Refinery Upgrades Needed to Boost Sustainable Fuel Output
Refiners must weigh significant capital costs and regulatory fragmentation to scale bio-feedstock co-processing.
Updated on Oct. 16, 2026 in Oil and Gas
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European refineries face significant technical and regulatory hurdles in scaling the production of sustainable aviation fuel (SAF) through co-processing. While one third of regional refineries currently integrate bio feedstocks into existing streams, strict fuel standards and inconsistent national laws complicate efforts to meet growing mandates.
Why it matters
Refiners must navigate a complex landscape of capital-intensive equipment upgrades and regulatory fragmentation to scale SAF output. These barriers currently limit most facilities to 5-10 percent bio feedstock ratios, challenging the ability to meet European sustainable fuel production requirements at scale.
Approximately one third of European refineries currently perform co-processing, though most remain capped at 5-10% bio feedstock ratios without hardware changes. Upgrading older sites to handle higher volumes could cost between $200 million and $400 million per facility.
The players
European Commission
The executive branch of the European Union responsible for drafting legislation, managing mandates, and overseeing policy development for regional energy and environmental standards.
IATA
The trade association for the world’s airlines, which advocates for industry-wide sustainability standards and hosts global forums for aviation stakeholders.
The details
Refining bio-based feedstocks requires hydrogen and specific metallurgy adjustments to manage increased acidity, which can necessitate costly hydrocracker upgrades. Furthermore, inconsistency in used cooking oil quality and fragmented national laws across European Union member states create operational risks for firms seeking to scale output. Companies are now exploring the integration of synthetic e-crude, produced via renewable hydrogen and captured carbon, to bypass some feedstocks constraints.
Timeline
October 2026: IATA World Sustainability Symposium held in Brussels.
Market Landscape
The push to scale sustainable aviation fuel occurs under the pressure of increasingly rigid European sustainable aviation fuel mandates. These regulations are driving a structural pivot in the oil and gas industry, forcing operators to reconcile traditional crude processing with the demands of renewable feedstock integration.
Refiners should assess whether current site metallurgy and hydrogen capacity support higher bio-feedstock ratios or if capital-intensive upgrades are mandatory. Operators must also monitor European Commission decisions on e-HEFA classification, as regulatory alignment will be the primary driver for justifying $200 million-plus facility investments.
The takeaway
The transition to sustainable aviation fuel is currently hindered more by regulatory fragmentation and hardware limits than by feedstock availability. Operators should monitor potential shifts in ASTM testing standards, which could lead to eased co-processing ratio limits and improve the ROI for planned facility upgrades.
Further reading
Operators can track evolving infrastructure standards and industry compliance trends in our Oil and Gas section.
Source note: This article includes information reported by Argusmedia.
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Is it a better long-term strategy to retrofit existing oil refineries for sustainable fuel production?
