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HVO — hydrogenated vegetable oil diesel — is increasingly promoted as a clean, green, drop-in alternative to fossil diesel. It has become a popular option for transport fleets, diesel car owners and even motorsports enthusiasts who want to reduce their carbon footprint without compromising performance. However, ongoing issues in Europe, now echoed in the U.S., show that many of HVO’s claims to fame need some serious scrutiny. Is it really clean and green? Is it a greenwashing scam? Is it a tax fraud scheme? What’s really going on here?
What is HVO Fuel?
HVO biofuel is a type of renewable diesel produced using hydrogenated vegetable oil, animal fats or waste oils. Hydrogen treats the oils under pressure, transforming them into a fuel that closely mimics petroleum diesel.
However, unlike traditional biodiesel (FAME), HVO lacks oxygen molecules, resulting in a cleaner-burning fuel. HVO can be used in any diesel engine without modification, stores well and burns efficiently. It’s praised for reducing tailpipe emissions and it claims lifetime carbon savings up of up to 90% compared to fossil fuel diesel.
What is the Sustainability Scandal Around HVO Diesel?
The HVO biofuel scandal has two different but intertwined elements. Firstly, there are major supply chain concerns, especially around mislabeled palm oil. Secondly, there are ongoing tax fraud investigations related to HVO. These issues have been rumbling on for a few years now, but a clearer picture is beginning to emerge. Here’s what we know:
Fraudulent Mislabeling of Virgin Palm Oil
Palm oil mill effluent (POME), a waste residue of palm oil production, is a common feedstock for HVO diesel. This is good management of this highly polluting by-product, which would otherwise contribute to water and soil pollution.
Well-established industry statistics suggest that globally, around one million tonnes of POME are produced annually. However, a 2025 report has revealed that the UK and EU imported more than two million tonnes of POME in 2023, with more still in 2024 — over twice the global availability estimate.
This clearly implies that a lot of POME is likely fraudulently mislabeled virgin palm oil. Much of this comes from Southeast Asia, where land-use data is murky at best.
The HVO Supply Chain Problem
The supply chain behind HVP is opaque. In the U.S., HVO feedstocks include UCO (collected from restaurants), animal fats and, increasingly, soy oil. However, true waste oil supply is finite. The increased reliance on soy may incentivize land conversion to soy cultivation, indirectly driving tropical deforestation, particularly in Indonesia and Malaysia.
In Europe, regulations such as RED II require the phasing out of palm oil and soy oil for biofuels by 2030. However, the European Court of Auditors has highlighted concerns that derivatives can slip through legal loopholes — even though they drive the same deforestation risks.
Whistleblowers from the European biofuel manufacturing industry have told the BBC that fraudulently labeled palm oil “floods the market like cancer,” and have highlighted multiple instances of virgin palm oil being deliberately wrongly classified as POME or palm oil sludge.
In Southeast Asia, deforestation to create palm plantations continues. So while your HVO biofuel might shout about its green credentials, its origin story often includes critical habitat destruction and the displacement of indigenous communities.
Even companies sourcing UCO or certified waste may face pressure from limited supply and global pricing dynamics. As HVO demand increases, the risk of indirect environmental damage and ethical violations grows.
HVO Diesel Tax Credit Fraud
Meanwhile, recent reports indicate that biofuel tax credit fraud, particularly involving HVO biofuel and other renewable diesel, remains an ongoing issue in the U.S. There are concerns that some companies are inflating or falsifying their renewable fuel production to claim lucrative tax credits and EPA credits. The EPA has launched new investigations and audits into biofuel producers, especially those claiming to use UCO as a feedstock.
Reuters notes that the EPA is actively auditing supply chains to verify the authenticity of feedstocks. The IRS and Treasury Inspetor General have criticized federal agencies for failing to adequately prevent and detect fraud, with billions potentially at risk. Despite high-profile prosecutions, regulatory oversight and enforcement are still catching up, and the risk of new fraud schemes remains high.
Should You Trust HVO Diesel?
From a practical standpoint, HVP diesel performance is appealing. It doesn’t require engine retrofitting, burns cleanly, and performs well in cold weather. It also doesn’t have the horrible smell of mineral diesel. It’s especially useful for high-mileage drivers and fleets.
However, performance isn’t the issue — ethics and sustainability are. If you care about what’s going into your tank, where it comes from and how it might be contributing to climate doomsday, the picture is muddy. Unless your HVO diesel is explicitly verified to come from local UCO or animal fat that you can trace — not soy or palm-derived feedstocks — then the sustainability claims don’t hold up.
Smarter Sustainable Alternatives
If you’re looking to drive sustainably without falling into a greenwashing scam, consider these options:
- B100 biodiesel: Made from UCO or tallow, this offers lower lifecycle emissions, but beware of cold temperature limits and engine modification requirements.
- Electric vehicles (EVs): For urban and short-range drivers, EVs offer zero tailpipe emissions, although battery sourcing remains a concern.
- Synthetic e-fuels: While still an emerging technology, these fuels are promising for internal combustion engine enthusiasts who want climate-neutral fuel for the long term. However, they are likely to be much more expensive than other fuels. They also use rare earth metals for electrolysis, which is unsustainable and arguably unethical.
The Road Ahead for HVO Biofuel
HVO diesel holds real potential, but only if sourced transparently and ethically. The issues around mislabeling virgin palm derivatives as “waste” should alarm anyone serious about climate and integrity. If you’re equally serious about performance and sustainability, don’t take the marketing claims at face value. Drive smart — ask hard questions, demand traceability and opt for verified sources or better alternatives.
