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The growing demand for cleaner energy options in Southeast Asia is prompting businesses to reevaluate traditional fuels. Hydrotreated vegetable oil (HVO) and conventional biodiesel are two renewable alternatives that offer distinct benefits.
Both promise reduced emissions, but their suitability depends on performance, cost, availability, and alignment with the region’s sustainability ambitions. Let’s break down the key factors.
Understanding the Fuels
Hydrotreated Vegetable Oil (HVO)
HVO, often called renewable diesel or green diesel, is produced by hydrotreating vegetable oils or animal fats. This process removes oxygen, yielding a fuel that is chemically similar to fossil diesel. Its drop-in nature means it can be used in existing diesel engines and infrastructure without modifications.
Conventional Biodiesel
Also known as FAME (Fatty Acid Methyl Ester), biodiesel is typically made via transesterification of vegetable oils or animal fats with methanol. It is commonly blended with fossil diesel (e.g., B7, B20) and is widely used to meet renewable content mandates.
According to Nationwide Fuels, a key difference lies in how each fuel is produced. Unlike biodiesel, which is made through transesterification and produces glycerol as a byproduct, HVO is produced via a hydrogenation process that removes oxygen completely. This results in a fuel that is chemically almost identical to conventional diesel, offering improved consistency, longer shelf life, and better resistance to degradation and water absorption. These attributes not only enhance engine performance but also reduce maintenance requirements, making HVO a highly reliable option for businesses looking to future-proof their fuel strategy.
Key Differences at a Glance
| Criterion | HVO Fuel | Biodiesel (FAME) |
|---|---|---|
| Processing | Hydrogenation process – no glycerol byproduct | Transesterification – produces glycerol |
| Chemical Composition | Drop-in diesel with consistent molecules | Contains oxygen, leading to variable properties |
| Shelf Life & Stability | Long shelf life (up to 10 years), stable even in storage | More prone to degradation and water absorption |
| Shelf Life & Stability | Up to 10 years; resistant to microbial growth | Prone to degradation (6–12 months); absorbs water, fostering microbial growth |
| Cold Weather Performance | Excellent cold flow properties | Cold performance can vary based on blend |
(Adapted from industry comparisons such as those by Crown Oil and Neste.)
Performance: Efficiency in Tropical Climates
HVO Fuel: The High-Performance Contender
HVO is a “drop-in” fuel, compatible with existing diesel engines without modifications—even at 100% purity (HVO100). Its higher cetane number (70–90 vs. diesel’s 40–55) ensures smoother combustion, boosting fuel efficiency and reducing engine noise. This versatility makes HVO ideal for businesses seeking minimal operational disruption. Its absence of oxygen and esters ensures stable performance in humid Southeast Asian climates, avoiding biodiesel’s oxidation risks.
HVO offers superior performance and flexibility, making it a future-proof choice for businesses prioritizing efficiency.
Biodiesel: A Familiar but Limited Option
Conventional biodiesel (FAME) is typically blended with diesel at ratios like B20 (20% biodiesel) to avoid engine issues like oxidation or corrosion. However, its lower energy density (~10% less than diesel) can lead to marginally higher fuel consumption. For businesses already using low blends, biodiesel remains a practical—if less efficient—solution.
Cost: Balancing Affordability and Long-Term Value
HVO’s Premium Price Tag
HVO production is energy-intensive, relying on hydrotreatment processes that are still scarce in Southeast Asia. This drives costs higher than conventional fossil diesel. However, as regional production scales, particularly in Singapore and Malaysia, prices are expected to fall, positioning HVO as a strategic long-term investment.
Biodiesel’s Cost Advantage
Biodiesel benefits from simpler production (transesterification) and abundant local feedstock, such as Indonesia and Malaysia’s palm oil. Government mandates like Indonesia’s B35 policy further reduce costs through subsidies.
Biodiesel is cheaper today, but HVO’s long-term cost competitiveness hinges on scaling production and policy support.
Availability: Supply Chains and Sustainability Pressures
HVO’s Import Hurdles
Most HVO in Southeast Asia is imported from Europe or Singapore, raising logistics costs. However, its ability to use waste feedstocks—like used cooking oil—aligns with circular economy trends, appealing to businesses aiming to reduce landfill waste.
Biodiesel’s Palm Oil Dilemma
Biodiesel dominates Southeast Asia’s market, with palm oil accounting for ~70% of feedstock. Yet, deforestation concerns threaten its global reputation, especially as the EU’s deforestation-free regulations tighten.
Environmental Impact: Emissions and Global Compliance
HVO: The Cleaner Combustor
HVO slashes CO₂ emissions by up to 90% compared to diesel, with 30% lower NOx emissions and minimal particulate matter. When sourced from waste oils, it avoids land-use conflicts and qualifies for certifications like ISCC, making it a favorite for eco-conscious exporters.
Biodiesel’s Balancing Act
While biodiesel reduces emissions by 50–60%, its reliance on palm oil risks deforestation-linked emissions. Companies using it must prioritize certified sustainable palm oil (CSPO) to mitigate backlash.
HVO is environmentally superior, but biodiesel can stay relevant with rigorous certification.
Aligning with Southeast Asia’s Energy Trends
Southeast Asia is experiencing rapid economic growth alongside increasing environmental and regulatory pressures to reduce carbon emissions. Energy policies in the region are promoting a shift toward renewable and low-carbon fuels. Key regional trends include:
Government Mandates
Many Southeast Asian countries have implemented biodiesel blending mandates to reduce fossil fuel dependence. Upcoming changes (e.g., increased biodiesel blend percentages) indicate a continuing shift toward renewable fuels.
Sustainable Feedstock Sourcing
With abundant agricultural residues and established palm oil industries, the region has a natural advantage in producing both biodiesel and HVO. However, ensuring sustainability and avoiding food-versus-fuel conflicts remain critical challenges.
Infrastructure Compatibility
Businesses in the region favor fuels that integrate seamlessly into existing diesel engines and storage systems. HVO’s drop-in capability is particularly appealing in this regard, as it requires no costly retrofits.
Strategic Choices for Sustainable Growth
For HVO Adoption
HVO’s 10-year shelf life and compatibility with legacy infrastructure minimize operational disruptions. Prioritize HVO if your business values long-term sustainability, has access to waste feedstocks, or serves markets with strict environmental regulations. Though pricier now, its scalability and compliance advantages justify the investment.
For Biodiesel Adoption
Stick with biodiesel if cost and local availability are critical. Leverage government subsidies in markets like Indonesia, but pair it with CSPO sourcing to avoid reputational risks.
Final Tip
The best way is to adopt hybrid strategies to balance immediate cost savings with future readiness. You may want to use biodiesel for everyday operations while testing HVO in parallel. This approach minimizes risks from market volatility by not tying your business to a single fuel type. It also keeps your fleet agile, so you’re well-prepared to transition fully to the most advantageous fuel option as market conditions improve.
Monitor policy shifts and feedstock innovations. The right fuel today might not be the right fuel tomorrow.