As the United Kingdom accelerates towards its ambitious transport decarbonization targets, energy sector analysts face an increasingly complex forecasting challenge. The government’s commitment to ending new petrol and diesel vehicle sales by 2030 has created a clear trajectory for electric vehicle adoption, yet this policy direction raises an important question for those tracking liquid biofuel markets: what becomes of biodiesel demand as electrification reshapes our transport infrastructure? The relationship between these two decarbonisation pathways proves far more nuanced than simple displacement theory would suggest. Whilst electric vehicles will undoubtedly reduce overall diesel consumption, the pace of that transition, the specific vehicle segments being electrified, and the evolving regulatory landscape create a complex interplay that demands careful analysis. Understanding this dynamic is essential for investors, policymakers, and consultants advising clients across the energy transition spectrum.

The Current Landscape of UK Transport Decarbonisation

Electric Vehicle Momentum and Policy Drivers

The electric vehicle revolution in the UK has moved decisively from aspiration to reality. Registration data shows battery electric vehicles now account for a substantial and growing proportion of new car sales, supported by expanding charging infrastructure and improving vehicle range capabilities. The government’s Zero Emission Vehicle mandate, which requires manufacturers to sell increasing percentages of electric vehicles each year, provides regulatory certainty that continues to drive investment across the automotive value chain. Consumer preferences have shifted markedly as well, driven by total cost of ownership advantages in many use cases, company car tax incentives, and growing environmental awareness amongst fleet managers and private buyers alike.

This momentum creates a foundation from which we must project future scenarios. The vehicle parc composition does not change overnight, of course. Even with robust EV sales, the existing fleet of diesel vehicles will diminish only gradually through natural retirement cycles, typically spanning twelve to fifteen years for private vehicles and longer for commercial applications. This lag effect means that diesel fuel demand, including biodiesel blends, will persist well beyond the 2030 cut-off date for new conventional vehicle sales.

Biodiesel’s Established Role in the Transport Mix

Biodiesel has become deeply embedded in the UK’s fuel supply system over the past two decades, largely driven by the Renewable Transport Fuel Obligation. This regulatory mechanism has required fuel suppliers to ensure that a certain percentage of the fuel they supply comes from renewable sources, creating guaranteed demand for biodiesel and other renewable fuels. Current RTFO targets have driven biodiesel blend rates to significant levels in the diesel fuel pool, with most diesel sold at UK forecourts now containing seven percent biodiesel by volume.

The feedstock profile for UK biodiesel has evolved considerably towards waste-based inputs, particularly used cooking oil and animal tallow, which offer superior greenhouse gas savings compared to crop-based alternatives. This evolution has addressed many of the sustainability concerns that plagued earlier biofuel policies whilst maintaining the fundamental value proposition: biodiesel allows the existing diesel vehicle fleet to reduce its carbon intensity immediately, without requiring any changes to vehicles, refuelling infrastructure, or driver behaviour. This drop-in compatibility represents a crucial advantage during the transition period before fleet electrification reaches maturity.

Understanding the Competitive Dynamics

Direct Displacement in Light-Duty Vehicles

The most straightforward impact of EV adoption on biodiesel demand occurs in the light-duty vehicle segment. Each battery electric car or van that enters service directly displaces a potential diesel vehicle (or petrol vehicle, though our focus here remains on diesel displacement). Since biodiesel is blended into conventional diesel, this displacement reduces the pool of fuel into which biodiesel can be incorporated. The mathematics here appears simple: if the diesel vehicle parc contracts by fifty percent, the absolute volume of biodiesel that can be blended into that fuel pool contracts proportionally, assuming blend rates remain constant.

However, the regulatory landscape adds complexity to this calculation. As the diesel pool shrinks, policymakers face a choice regarding RTFO targets. They might maintain percentage-based obligations, which would preserve biodiesel volumes even as the overall diesel market contracts, effectively increasing blend rates. Alternatively, they might allow absolute biodiesel volumes to decline in line with the shrinking diesel market, redirecting renewable fuel obligations towards other transport modes such as aviation or maritime shipping. The policy trajectory chosen will significantly influence how directly EV adoption translates into reduced biodiesel demand.

The Heavy-Duty and Specialised Vehicle Exception

Whilst light-duty vehicle electrification proceeds rapidly, certain transport segments present substantially greater challenges for battery electric solutions. Heavy goods vehicles operating long-haul routes face particular difficulties with current battery technology due to the weight penalty of carrying sufficient battery capacity for extended range requirements. A forty-tonne articulated lorry requires vastly more energy storage than a family car, and the additional weight of batteries reduces payload capacity, creating economic penalties that cannot yet be overcome at acceptable battery costs.

Agricultural machinery, construction equipment, and other specialized diesel applications face similar constraints. These vehicles often operate in locations without reliable charging infrastructure, require extended operating hours that exceed practical charging intervals, and need the energy density that liquid fuels provide. For these applications, biodiesel (and potentially other liquid renewable fuels such as hydrotreated vegetable oil) may remain the most practical decarbonization pathway for considerably longer than the light-duty segment.

This bifurcation creates an important dynamic for biodiesel demand projections. Rather than a uniform decline across all applications, we may observe biodiesel demand becoming increasingly concentrated in heavy-duty and specialized segments even as light-duty displacement accelerates. This concentration could maintain a floor under biodiesel demand even in aggressive electrification scenarios.

