Will 2026 be a renewable fuel turning point? 
7 Areas to watch out for….

By 
Mikala Grubb, Sandra Winter-Madsen, Milica Folić and Sylvain Verdier

, Topsoe
Special to The Digest

The renewable fuels industry has reached a critical juncture. After years of incremental progress, false starts and regulatory uncertainty, the sector is entering a phase that experts describe with cautious optimism. The question is not whether the fuel transition will happen, but how and when it will unfold across different regions, and what role feedstocks and regulatory frameworks will play.

1.  Regulatory foundation finally solidifies

The most significant shift over the past year has been regulatory consolidation. The European Commission’s unwavering commitment to RED III sends an unmistakable signal: mandates will not be watered down. This isn’t aspirational policy; it’s binding legislation with substantial penalties for non-compliance.

After some pushback in 2025, the Commission held firm. The mandates will happen, something key in a regulatory-driven market. The premium over fossil fuels necessitates regulatory support, making policy stability essential for investment decisions.

Beyond Europe, regulatory frameworks are proliferating globally. The UK has emerged as a model with its balanced “stick and carrot” approach, mandates that experts describe as “less ambitious, more realistic” than the EU’s, coupled with revenue certainty mechanisms and carbon intensity-based credit trading. The US has pivoted toward supporting existing biofuel production rather than prioritizing SAF, but this shift actually strengthens the business case for current producers while creating potential flexibility for future aviation fuel deployment.

2. China is scaling at speed

China represents both an opportunity and a potential market disruptor. Without formal mandates, Chinese producers are already scaling bio-methanol production at competitive prices that are becoming global reference points. The country’s renewable energy capacity, battery storage expertise and CO₂ availability position it uniquely for synthetic fuel production.

More significantly, the central government is now backing the transition with tangible financial support. The central budget now supports low, zero, and negative carbon demonstration projects with subsidies up to 20% of approved total investment. While the central committee’s proposal for the 15th Five Year Plan addresses national economic and social development, it remains a framework rather than binding SAF mandates.

Still, if China achieves large-scale e-SAF production ahead of global demand maturity, it could fundamentally alter pricing dynamics and competitive positioning worldwide. This could be a game changer with such a development tipping the scale for the entire industry.

3.  Feedstock discussions are evolving but still top agendas

The conversation around feedstocks has evolved dramatically. Industry experts have abandoned the search for a single “silver bullet” solution in favor of aggregating multiple smaller feedstock streams, in what might be called a “buckshot” strategy.

Used cooking oil faces ongoing traceability controversies, yet remains a focus for producers seeking proven pathways. Meanwhile, attention is shifting toward novel feedstocks that sidestep these challenges entirely. Municipal solid waste, through gasification pathways, could simultaneously solve waste management challenges while producing renewable fuels. Biogas, a mixture of methane and CO₂, presents a neat feedstock that requires minimal processing. Niche sources like cashew nutshell oil and synthetic fatty acids are receiving serious consideration.

The rise of intermediate crops is particularly noteworthy. A SkyNRG and ICF Market Outlook report projects these could reach 28 million tons by 2050, which is a significant contribution that supports farmers while avoiding the food-versus-fuel debate that has plagued first-generation biofuels.

Plastic and tire waste-to-fuel pathways are gaining traction, though business cases remain niche and region-specific. ASTM is exploring approval for co-processing up to 5% of “anything exotic” with fossil feedstocks, which could provide crucial early-market entry for emerging technologies.

The feedstock landscape for the next few years appears adequate for announced projects, though a crunch is anticipated post-2030 as mandates tighten. The competition for feedstocks is intensifying not just within renewable fuels, but across sectors. Maritime fuels now compete with SAF and renewable diesel for the same vegetable and waste oils, while methanol and ethanol demands overlap across marine, aviation and chemical applications.

4. Refineries move from awareness to action

Perhaps the most fundamental shift is occurring within traditional refineries. Five or six years ago, many refineries remained unaware or dismissive of energy transition requirements. Today, there isn’t a refinery in the world not actively planning for decarbonization.

European refineries have embraced co-processing, blending approved amounts of renewable feedstocks with fossil crude in existing infrastructure with catalyst modifications. While dedicated renewable fuel production remains limited (roughly 0.3 million barrels per day of renewable fuels versus 100 million barrels per day of crude oil production), co-processing provides a pragmatic bridge.

More significantly, major refineries are developing ambitious hydrogen strategies. TotalEnergies targets half a million tons of green hydrogen by 2030, which is substantial given that European refineries currently consume 7 million tons of hydrogen annually. Repsol and others have published detailed hydrogen roadmaps extending to 2040.

This movement of refineries into green and low-carbon hydrogen creates crucial infrastructure, derisks technology and demonstrates to investors that pathways are viable. While debate continues about whether fossil refineries represent the optimal deployment point for green hydrogen, the practical effect is cost reduction and ecosystem development that benefits the broader energy transition.

5.  The Asia-Pacific opportunity – 70m tons by 2050

The scale of anticipated deployment in Asia-Pacific is staggering. Under likely policy scenarios, the region could require 70 million tons of SAF by 2050, nearly twice Europe’s entire current jet fuel consumption. Countries across Southeast Asia, India and the Middle East are developing national SAF roadmaps, connecting feedstocks to projects and building certification infrastructure.

While current commitments often target only 1-2% SAF by 2030, the ecosystem-building occurring now lays groundwork for rapid scaling. Each country is approaching renewable fuels through the lens of industrial policy, seeking to integrate climate action with economic development and energy security.

6. Financing timeline remains the missing piece

Despite regulatory clarity and technical readiness, project finance remains constrained. Dialogues with refineries and project developers are lengthening, even as announcements come earlier. The time to financial close has extended significantly, with very few final investment decisions (FIDs) materializing.

The European Commission’s proposed double-sided auction pilot for e-SAF aims to address this gap by providing offtake certainty similar to the UK’s revenue certainty mechanism. The challenge lies in funding source (whether from EU emissions trading system revenues, renewable fuel penalties, or other mechanisms) and duration.

2026 will be key – the industry needs to see FIDs so projects and plants are up and running and producing e-SAF by 2030. The math is unforgiving: projects typically require several years from final investment decision to production, meaning delays today directly impact 2030 target achievement.

7. Cautious optimism is the 2026 market temperature

What’s most striking about the current moment is the shift in sentiment among industry insiders. Last year’s uncertainty has given way to guarded confidence. Regulators fought off pushback and held firm on mandates. Technology continues derisking through pilots and demonstrations. Feedstock diversity is expanding rather than contracting.

Regulators won the fight – it’s happening. We now see regulation being implemented, at least discussed, globally. This will create the demand for renewable fuels and it’s here to stay.

The road ahead remains challenging: cost parity with fossil fuels may never fully materialize, requiring sustained policy support. But the direction is clear, the commitment is genuine and the ecosystem is coalescing. For an industry long plagued by false starts and pilot purgatory, that represents genuine progress.

The question is: “Now that the first steps have been taken, how long will it take to get to the next stage and what progress will 2026 be able to deliver?”

The article is based off Topsoe’s Fuel for Thought Season 7 Episode 1, available wherever you tune in to your favourite podcasts.