China's biofuel sector is undergoing a profound transformation, with producers rapidly pivoting from biodiesel exports to sustainable aviation fuel production after a wave of European trade defense measures dismantled their long-standing export model.

The USDA China biofuel annual report released on Aug. 28 underscores how trade policy, global decarbonization targets, and China's own electrification drive are redrawing the map for renewable fuels.

China's SAF and renewable diesel exports are projected to decline sharply in 2025, reaching approximately 620 million liters, the lowest levels in four years, primarily due to EU anti-dumping duties and trade restrictions that have drastically reduced biodiesel exports from their peak of around 900 million liters in 2023 and 2024.

EU and UK tariffs disrupt Chinese biodiesel

The report reveals that Beijing's biodiesel industry, long dominated by exports to Europe, has been hammered by the European Union's anti-dumping duties of 10%–35.6%, imposed in February.

Roughly 80% of Chinese biodiesel output historically flowed to the EU, but exports dropped 40% to just 1.2 billion liters this year, pushing national production down 30% to 1.87 billion liters. About a quarter of China's 40-plus producers have already shuttered.

"The EU's anti-dumping measures significantly squeezed profit margins, leading most biodiesel plants to suspend operations," USDA noted.

That squeeze was compounded in August when the UK's Trade Remedies Authority recommended antidumping duties on Chinese biodiesel as high as 54.65% for non-cooperating exporters, even steeper than the EU's penalties.

Companies such as EcoCeres and Jingu Group face lower tariffs of 15.68%, but the UK decision, triggered by domestic producers' complaints of "material injury," could effectively close the market for Chinese biodiesel altogether.

UK biofuel consumption had already slumped 32% in the first half of 2025, with major players like Greenergy suspending FAME production. "The duties are an attempt to level the playing field and give domestic producers breathing room," a market source told S&P Global Commodity Insights.

Moreover, the report documents how trade tensions have effectively shut down US-China biofuel trade. China continues to impose punitive tariff rates on US ethanol imports, and the existing retaliatory tariff levels restrict opportunities for US ethanol exports to China.

Pivot to SAF: China eyes export powerhouse role

With biodiesel markets collapsing, Chinese producers are retooling for aviation fuels – a segment strategically exempted from European and UK trade defense measures.

According to the USDA, China's SAF production capacity is projected to reach 3.0–3.8 billion liters in 2025, potentially surpassing Europe.

In April, Zhejiang Jiaao Enprotech became the first company approved under China's new SAF export pilot program, shipping 13,400 mt (16.75 million liters) abroad the following month.

More than 40 SAF facilities are now operating, under construction, or planned nationwide, including projects by Sinopec Zhenhai Refining, Henan Junheng, and Shandong Sanju. Beijing has introduced a "whitelist" system for SAF exports, treating them under conventional jet fuel procedures while offering green finance incentives across the value chain.

"SAF is emerging as the clear strategic outlet," USDA wrote. "China remains export-oriented given limited domestic demand, but its potential capacity rivals or exceeds that of Europe."

Domestic biofuels: stagnation amid EV boom

While China accelerates SAF production, domestic liquid biofuel consumption is stalling.

The USDA reports that ethanol consumption will fall 11% this year to 4.3 billion liters as gasoline demand shrinks under the weight of electric vehicle (EV) adoption.

China sold nearly 13 million new energy vehicles in 2024 – 41% of all car sales – and analysts project EVs could exceed 50% of sales in 2025.

As a result, the nationwide ethanol blend rate is stuck at just 2.1%, far short of the E10 target once promised for 2020.

The government has shifted its rhetoric from "moderate development" of corn ethanol to "strict control," while alternative feedstocks such as cassava have struggled. Coal-based synthetic ethanol, however, has surged, doubling output to 1.2 billion liters in 2024 and capturing over 50% of Shandong's market thanks to competitive pricing.

"The lack of meaningful support for domestic blending, alongside rapid EV uptake, indicates China has chosen electrification over liquid biofuels to decarbonize transport," the USDA said.

Global trade ripples: feedstocks, SAF supply

China's pivot is already shaking global feedstock markets. The USDA notes that Beijing scrapped export tax rebates for used cooking oil (UCO) in late 2024 to secure domestic supply, with UCO now the critical constraint for SAF growth.

China collects around 5.2 billion liters of UCO annually but only 63% is converted into biofuels – far below the levels needed for its planned SAF capacity.

Meanwhile, European buyers are sourcing alternative waste oils. UCO imports into Amsterdam-Rotterdam-Antwerp are trading at $1,220–$1,255/mt, with Gulf Cooperation Council (GCC) suppliers increasingly filling the gap left by Chinese biodiesel.

"This could become a catalyst for faster Chinese entry into the SAF export market, where regulatory exemptions and strong global demand make the economics far more attractive," a Singapore-based trader said.

For Europe and the UK, protectionist measures may give temporary relief to struggling producers, but also risk deepening reliance on foreign SAF just as blending mandates rise.

As the world's largest energy consumer, China's choices will reverberate globally. In abandoning traditional biofuel exports and doubling down on aviation fuels, Beijing is redrawing renewable fuel supply chains – forcing Europe, the UK, and others to adapt to a new trade and energy reality.

Platts, part of S&P Global Commodity Insights, assessed the Asian SAF-jet fuel spread at $1,301.74/mt on Aug. 28, down $18.03/mt day over day.

Platts assessed UCOME FOB North China at $1,185/mt on Aug. 29, recovering from the previous low at $1,095/mt on May 23. The Platts-assessed UCOME FOB Straits price similarly climbed to $1,240/mt on Aug. 29, from $1,198/mt on June 9.