Modelling the Transition: Three Scenario Pathways

Rapid Electrification Scenario

Under a rapid electrification pathway, we might envision EV adoption substantially exceeding current government targets, perhaps driven by breakthrough battery technology that addresses range and charging time concerns, dramatic cost reductions, or reinforced policy intervention. In this scenario, light-duty diesel vehicle registrations could effectively cease by 2028, two years ahead of the official target, whilst heavy-duty electrification also advances more quickly than currently anticipated through adoption of battery-electric trucks for shorter routes and potentially catenary systems for motorway freight.

Such a scenario would compress biodiesel demand quite severely, potentially reducing volumes by sixty to seventy percent by 2040 compared to current levels. The remaining demand would concentrate almost entirely in the specialized applications discussed earlier, those segments where electrification faces the most stubborn technical and economic barriers. Even in this aggressive scenario, however, complete displacement appears unlikely within the timeframe under consideration. Agricultural machinery, marine vessels operating in UK waters, and certain construction applications would likely continue utilizing liquid fuels, maintaining some level of biodiesel demand.

Steady-State Transition Scenario

A more moderate pathway assumes government targets are met but not substantially exceeded, reflecting a transition that proceeds steadily whilst encountering expected obstacles. Grid capacity constraints might limit charging infrastructure expansion in certain regions, supply chain challenges could create periodic vehicle availability issues, and consumer adoption in rural areas or amongst certain demographics might lag urban uptake. Heavy-duty electrification would advance in line with current manufacturer roadmaps, with battery-electric trucks serving urban delivery and regional distribution whilst long-haul freight remains predominantly diesel-powered through at least the late 2030s.

Under this scenario, biodiesel demand would decline more gradually, potentially stabilizing at thirty to forty percent of current levels by 2040. This remaining demand would split between the heavy-duty segment, which maintains substantial diesel use, and a long tail of legacy light-duty diesel vehicles that persist in the fleet beyond their typical retirement age due to economic factors or owner preference. The transition timeline in this scenario extends considerably, providing biodiesel producers and distributors more runway to adapt their business models or diversify into adjacent markets.

Delayed Electrification Scenario

A delayed scenario might emerge from various setbacks: insufficient grid investment creating charging infrastructure bottlenecks, economic recession reducing consumer purchasing power for higher-priced EVs, or battery technology development failing to meet cost or performance expectations. Political changes could also alter the policy landscape, potentially softening mandates or extending transition timelines in response to industry lobbying or public resistance.

This pathway would maintain biodiesel demand near current levels through the mid-2030s before beginning a steeper decline once the obstacles are overcome or worked around. Such a scenario might actually prove beneficial for biodiesel producers in the medium term, as it extends the period during which their products serve an essential role in transport decarbonization. It would also provide additional time for the development of sustainable aviation fuels and renewable marine fuels, potentially allowing biodiesel producers to pivot their output towards these alternative markets as road transport demand eventually declines.

Strategic Implications for Energy Sector Stakeholders

Opportunities in the Evolving Biodiesel Value Chain

Rather than viewing electrification purely as a threat, astute biodiesel producers are identifying strategic opportunities within the evolving landscape. The expertise developed in sourcing waste feedstocks, processing complex biological inputs, and managing fuel quality across varying blend rates transfers readily to emerging markets such as sustainable aviation fuel production. Hydrotreated vegetable oil, a premium biodiesel alternative, serves as a direct pathway to renewable jet fuel using similar processing technology and feedstock streams.

The logistics infrastructure that has been built around biodiesel blending and distribution also represents an asset that may find new applications. As hydrogen and synthetic fuels develop, experience in managing liquid fuel supply chains for renewable products could prove valuable. Some forward-thinking companies are positioning themselves as renewable liquid fuel specialists rather than purely biodiesel producers, acknowledging that the specific molecule may matter less than the capability to deliver sustainable liquid energy carriers to hard-to-decarbonize sectors.

Investment and Planning Considerations

For consultants advising clients in either the biodiesel production sector or the EV charging infrastructure space, the interconnected nature of these transitions demands a holistic analytical approach. Investment decisions made today must account for uncertainties across both technological development and policy evolution. The next five years will prove particularly critical, as the trajectory of heavy-duty vehicle electrification becomes clearer and RTFO policies adapt to the shrinking diesel pool.

Clients should be encouraged to maintain strategic flexibility, avoiding over-commitment to single-scenario assumptions. For biodiesel producers, this might mean developing capabilities in advanced biofuel production whilst maintaining efficient operations in traditional markets. For charging infrastructure developers, it suggests attention to grid integration challenges and the economics of heavy-duty charging solutions, recognizing that this segment may offer more sustained growth opportunities than saturating light-duty markets.

Conclusion

Electric vehicle adoption rates will indeed substantially influence long-term biodiesel demand in the UK, yet the relationship defies simplistic linear projections. The transition operates across multiple timescales, affects vehicle segments differently, and responds to policy choices that remain partially uncertain. Rather than viewing these as competing technologies, the energy sector must recognize that both serve the broader imperative of transport decarbonization, with their interaction shaped by technical feasibility, economic viability, and regulatory frameworks that continue evolving. For energy consultants, success lies in helping clients prepare for multiple plausible futures whilst recognizing that the pace of transition may ultimately matter as much as the destination itself. The coming decade will separate those who adapt strategically from those who merely react to changes they failed to anticipate.