscape: Mandates, Credits, and Double-Counting Rules
• Devil's Advocate: Feedstock Fraud, Constraints, and Lock-in Risk
• Outlook to 2030/2035: UCO in a Multi-Feedstock SAF System
• Implementation Guide: For Investors and Offtakers
• FAQ: UCO Quality, Sustainability, and Abatement Costs

Technical Foundation: From Waste Oil to HEFA SAF

Used Cooking Oil is a waste lipid stream generated by restaurants, food processors, and households. Historically, UCO was primarily rendered into low-grade animal feed additives or soap feedstocks. Over the past decade, hydrotreating technology has enabled UCO to be upgraded into low-carbon fuels – first biodiesel (FAME) and increasingly HEFA renewable diesel and SAF.

In the HEFA route, UCO is collected, filtered, and pretreated to remove water, free fatty acids, and contaminants such as metals. It is then co-processed or dedicatedly processed in a hydrotreater, where hydrogen removes oxygen and saturates the hydrocarbon chains, producing paraffinic fuels that can be fractionated into renewable diesel and SAF blendstocks. The appeal of UCO is twofold:

• Waste-based origin: Regulators classify UCO as a waste feedstock with lower indirect land use change (ILUC) risk than virgin vegetable oils.
• Chemical similarity: The triglyceride structure closely resembles that of conventional vegetable oils used in hydroprocessing, enabling drop-in deployment with modest pretreatment upgrades.

However, UCO is heterogeneous. Quality parameters such as moisture, free fatty acid content, and contamination levels vary significantly by source. This affects pretreatment requirements, hydrogen consumption, catalyst life, and ultimately the Levelized Cost of Fuel (LCOF) for HEFA SAF.

Global UCO Market Overview & Trade Flows

The UCO market is inherently constrained by population, dietary patterns, and the penetration of commercial food service. Collection rates are also uneven: some European cities capture more than 60% of potential UCO, while many emerging markets capture less than 20%, with large volumes still discharged into sewage systems or informal channels.

Three broad tiers have emerged in the global UCO value chain:

1. Local collection & aggregation: Small haulers and specialized waste management companies collect UCO from restaurants, food chains, and food processors, consolidating streams into truckload volumes.
2. Regional pre-processing: UCO is filtered, dewatered, and blended to meet export or refinery specifications.
3. International trade: Net-importing regions (notably the EU) increasingly rely on UCO imports from Asia, North America, and, to a lesser extent, Latin America to meet renewable fuel mandates.

This dynamic has created a global arbitrage structure: UCO collected in lower-cost markets can be exported and valorized into high-value SAF in jurisdictions with generous incentives. It also raises concerns about fraud (mislabeling virgin oils as UCO) and sustainability leakage.

Benchmarks & Cost Data: UCO Prices and HEFA Economics

The economics of UCO-based HEFA SAF are driven by three main variables: feedstock cost, hydrogen cost, and policy support. UCO typically represents 50–70% of total production cost, making price volatility a critical risk factor.

From an abatement perspective, the key question is not simply whether UCO-based SAF is more expensive than fossil jet – it almost always is – but how much CO₂e is avoided per unit of additional cost. Lifecycle studies typically assign UCO-based HEFA SAF a 70–90% GHG reduction compared with fossil jet, largely because the baseline allocates minimal upstream emissions to UCO as a waste.

Supply–Demand Balance: Can UCO Scale with SAF Mandates?

The core strategic issue is volume. Even with ambitious improvements in collection and trade logistics, UCO simply cannot scale linearly with aviation demand growth and SAF quotas.

Energy Solutions scenarios suggest that:

• Global collectable UCO volumes in 2030 may realistically reach 8–12 million tonnes/year under aggressive policy and collection assumptions.
• If fully routed into HEFA SAF, this could support on the order of 15–22 million tonnes/year of SAF and renewable diesel combined, depending on product slate.
• By contrast, various net-zero-aligned roadmaps envision aviation SAF demand of 60–120 million tonnes/year by 2035, far exceeding UCO’s potential contribution.

This creates a structural tension: policymakers often prioritize waste-based feedstocks like UCO for double-counting or higher credit multipliers, yet the underlying waste pool is modest relative to long-term SAF needs. The result is intense competition between biodiesel, renewable diesel, and SAF producers for a limited pool of UCO.

Energy Solutions: Biofuels Market Intelligence for Decision-Makers

Airlines, refiners, and infrastructure investors cannot afford to treat UCO as an unlimited, low-cost feedstock. Our analytical stack at Energy Solutions integrates feedstock availability data, refinery conversion yields, and policy scenarios to identify where UCO-based HEFA projects remain competitive – and when it is time to pivot towards alternative SAF pathways.

Integrated with our interactive tools and calculators, stakeholders can stress-test project IRRs under changing UCO price bands, carbon prices, and mandate trajectories before committing capital.

Case Studies: Airlines, Producers, and Municipal Collection

The following stylised case studies illustrate how different actors capture value – and where constraints emerge in practice.

Policy Landscape: Mandates, Credits, and Double-Counting Rules

UCO’s elevated value is ultimately a policy artefact. In the absence of blending mandates, tax credits, and certificate schemes, waste oils would trade much closer to their historical value as minor industrial inputs.

