RED III Explained: EU Biofuel Targets and Palm Oil

RED III is the common name for Directive (EU) 2023/2413, the revision of the EU Renewable Energy Directive adopted on 18 October 2023 and in force since 20 November 2023. It raises the EU's binding 2030 renewables target to at least 42.5% and sets new transport targets: a 29% renewable share or a 14.5% cut in greenhouse gas intensity. For palm oil, RED III keeps the existing rule: biofuels made from high indirect land-use change (ILUC) risk feedstock, a category that currently covers palm oil, stay frozen at 2019 levels, and their contribution to the targets must fall to 0% by 31 December 2030 at the latest.

What is RED III?

The RED (Renewable Energy Directive) is the EU's legal framework for renewable energy. The 2018 version, Directive (EU) 2018/2001, is commonly called RED II. RED III is not a stand-alone law but an amending directive that revises RED II, Regulation (EU) 2018/1999 and the Fuel Quality Directive 98/70/EC.

• Number: Directive (EU) 2023/2413 of the European Parliament and of the Council of 18 October 2023.
• Published in the Official Journal: 31 October 2023 (L series 2023/2413).
• In force: on the twentieth day after publication, i.e. 20 November 2023, as the European Commission notes.
• Transposition deadline: 21 May 2025 for most provisions; 1 July 2024 for certain permitting provisions (Article 5).

As a directive, RED III does not bind companies directly. Member States must write it into national law, for example through obligations on fuel suppliers.

RED III targets at a glance

• Overall target: at least 42.5% renewables in the EU's gross final energy consumption by 2030, with a collective effort to reach 45%.
• Transport (Article 25): Member States must oblige fuel suppliers to reach either a renewable share of at least 29% by 2030 or a greenhouse gas intensity reduction of at least 14.5% against a baseline.
• Combined sub-target: advanced biofuels and biogas from Annex IX Part A feedstock plus renewable fuels of non-biological origin (RFNBOs, such as green hydrogen) must reach at least 1% in 2025 and 5.5% in 2030. Of the 2030 figure, at least 1 percentage point must come from RFNBOs.
• Maritime: Member States with sea ports should endeavour to reach at least 1.2% RFNBOs in maritime fuel from 2030.
• Annex IX Part B cap: biofuels from used cooking oil and category 1 and 2 animal fats are capped at 1.7% of transport energy. Member States can raise the cap with Commission approval.
• Crop-based cap: no more than 1 percentage point above each country's 2020 share, with a ceiling of 7% of transport energy.
• Multipliers: for the share calculation, biofuels from Annex IX feedstock and RFNBOs count at twice their energy content. Advanced biofuels used in aviation and shipping count 1.2 times, and RFNBOs in those modes 1.5 times.

RED II vs RED III: what changed?

Item	RED II (Directive 2018/2001)	RED III (Directive 2023/2413)
2030 renewables target	At least 32%	At least 42.5% (aim 45%)
Transport target	14% share by 2030	29% share or 14.5% GHG intensity cut
Advanced biofuels (Annex IX A)	0.2% (2022), 1% (2025), 3.5% (2030)	Combined with RFNBOs: 1% (2025), 5.5% (2030), at least 1 point from RFNBOs
Used cooking oil and animal fats (Annex IX B)	Capped at 1.7%	Still capped at 1.7%
Food and feed crop biofuels	7% ceiling (road and rail)	7% ceiling (all transport)
High ILUC-risk biofuels (palm)	Frozen at 2019 level, down to 0% by 2030	Same; now also applies to the GHG intensity target
Transposition deadline	30 June 2021	21 May 2025 (some parts 1 July 2024)

How does RED III treat palm oil biodiesel?

There are two layers of limits. First, all biofuels from food and feed crops, including palm, rapeseed and soybean oil, fall under the 7% ceiling. Second, biofuels from high ILUC-risk feedstock face a tighter limit. Their share counted towards the targets may not exceed each Member State's 2019 consumption level, and from 31 December 2023 that limit falls gradually to 0% by 31 December 2030 at the latest. The rule comes from Article 26 of RED II and is retained by RED III.

