Used cooking oil is valuable primarily because it serves as a low-carbon feedstock for renewable fuels, and demand for those fuels is surging. The global used cooking oil market was valued at $8 billion in 2024 and is projected to reach nearly $12 billion by 2030. What was once a waste product that restaurants paid to haul away now commands real commodity prices, driven by government mandates, airline decarbonization targets, and a carbon footprint that beats nearly every alternative feedstock.
Renewable Fuel Is the Biggest Driver
The single largest reason used cooking oil (often called “yellow grease” on commodity markets) has value is its conversion into biodiesel, renewable diesel, and sustainable aviation fuel. Through a chemical process called transesterification, used oil becomes biodiesel. A more advanced process called hydrotreating converts it into renewable diesel or jet fuel that is chemically identical to petroleum-based versions and can be dropped straight into existing engines and fuel infrastructure without modification.
Hydrotreated vegetable oil outperforms traditional biodiesel on several measures: lower density, fewer aromatic compounds, a higher cetane rating (which means cleaner ignition), and more energy per gallon. Both fuels perform better than petroleum diesel in emissions testing. The aviation industry is especially hungry for this supply. The International Air Transport Association projects a need for 18.5 million tonnes of sustainable aviation fuel by 2030, and most of that demand is expected to be filled through lipid-based pathways, with used cooking oil as a primary feedstock. SAF could account for 4% to 5% of all jet fuel use by 2030 if announced production capacity comes online as planned.
Carbon Scores Give It a Price Advantage
Not all renewable fuels are treated equally by regulators. What matters is a fuel’s carbon intensity score: a lifecycle measurement of how much greenhouse gas is emitted per unit of energy, from growing or collecting the feedstock through burning the finished fuel. Used cooking oil scores dramatically better than alternatives because it’s a waste product. No land was cleared to grow it, no fertilizer was applied, and no harvest equipment burned diesel to collect it. All of that upstream carbon is assigned to the food that was originally cooked in it.
The numbers are striking. Biodiesel made from used cooking oil has a carbon intensity of roughly 19.8 grams of CO2 equivalent per megajoule of energy. Soybean-based biodiesel scores 56.5. For renewable diesel, the gap is similar: about 26 grams for used cooking oil versus 61.4 for soy. Since many government programs tie financial incentives directly to carbon intensity, a lower score translates into higher credit values per gallon of fuel produced. This is why refiners will pay a premium for used cooking oil over virgin vegetable oils.
Government Credits and Mandates
Regulatory programs in the United States and Europe essentially guarantee demand for low-carbon fuels and attach real dollar values to producing them. In the U.S., the Inflation Reduction Act created the Section 45Z Clean Fuel Production Credit, which provides up to $1.00 per gallon for qualifying clean transportation fuels produced domestically through 2029. The lower a fuel’s carbon intensity, the larger the credit, which again favors used cooking oil over crops like soy or corn.
There’s an important catch, though. Starting in 2026, fuel qualifying for the 45Z credit must be derived from feedstock produced or grown in the United States, Mexico, or Canada. The Treasury Department has flagged concerns about reliably distinguishing imported used cooking oil from palm oil (which has a much higher carbon footprint) and has paused credit pathways for foreign-sourced used cooking oil until further guidance is issued. This regulatory uncertainty has made domestically sourced used cooking oil even more valuable to American refiners.
Fraud and Verification Challenges
The high value placed on used cooking oil has created a significant fraud problem. Because waste oils receive better carbon credits than virgin oils, there’s a financial incentive to label fresh palm oil or other cheap virgin oils as “used cooking oil.” The European Commission concluded an examination of potential Chinese biofuel import fraud and identified systemic weaknesses in how certification audits were conducted. In response, a working group of EU countries is revising the legal framework for sustainability certification, and the EU is moving toward mandatory deployment of a union-wide biofuels database to track supply chains.
These fraud concerns actually reinforce the value of verified, domestically collected used cooking oil. Restaurants and food manufacturers with documented, traceable waste streams are sitting on a more trusted, and therefore more marketable, commodity.
What Restaurants and Collectors Earn
On commodity markets, yellow grease trades by the hundredweight (100 pounds). Recent USDA pricing shows used cooking oil selling between $35 and $48 per hundredweight depending on the region, with California markets typically at the higher end. That works out to roughly 35 to 48 cents per pound.
For restaurants, this has completely flipped the economics of oil disposal. Instead of paying a waste hauler, many kitchens now receive rebates or free pickup. Automated collection systems have made the process even smoother. Companies like Restaurant Technologies serve over 45,000 commercial kitchens with bulk oil delivery, automated filtration, and hands-free disposal. Used oil is pumped out of sealed tanks on a schedule, eliminating the old system of employees lugging hot, heavy containers to outdoor bins. The used oil then enters a supply chain that feeds refineries.
Keeping Sewers Clear
There’s also value in what used cooking oil doesn’t do when it’s properly collected. Fats, oils, and grease that wash into municipal sewer systems congeal into “fatbergs,” massive blockages that damage pipes and cause sewage overflows. Nationally, cleaning up grease-related sewer clogs costs an estimated $1 billion per year in the United States. Even a small regional wastewater authority can spend $85,000 annually on fatberg removal. Every gallon of cooking oil that enters the recycling supply chain is a gallon that doesn’t end up coating sewer walls, so municipalities have their own reasons to encourage collection.
Uses Beyond Fuel
While biofuel drives the bulk of demand, used cooking oil feeds other industries too. It has long been an ingredient in animal feed formulations, where it adds caloric density at low cost. It can also be processed into soap through a simplified version of the same saponification chemistry used for centuries. Community programs in several countries teach residents to convert household cooking oil into usable soap bars using little more than an alkaline solution and corn flour as a clarifying agent. Bio-based lubricants represent a smaller but growing application, as manufacturers look to replace petroleum-derived greases and hydraulic fluids with renewable alternatives.
None of these applications individually rival the fuel market in scale, but they add layers of demand that keep prices firm even when fuel markets fluctuate. The combination of environmental regulation, aviation decarbonization targets, municipal waste savings, and growing industrial uses has transformed used cooking oil from a disposal headache into one of the more sought-after waste commodities in the world.