Renewable fuels have a strong role in the energy transition
As Europe accelerates its transition towards climate neutrality, electrification is often presented as the primary solution. Yet the reality is more complex. Many sectors, including aviation, heavy-duty transport, construction machinery, backup power systems, data centres, and heating, will continue to rely on liquid fuels for decades to come.
To better understand the role of renewable liquid fuels in this evolving energy landscape, Eurofuel's member, the Finnish Heating Energy Association (LEY), recently interviewed Teemu Sarjovaara, Head of Product Management for Marketing & Services at Neste. Their discussion explored the current state of renewable fuels, the technologies behind their production, and why these fuels will remain an essential component of the future energy system.
What emerges clearly from the conversation is that renewable liquid fuels are no longer a niche or transitional solution. They have become a global industry and offer a practical and scalable pathway to reduce greenhouse gas emissions in sectors where direct electrification remains difficult, costly, or simply not feasible.
Over the past decade, renewable diesel has moved from an emerging technology to a widely used solution in transport, logistics, off-road applications, and, increasingly, heating. Sustainable aviation fuel is also gaining momentum as airlines seek ways to decarbonise long-distance travel. The market has expanded well beyond the Nordic countries and is now supported by growing production capacity and investment across Europe, North America, and Asia.
Despite this rapid development, public understanding of renewable fuels is still often shaped by confusion around terminology. While terms like biodiesel, renewable diesel, HVO, and FAME are often used interchangeably, they refer to distinct product categories. Biodiesel (FAME) and renewable diesel (HVO) differ significantly in their chemical composition, properties, and manufacturing processes.
One of the key advantages of renewable diesel, like Neste MY Renewable Diesel™, which is a hydrotreated vegetable oil (HVO), is its compatibility with existing infrastructure. In most cases, it can be used directly in current diesel engines and heating systems, often with minimal adjustments. This makes it particularly valuable in sectors where equipment lifetimes are long, and full system replacement would be economically or technically challenging. It also enables rapid emissions reductions without requiring large-scale infrastructure changes.
At the same time, the development of renewable fuels is strongly influenced by policy and regulation. Because production facilities require large, long-term investments, regulatory stability is essential. Frequent changes in blending mandates, taxation, or national support schemes can create uncertainty, affecting investment decisions and slowing down capacity expansion. A stable and predictable policy framework is therefore a key condition for scaling up renewable fuel production to meet future demand.
It is also increasingly clear that electrification alone cannot deliver full decarbonisation across all sectors. In residential heating, hybrid solutions are becoming more common. Many households are combining heat pumps with existing oil-based systems to ensure reliability during peak demand or extreme weather conditions. Renewable heating fuels offer a way to decarbonise these systems without requiring full replacement, supporting a gradual and affordable transition.
Taken together, these developments point to a clear conclusion: renewable liquid fuels are not a temporary solution, but a long-term component of a diversified and resilient energy system. They will not replace electrification, nor should they. Instead, they complement it—providing a practical pathway to decarbonise sectors where alternatives are limited. Looking ahead, innovation in feedstocks and production technologies will be essential for scaling up renewable fuel supply.
As Europe advances toward its climate and energy goals, renewable liquid fuels will play an increasingly important role in ensuring that the transition is both technologically realistic and socially and economically sustainable.
06 July 2026
