How SAF Demand Is Reshaping Forest-Based Feedstock Markets

Sustainable aviation fuel (SAF) has quickly become one of the most closely watched markets in the low-carbon economy. Airlines, fuel producers, policymakers, and investors are all looking for pathways to reduce aviation emissions. And SAF is widely viewed as one of the most practical near-term solutions.

But the story does not begin at the airport or refinery. It begins upstream with feedstocks.

As demand for SAF, renewable diesel, HVO, and marine biofuels grows, competition for low-carbon feedstocks is intensifying. That competition is creating new market relationships between sectors that were once more separate:

• Aviation

• Road Transport

• Marine Fuels

• Pulp and Paper

• Forestry

• Oleochemicals

For pulp mills and forest products companies, this shift is especially important. Forest-derived byproducts such as crude tall oil (CTO), tall oil fatty acids (TOFA), lignin, wood residues, and biogenic carbon dioxide are increasingly being evaluated not just as secondary outputs, but as potential inputs into higher-value fuel, chemical, and carbon markets.

SAF Demand Is Expanding the Feedstock Conversation

SAF is often discussed in terms of fuel markets, but its role in feedstock markets is just as crucial. As mandates and voluntary decarbonization commitments accelerate, fuel producers need reliable access to qualifying low-carbon inputs.

That need is broadening the commercial value of waste-based and residue-based materials. Used cooking oil (UCO) has become one of the most prominent low-carbon feedstocks in renewable fuel supply chains. As a result, UCO pricing increasingly acts as a market signal for other waste and residue feedstocks, including forest-derived materials.

Crude tall oil is another example. CTO is produced by kraft pulping and contains valuable components, including tall oil fatty acids, tall oil rosin, and tall oil bottoms. These fractions have long-standing uses in chemicals, adhesives, inks, coatings, rubber tackifiers, surfactants, fuels, and asphalt additives. As renewable fuel markets grow, CTO and its derivatives are receiving increasing attention as low-carbon feedstock options.

The result is a new pricing environment. Pulp mill byproducts that once moved primarily through traditional industrial channels are now influenced by renewable fuel demand, carbon intensity values, and policy incentives.

Policy Is Turning Feedstock Availability into a Strategic Issue

The market impact of SAF demand cannot be separated from regulation. In Europe, renewable energy policy has increasingly emphasized advanced and waste-based feedstocks. Materials that qualify under relevant policy frameworks can attract greater interest because they help producers meet mandated targets and carbon-intensity requirements.

This is why Annex IX feedstocks have become so strategically important. As fuel producers seek feedstocks that support compliance and improve carbon performance, competition can increase for limited volumes of qualifying materials. That pressure can lift price floors and reshape procurement strategies.

The May 2026 Pulp Mill Bio Solutions report highlights this dynamic in Europe in several ways:

• HVO plants are seeking more Annex IX A feedstocks.

• European prices are rising as the international feed complex tightens.

• Germany and the Netherlands are advancing RED III implementation.

These developments point to a broader market reality: policy is no longer a background condition. It is actively shaping feedstock flows, pricing relationships, and investment decisions.

For forest-based feedstock suppliers, this creates both opportunity and complexity. The opportunity lies in higher-value demand. The complexity lies in documentation, qualification, traceability, and understanding how regional policy changes affect market access.

SAF, HVO, and Marine Biofuels Are Competing for the Same Feedstock Pool

SAF is not the only market driving demand for low-carbon feedstocks. Renewable diesel, HVO, biodiesel, and marine biofuels are also competing for many of the same inputs.

This matters because feedstock markets do not respond to a single demand signal. A tightening UCO market, a stronger renewable diesel revenue stack, or a policy shift in European HVO markets can affect the economics of other low-carbon feedstocks.

For forest-derived materials, these cross-market relationships are becoming more important.

For example, if renewable diesel demand strengthens in North America, UCO prices may rise. If UCO becomes more expensive or harder to secure, buyers may look more closely at alternative waste-based feedstocks. That can increase interest in CTO or TOFA.

Similarly, if European SAF demand remains firm while HVO demand fluctuates, feedstock buyers may adjust procurement strategies across regions.