The criteria are set in Delegated Regulation (EU) 2019/807 of 13 March 2019. A feedstock is high ILUC-risk if its global production area has grown by more than 1% a year on average since 2008, covers more than 100,000 hectares, and more than 10% of that expansion went into high-carbon-stock land. The regulation's annex records that 45% of palm oil expansion went into forested land and 23% into peatland or wetlands. Soybean was recorded at 8%, below the threshold. Our explainer What is ILUC? covers the concept in detail.

Two points are often misunderstood. First, the limit is not an import ban. According to the European Commission, Member States may still use and import these biofuels. Volumes above the limit simply do not count towards national targets. Second, palm biofuels certified as low ILUC-risk are exempt from the limit. The certification rules are in Regulation 2019/807 and Implementing Regulation (EU) 2022/996.

Indonesia challenged the framework at the WTO (DS593). To follow up on the panel ruling, the Commission adopted a revision of Regulation 2019/807 on 10 April 2026 that also added soybean to the high-risk list. The European Parliament objected to it on 8 July 2026 over the soybean classification, so that revision cannot enter into force. In the same resolution, however, Parliament said it does not object to phasing down palm oil biofuels. See also the WTO panel ruling and the Parliament objection.

Annex IX: an opening for POME, empty fruit bunches and UCO

Annex IX lists waste and residue feedstocks that receive incentives. Part A, the advanced biofuel feedstocks, explicitly names "palm oil mill effluent and empty palm fruit bunches" (POME and EFB). Part B covers used cooking oil (UCO) and category 1 and 2 animal fats. Delegated Directive (EU) 2024/1405 extended the list with items such as fusel oils, cyanobacteria and damaged crops unfit for food or feed.

Palm residues therefore keep a route into the EU biofuel market and even count towards the 5.5% sub-target. That route is under close scrutiny. According to the investigative group Earthsight, the EU imported 871,044 tonnes of POME, EFB and SBEO oil worth EUR 904 million from Indonesia and Malaysia in 2025. Earthsight also notes that Germany and Ireland have banned or are phasing out these feedstocks from their biodiesel mandates.

RED III transposition: deadline and status

The general transposition deadline passed on 21 May 2025, but many Member States are late. According to the European Renewable Energy Federation (EREF), the Commission opened infringement procedures against all 27 Member States. Sweden was referred to the EU Court of Justice in October 2025 over the permitting provisions. On 29 April 2026 the Commission referred Greece, Malta and Portugal to the Court and asked for financial penalties. The Brussels Times reported that Greece and Portugal had notified no transposition measures at all. Regulatory research firm Cullen International counted only five Member States that had transposed the directive as of 30 June 2026. The Commission is also preparing proposals for a post-2030 renewables framework, scheduled for the end of 2026.

What it means for Indonesia

Palm biodiesel exports. CPO-based biodiesel can still enter the EU, but it is worth less and less to fuel suppliers there because a shrinking volume counts towards the targets, reaching zero in 2030. Low ILUC-risk certification is the only route for CPO-based palm biofuels to keep counting. Analysis: the main market for Indonesian palm biodiesel is now the domestic mandate (B40, heading to B50), not Europe.

Palm residues. POME and EFB sit in Annex IX Part A and UCO in Part B. At home, exports of UCO and POME residues were tightened under Trade Ministry Regulation 2/2025, while domestic demand for sustainable aviation fuel is growing.

Not the same as the EUDR. RED III governs what counts towards renewable energy targets. Market access for palm oil and its derivatives is governed separately by the EUDR, the EU deforestation regulation, which requires deforestation-free due diligence (see the EUDR extension to palm derivatives). Neither law bars Indonesia from running its own biodiesel programme, as our fact check explains.

Frequently asked questions

Does RED III ban palm oil?

No. RED III does not ban imports or use of palm oil. What it limits is how much high ILUC-risk palm biofuel counts towards renewable energy targets, falling to 0% by the end of 2030 at the latest. Some Member States apply stricter national rules.

Is RED III already in force?

The directive has been in force since 20 November 2023. Obligations on fuel suppliers only apply once each Member State has written them into national law, and as of mid-2026 that process was unfinished in many countries.