The renewable fuels sector has long been seen as a cornerstone of the global energy transition, offering an immediate lever for decarbonization—particularly in hard-to-electrify sectors like aviation, heavy transport and shipping. But while the molecules may flow through existing infrastructure, the business model powering renewable fuels is anything but conventional.

With 79% of Energy & Utilities executives making the fight against climate change their top priority, leaders are harnessing carbon, data and regulation to create sustainable, competitive advantages.

This shift in executive focus highlights why renewable fuels—though complex—are increasingly viewed as strategic assets in a changing energy economy.

In May 2025, Finnish bioeconomy leader UPM announced it would discontinue its Rotterdam biofuels refinery project. The official reasoning: a shift in capital allocation and a focus on more scalable opportunities within its biofuels strategy. But beneath that corporate messaging lies a deeper market signal—building a profitable, scalable renewable fuels business is structurally more complex than many expect.

Beyond energy content: The dual value of renewable fuels

Traditional oil-based fuels are priced and traded based on a single value driver: energy content. Markets are commoditized, margins are thin and efficiency reigns.

Renewable fuels operate on a dual-dimensional value model:

  • The first dimension is still the energy value of the fuel, much like oil-based products.
  • The second—and increasingly dominant—dimension is the bio credit value: the sustainability or carbon reduction benefit, often measured in CO2e per ton and monetized via compliance or voluntary carbon markets.

This second value stream is not consistent. It fluctuates based on feedstock type, production method, region and applicable policy frameworks—ranging from the EU ETS and RED III to California’s LCFS. Prices are influenced by regulatory shifts, credit demand and evolving sustainability priorities across markets.

To capture full value, producers must go beyond physical logistics. They need to track carbon intensity at the batch level, trace feedstock origin and navigate carbon market volatility—requiring a new level of operational transparency, data management and regulatory agility.

A new kind of strategy is required

UPM’s decision reflects a broader market truth: scale alone isn’t enough. Success in renewable fuels calls for a shift in mindset—one that integrates commercial strategy, policy foresight and digital operations.

Here are four fundamental shifts shaping this new reality:

  1. Capital investment requires policy alignment
    Building biorefineries involves major upfront costs, but the revenue model relies heavily on policy-backed credit mechanisms that can change rapidly. Strategic timing and alignment with long-term regulatory signals are essential.
  2. Feedstock complexity requires agile supply chains
    Sourcing used cooking oil, animal fats and other low-carbon feedstocks is a global game—with high competition, shifting availability and increasing traceability requirements. Companies must adapt quickly to local regulations and feedstock constraints.
  3. Carbon credit markets offer value—but demand precision
    Bio credit values differ significantly by geography and compliance context. Knowing when and where to embed credits in fuel pricing—or monetize them separately—is now a core commercial decision.
  4. Traditional operating models fall short
    This isn’t just about refining anymore. Renewable fuel businesses must integrate digital systems for credit tracking, lifecycle analysis and compliance reporting—alongside their physical operations. This is increasingly important, as biofuel consumers need clear documentation of the energy’s origins and attributes to meet their environmental reporting, regulatory compliance and taxation requirements. They also rely on this data to account for downstream cumulative CO2 impacts on products they sell. As a result, demand for carbon tracking and certification continues to grow.

Scaling through smarter infrastructure

So, does the complexity mean renewable fuels aren’t scalable? Far from it. But scaling requires a different set of capabilities:

  • Digital traceability platforms to link carbon attributes to physical fuel in a verifiable, marketable way.>
  • Market intelligence to dynamically decide where and how to monetize bio credits.
  • Data-driven optimization to match feedstocks with the most valuable production and credit pathways.
  • Ecosystem partnerships with suppliers, regulators and carbon market platforms to co-create flexible, responsive value chains.

Some market players will adapt to this model and thrive. Others may choose to retreat or pivot. What’s clear is that success will not be determined by capacity alone—it will hinge on the ability to master the intersection of carbon, data and regulation.

Looking ahead: A new business model for a new era

Renewable fuels represent more than a technological advance—they signal a fundamental shift in how energy value is created, captured and commercialized. Succeeding in this space demands new capabilities: digital traceability, regulatory agility and a mindset that sees complexity not as a barrier, but as a catalyst for innovation and differentiation—as consumers increasingly demand verified carbon tracking and certification for what they purchase.

For companies that expect renewable fuels to behave like traditional oil, the path forward may prove difficult. But for those willing to rethink the model and embrace the dual-value logic of biofuels, the opportunity is clear: to lead in a rapidly evolving energy economy, unlock new sources of long-term, sustainable value and build the data-driven ecosystem needed—one grounded in validated data and auditable systems that can scale with demand.