• European Union: UCO is classified as an Annex IX Part B waste feedstock under the Renewable Energy Directive. Many member states grant double-counting towards transport targets and, in some cases, apply caps to UCO-based biodiesel shares to manage sustainability and fraud risks.
• United States: Under the Renewable Fuel Standard and emerging SAF-specific incentives, UCO-based fuels can generate higher-value Renewable Identification Numbers (RINs) or SAF credits. Additional support arrives via production tax credits and, in some jurisdictions, Low Carbon Fuel Standard (LCFS) credits.
• Asia-Pacific: Policy frameworks are heterogeneous. Some countries incentivize domestic biodiesel consumption with limited SAF-specific measures, while others explore export-oriented UCO-to-SAF value chains leveraging foreign mandate support.

For investors, the central risk is that double-counting provisions and high multipliers may be revised downward as regulators confront feedstock scarcity and fraud cases, eroding project economics for UCO-centric assets.

Devil's Advocate: Feedstock Fraud, Constraints, and Lock-in Risk

While UCO appears attractive on paper – high GHG savings, waste-based origin, strong policy multipliers – a closer look reveals significant structural risks that sophisticated investors and off-takers must internalize.

Physical and Sustainability Constraints

• Finite volume: Even under optimistic scenarios, UCO cannot cover more than a single-digit percentage of global jet demand. Excessive reliance on UCO creates an illusion of scalability and may delay investment in more scalable SAF pathways such as alcohol-to-jet, Fischer–Tropsch from residue streams, or power-to-liquid e-fuels.
• Competing sectors: Road transport biodiesel, renewable diesel for trucks, and industrial applications all compete for the same waste pool. As heavy-duty transport decarbonizes, reallocating UCO away from trucks to planes raises cross-sector equity and system-optimization questions.
• Fraud and traceability: The arbitrage between low-cost vegetable oils and high-premium UCO creates incentives to mislabel virgin oils as waste. This exposes project developers to reputational and regulatory risk if audits uncover misclassified feedstocks.

Lock-in and Option Value Risk

• Asset lock-in: Building HEFA capacity heavily optimized for UCO and other lipids risks technological lock-in if policy begins favouring non-lipid pathways with higher scalability or lower long-term abatement costs.
• Regional concentration: UCO collection is most advanced in high-income, service-oriented economies. Over-reliance on a handful of export corridors creates geopolitical and trade exposure, especially if exporting countries prioritize domestic uses.
• Policy re-pricing: Should regulators conclude that UCO volumes are overstated or double-counted across markets, they may tighten rules or reduce multipliers, abruptly reducing the implicit carbon value embedded in UCO-based fuels.

Outlook to 2030/2035: UCO in a Multi-Feedstock SAF System

By 2030, Energy Solutions expects UCO to be positioned as a premium, niche SAF feedstock, not a mass-market solution. Its primary roles will be:

In integrated planning exercises, UCO-based HEFA pathways are increasingly compared with other bioenergy and biorefinery routes covered on Energy Solutions – for example bio-LPG co-products from HVO/HEFA plants serving off-grid LPG markets, integrated biorefineries that co-produce fuels, heat and chemicals, and advanced alcohol routes such as cellulose ethanol projects that may ultimately feed into SAF or chemical value chains alongside UCO.

• Providing high-certainty, high-GHG-reduction volumes for early compliance with SAF mandates.
• Serving as a hedge in diversified SAF portfolios that also include alcohol-to-jet, gasification-based pathways, and early power-to-liquid projects.
• Anchoring regional hubs where UCO collection is particularly efficient (dense urban centres, tourism hubs, and food-processing clusters).

Beyond 2035, as alternative SAF technologies mature and electricity-driven e-fuels potentially decline in cost, UCO’s strategic importance may shift towards balancing and niche applications rather than baseline volume provision. The winning strategies will treat UCO as one element in an integrated feedstock and technology roadmap, not as a single solution to aviation decarbonization.

Implementation Guide: For Investors and Offtakers

For investors, airlines, and refiners evaluating UCO-based SAF strategies, a structured approach can reduce risk:

1. Map the physical UCO pool: Quantify realistic, collectable UCO volumes in the catchment area, accounting for existing biodiesel, animal feed, and industrial users.
2. Stress-test feedstock pricing: Run project IRR and abatement-cost scenarios at UCO prices from 600–1,400 USD/t and test resilience under price spikes caused by policy changes or trade disruptions.
3. Secure traceability: Implement certified chain-of-custody systems (mass balance or segregated) and independent auditing to guard against fraud and mislabeling risks.
4. Design for optionality: Where CAPEX permits, configure hydrotreaters to process a range of feedstocks (UCO, tallow, other residues) to avoid over-dependence on a single waste stream.
5. Align with long-term SAF strategy: Position UCO-based HEFA as an early compliance lever while simultaneously pursuing technology options that can scale beyond UCO’s inherent volume constraints.

Methodology Note

All numerical values in this report are indicative and stylised for analytical purposes. Price and volume ranges draw on a combination of public statistics, broker quotes, disclosed project data, and Energy Solutions modeling. Lifecycle emissions and abatement costs are estimated using typical well-to-wake boundaries, with sensitivity to allocation methods and regional grid intensities. Nothing in this report should be interpreted as a binding commercial offer or as investment advice.