Key View
- We anticipate that Mainland China’s exports of Used Cooking Oil (UCO) will decline in 2025.
- Several factors are expected to drive a downturn in Mainland China’s UCO exports through 2025 and beyond. Initially, we foresee a significant drop in US demand for Chinese UCO.
- Secondly, we anticipate that Mainland China will prioritise the production and export of SAF over feedstock exports.
- The US is likely to increasingly prioritise domestically sourced feedstocks, which could impact biofuel producer margins. However, unless there is a change in the current 45z tax credit, we anticipate that traditional US feedstock sources, like soybean, will continue to be supplanted by alternatives such as UCO and tallow.
Mainland China is strategically pivoting in the global biofuel market by reducing exports of Used Cooking Oil (UCO) and focusing on Sustainable Aviation Fuel (SAF). Historically a key supplier of UCO, China has been instrumental in meeting global biofuel demands. However, an internal shift is underway as China begins prioritizing domestic needs and sustainability targets, decreasing UCO exports to bolster local biofuel production.
This strategic shift aligns with China’s broader environmental goals and its commitment to reducing carbon emissions. By redirecting resources towards SAF, China is investing in cleaner, more efficient technologies that support its long-term vision for a greener economy. SAF promises a significant reduction in aviation emissions, making it an attractive option for achieving carbon neutrality. With government backing and increasing investment in research and development, China is positioning itself as a leader in SAF innovation.
As global demand for sustainable biofuels grows, China’s pivot could reshape international trade dynamics. The emphasis on SAF not only caters to a burgeoning market but also elevates China’s role in driving sustainable energy solutions. This transition reflects the nation’s strategic foresight, balancing economic growth with environmental stewardship, and reinforcing its influence in the global energy landscape.
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