This shift is forcing traders, investors, and logistics providers to rethink their strategies and operations. The Renewable Transport Fuel Obligation (RTFO) data, published in November 2025, revealed that biofuels sourced from waste accounted for 77% of all verified renewable fuel supplied to the UK market in 2024. The shift towards circular-economy feedstocks has opened doors for commodity enterprises. Those able to connect fragmented supply chains with institutional financing stand to gain.
The Rise of Used Cooking Oil as a Commodity Asset
Used cooking oil (UCO) is now at the heart of this transformation. Once dismissed as little more than a byproduct, used cooking oil (UCO) has found a new life. It’s now traded using standardised indexes, with Argus Media and Fastmarkets at the helm. In 2024, it accounted for 46% of the UK’s total certified renewable fuel output. Its significance was particularly evident in biodiesel production, where a substantial 81% of the 841 million litres produced depended on used cooking oil (UCO).
The RTFO’s double-counting feature benefits waste feedstocks, rewarding both reductions in carbon intensity and contributions to recycling. Consequently, grasping these regulatory incentives is now important for crafting financially sound deals within the UCO market.
Price Pressures and Market Tightening
The market’s trajectory through 2024 and the beginning of 2025 mirrors this increasing appetite. UCO prices in northwest Europe held steady through the initial months of 2025, with an average of $1,203.92 per tonne. Spot prices reached $1,250 per tonne on March 24th, marking the highest level since October of the previous year.
Seasonal demand for winter-grade biodiesel, along with reduced collection volumes and robust palm oil prices, are the culprits behind the current worldwide supply shortage, according to traders. For commodity houses juggling multi-year offtake contracts, this kind of market fluctuation brings both peril and potential. It compels companies to fortify their logistics and broaden their sources of raw materials.
London’s Rise as a Structured Finance Center
London’s commodity markets have long specialised in financial engineering and standardised trade. Waste-based biofuels, however, demand frameworks that differ from those applied to traditional crude products or agricultural commodities. Their regulatory complexity and certification requirements create a need for sophisticated financial structures and capital tools that can withstand fluctuating supply conditions.
London remains uniquely suited to this task. The city hosts institutions with deep experience in trade finance, sustainability-linked funding instruments, and cross-border commodity operations.
Throughout 2024, several global dealers expanded or established investment divisions in London, aiming to leverage its institutional capital base and well-developed financial infrastructure.
The Complexity of Compliance and Certification
The processes of compliance and certification are inherently complicated.
Certification systems, such as the International Sustainability and Carbon Certification (ISCC) and the European Union’s Renewable Energy Directive III (RED III), have become important for market participation. Traders are obligated to confirm the sources of their feedstocks, comply with sustainability regulations, and maintain meticulous records of their movements across international boundaries.
For companies lacking established due diligence processes, these requirements create obstacles to entering the market. Big players in the market are, however, leveraging certification know-how to gain an edge. They’re integrating compliance considerations into every aspect of their operations, from sourcing goods to logistics and investment structure.
Alkagesta UK Limited provides a clear example of how markets change over time.
Case Study: How Alkagesta UK Limited Exemplifies Market Evolution
Alkagesta SA, founded in Malta in 2018, illustrates how multinational commodity firms are responding to the evolution of the sector. In 2024, the company launched Alkagesta UK LTD, its investment and capital structuring arm based in London. The division’s mandate is to channel institutional finance into UCO processing assets and broader biofeedstock supply chains across Europe and Asia.
Alkagesta SA operates across 42 countries and moves more than 7 million metric tonnes of commodities annually. The group’s core capabilities in procurement, logistics, certification, and structured finance align precisely with the operational demands of the waste-based biofuels sector.
Strategic Positioning in a Growth Market
Alkagesta’s move into London mirrored the broader state of play in the UK’s investment scene. In the first six months of 2025, UK transactions that were made public reached £71 billion. Private equity deals accounted for a significant portion, 72% of the total, marking a 90% increase compared to the year before.
Against this backdrop, Alkagesta London began investing in networks for processing, storing, and transporting used cooking oil. The company’s leadership boasts a diverse array of specialists, each bringing a wealth of experience from structured finance, institutional connections, and
capital markets. They serve as the link between commodity operations and the demands of institutional investors who want to participate in sustainable asset classes.
Operational Integration Across Three Geographic Hubs
Alkagesta UK’s operations focus on three main pillars: certification oversight, trade finance coordination, and transaction structuring. The firm manages ISCC EU and RED III compliance, aligns capital flows with feedstock requirements, and works with 28 international banks to support trade finance.
