In line with its ambition to achieve net-zero emissions by 2050, Singapore may soon be able to tap into hydrotreated vegetable oil ( HVO ) as a viable alternative to fossil diesel for powering data centres.

Rolls-Royce Power Systems, in collaboration with Microsoft, has issued a joint position paper advocating the adoption of HVO as an immediate lever for emissions reduction, and one that does not require additional new infrastructure.

Compared to traditional diesel, HVO, a bio-based fuel derived from waste fats and oils, offers up to 90% lifecycle CO2 reduction. Its seamless compatibility with existing diesel generators makes it a plug-and-play solution for data centres.

While an essential resource in a growing digital economy, data centres also account for significant and growing energy consumption. Singapore’s Green Data Centre Roadmap, released in 2024, prioritizes low-carbon energy and aims to add over 300 megawatts of new capacity sustainably.

Adoption barriers

Rolls-Royce and Microsoft are positioning HVO as a key transitional technology to bridge the gap until the development and production of longer-term fuels such as e-diesel or power-to-liquid ( PtL ) mature.

Despite its environmental promise, HVO faces adoption barriers, including the fuel’s higher cost – two to three times that of diesel – and fragmented global standards, according to the position paper.

To tackle this, Rolls-Royce and Microsoft are urging policymakers to harmonize certification frameworks, introduce incentives similar to Singapore’s Green Ship Programme, streamline regulatory approvals, and invest in domestic supply chains and feedstock transparency.

“This is about enabling decarbonization without delay,” says Tobias Ostermaier, president of stationary power solutions at Rolls-Royce. “HVO is scalable now. What we need is the right regulatory push.”

Kavickumar Muruganathan, ESG policy and planning director, Asia-Pacific, at Microsoft, adds: “We must foster innovation in low-carbon energy while enabling infrastructure to adapt quickly. HVO is a critical step forward.”

With Singapore already a regional data centre hub, the pivot to HVO could not only reduce emissions but also establish the city-state as a certification and innovation hub for green and sustainable fuels.