These linkages are making feedstock intelligence more valuable. Pulp mills and forest products companies can no longer assess byproduct value only through traditional end-use markets. They also need to understand how fuel mandates, carbon credit frameworks, refinery economics, and global trade flows are influencing the value of their outputs.

Forest-Based Feedstocks Are Becoming Part of a Larger Decarbonization Stack

The growing interest in forest-derived feedstocks reflects a larger shift in how pulp mills are being evaluated. Mills are no longer viewed only as producers of pulp, paper, and packaging inputs. They are increasingly seen as potential platforms for generating bio-based revenue.

That revenue stack can include multiple products:

• Tall Oil

• Turpentine

• Lignin

• Methanol

• Wood Residues

• Biogenic CO₂

• Carbon Offsets

• Other Low-Carbon Products

Some of these markets are mature, while others are still emerging. Together, they point to a future in which pulp mill economics may be influenced by a much wider range of downstream markets.

SAF demand is one piece of this picture. It creates a commercial pull for qualifying low-carbon feedstocks. But the same underlying trend is visible in other markets as well:

• Chemical companies are looking for bio-based alternatives.

• Carbon markets are evaluating biogenic carbon attributes.

• Energy producers are exploring biomass and carbon capture pathways.

For pulp mills, this creates a strategic question. Which byproducts should remain commodity outputs, and which should be positioned as higher-value decarbonization inputs?

“Pulp mills must decide which byproducts remain commodity outputs and which can be elevated into higher-value decarbonization inputs.” 

Traceability Will Determine Who Captures the Most Value

As low-carbon feedstock markets mature, having access to biomass-derived material may no longer be enough. Buyers increasingly need documentation proving the origin of a feedstock, its production process, and whether it meets relevant sustainability frameworks.

This is especially important for markets tied to carbon intensity, regulatory compliance, or environmental attributes. If a feedstock cannot be documented, it may not capture its full value. If it can be traced and verified, it may become more attractive to buyers seeking compliance-ready inputs.

This is where forest products companies may face a critical advantage (or a critical bottleneck). Many pulp mills sit within established forest value chains, but those value chains can be complex. Feedstock origin, land ownership, procurement practices, and sustainability documentation all matter.

As SAF, HVO, marine biofuel, and carbon markets become more sophisticated, traceability will likely become a commercial requirement rather than an administrative add-on. The companies that can document feedstock attributes most effectively will be better positioned to access premium markets.

Learn More About Traceability and EUDR Compliance with Forest Trackt

What This Means for Pulp Mills and Feedstock Suppliers

The rise of SAF is creating new opportunities for forest-based feedstocks. But it is also changing the level of market awareness required to compete.

Pulp mills and suppliers should be watching several key signals:

• How SAF mandates and voluntary airline commitments affect demand for qualifying feedstocks

• How UCO pricing influences the broader waste-feedstock complex

• How RED III and other policy frameworks affect Annex IX feedstock demand

• How renewable diesel and HVO economics compete with aviation fuel demand

• How traceability and sustainability documentation shape market access

• How emerging bio-based chemical markets compete with fuel markets for the same raw materials

The central takeaway is clear: forest-derived feedstocks are becoming more strategically valuable because they sit at the intersection of fuel, chemical, and carbon markets.

For pulp mills, this could open new revenue pathways. For fuel producers, it could create new sourcing opportunities. For investors and policymakers, it highlights the need to understand the upstream supply chains behind low-carbon fuel growth.

The Bigger Picture: Aviation Is Pulling Forest Products into the Low-Carbon Economy

SAF demand is not just changing aviation; it is helping reshape the economics of forest-derived feedstocks.

As policy support grows and fuel producers compete for low-carbon inputs, materials such as crude tall oil and tall oil fatty acids may become increasingly important in renewable fuel supply chains.

At the same time, the commercial value of these materials will depend on pricing signals, regulatory eligibility, traceability, and competition from other end uses. This is why the next phase of SAF market development will not be about production capacity alone. It will also be about feedstock strategy.

Companies that understand these upstream dynamics will be better positioned to identify opportunities, manage risk, and capture value as low-carbon markets continue to evolve.

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