This model brings together Alkagesta Malta’s sourcing and logistics expertise with London’s investment and structuring strategy, forming a system that helps manage the complex, scattered supply chains of waste-based commodities.
As CEO Orkhan Rustamov says, London provides “a unique blend of financial acumen and institutional dependability,” positioning the city as a natural centre for coordinating structured investments that support the energy transition.
Market Fundamentals Point Toward Sustained Growth
Forecasts for the sector remain broadly positive. Research from Spherical Insights projects the UK biofuels market will expand at a compound annual growth rate of 11.08% between 2025 and 2035, reaching USD 7.95 billion. This trajectory depends heavily on RTFO obligations requiring fuel providers to supply 19.474% sustainable fuel by 2030.
The UK must also comply with RED III mandates, including a target of 14.5% renewable fuel intensity by 2030, with 55% of that derived from waste or residue-based feedstocks. Together, these frameworks provide long-term regulatory stability, encouraging investment in waste-oil collection systems, processing facilities, and certification infrastructure.
Scotland’s pilot program for converting heating oil systems to hydrotreated vegetable oil (HVO) reflects growing government interest in waste-based fuels beyond transport. Produced from UCO or animal fats, HVO can deliver up to a 90% reduction in greenhouse gas emissions compared with diesel.
Globally, the International Energy Agency expects demand for advanced biofuels to rise by 20% between 2025 and 2030, driven by policies in the EU and North America. This strengthens the case for UK-based investment in biofeedstock supply chains.
Institutional Capital Redirects Toward Measurable ESG Outcomes
A 2025 Grant Thornton analysis of 200 private equity leaders shows that while 68% of firms have reduced reliance on dedicated ESG funds, 73% now embed ESG criteria directly into core
investment strategies. Compliance and ethics have overtaken short-term value creation as priorities.
Waste-based biofuels attract institutional investors because their environmental benefits can be measured, such as lower carbon emissions and higher recycling rates. These attributes align with net-zero commitments and ESG reporting frameworks.
London’s leadership in sustainable finance reinforces this trend. The city’s Sustainable Bond Market has mobilised more than £260 billion across 564 issuances, while its broader green-finance ecosystem channels capital into low-carbon infrastructure, carbon markets, and impact-focused projects.
Structural Constraints and Competitive Realities
Despite strong fundamentals, structural constraints continue to limit scalability. UCO availability fluctuates with collection patterns, economic conditions in source countries, and competing industrial uses. China’s removal of its 13% export tax rebate on UCO in 2024 tightened global supply and redirected flows toward Europe, heightening competition among traders.
Certification itself creates operational strain, particularly for smaller firms lacking compliance infrastructure. Large traders with established verification systems, including firms with extensive storage capacity and diversified supply networks, retain competitive advantages. Alkagesta’s 700,000 cubic meters of storage across Europe and Asia is one example of the increased logistical depth required to manage supply volatility.
At the macro level, UK private equity sentiment trails global trends. Just 50% of UK firms expect to increase investment in 2025, compared to 67% of international firms. Domestic uncertainty may slow local capital flows into renewable commodity sectors, reinforcing London’s dependence on international investors.
Industry Consolidation Reshapes Market Structure
Commodity traders are reorganising around waste-based feedstocks, shifting away from fossil fuels and building specialised teams focused on sourcing logistics, sustainability certification, and finance structuring. This distributed model leverages regional expertise while centralising capital allocation in hubs like London.
The city has become a focal point for strategic expansion. Following Alkagesta UK’s launch, several trading firms have expanded London operations specifically to manage biofuel-related investment structures. London’s regulatory environment, financial infrastructure, and access to institutional investors provide advantages for coordinating cross-border feedstock flows and capital deployment.
The Path Forward: Sustainability Meets Financial Infrastructure
As the UK pursues its net-zero targets and increases domestic renewable fuel production, London’s role in the commodity trading ecosystem is evolving. Government policy, institutional investor interest, and established financial frameworks are converging to position waste-based biofuels as a significant asset class in the broader energy transition.
For companies such as Alkagesta UK LTD, the market’s evolution underscores both the operational challenges inherent in waste-based commodity trading and the rising importance of institutional-grade financial structuring. London’s financial infrastructure has become central not just to accessing capital but to defining how modern commodity companies participate in the next phase of global energy markets.