2025 State of The Industry Report

Algal Oil

This report evaluates algal oil as an alternative to fish oil in aquaculture, examining its nutritional performance, scalability, sustainability, and safety. Findings indicate that algal oil provides a proven and reliable source of omega-3s suitable for commercial aquafeed production.

Read the executive summary

About the Report

Global fish-oil supply has become increasingly constrained over the past decade. Aquaculture growth continues to depend on this finite marine resource, with rising demand driving price volatility and pressure on pelagic fisheries.

Algal oil is derived from microalgae that naturally produce the same long-chain omega-3 fatty acids (EPA and DHA) found in fish oil. It is positioned as a direct substitute for fish oil in aquafeeds, offering an alternative source of essential fatty acids that does not depend on wild-caught fish and can be produced through land-based cultivation.

This report is the first in CFI’s State of the Industry series on novel aquafeed ingredients. The series evaluates the technical performance, scalability, sustainability, and safety of emerging alternatives to fish meal and fish oil, providing an evidence base for sustainable industry growth.

Algal oil is a proven replacement for fish oil, delivering essential EPA and DHA without losses in productivity or quality.

Up to 55 % EPA + DHA in total fatty acids in microalgae dry matter. Algal oils contain more than half their total fatty acids as long-chain omega-3 fatty acids—comparable to or higher than premium fish oils.

100 % fish-oil replacement demonstrated. Trials and commercial feeds show full substitution without loss in growth or flesh omega-3 retention.

Consistent composition and product quality. Controlled fermentation ensures predictable nutrient profiles, free from seasonal or geographic variation.

Viable as a fish oil replacement

Feed producers increasingly recognise that algal oils can meet EPA and DHA requirements without compromising growth, feed efficiency, or product quality. Continued advances in strain selection and cultivation will enable producers to fine-tune omega-3 ratios and extend applications across more aquaculture species.

Algal oil has already transitioned from pilot use to recurring inclusion in commercial aquafeeds, establishing a credible path to scale. Recurrent fish-oil volatility and quotas have created enduring pull for stable omega-3 sources, with large-scale production ensuring year-round supply.

Scaling production: Global output is projected to increase from 20,000 MT in 2024 to around 36,000 MT by 2030.

Successful commercial adoption: Algal oil is a recurring ingredient in the feed formulations of leading aquafeed producers, who cite functional equivalence and supply stability as drivers of adoption.

Cost and capital intensity: Production remains capital- and energy-intensive, and costs are generally higher than fish oil. However, competitiveness improves during periods of fish-oil price volatility.

Strong growth potential

Algal oil is positioned for steady expansion through the late 2020s. Enabling further scale-up will depend on aligning cost reductions, capital investment, and predictable year-on-year demand from aquaculture producers.

Algal oil is produced in land-based systems that avoid marine impacts and provide a stable, year-round omega-3 supply with similar greenhouse gas emissions to fish oil.

Climate performance. Up to 30% reduction in lifecycle emissions compared to fish oil, especially when powered by renewable energy or circular carbon sources.
Resource efficiency. Moderate land and water use. Production avoids marine resource extraction but remains reliant on agricultural carbon feedstocks.

Zero bycatch, zero marine depletion. Production is fully decoupled from wild-capture fisheries.

Decoupling aquaculture from marine ingredients

Algal oil offers a viable pathway to alleviate pressure on marine ecosystems by reducing fishing pressure, by-catch, and habitat disturbance associated with fish oil production. As electricity grids decarbonise and renewable energy and circular feedstocks are adopted in production, per-tonne GHG emissions should decline further.

Algal oil reduces contaminant exposure compared to fish oil. It is approved for aquafeed use in key markets including the EU, US, Norway, and Chile.

Regulatory approval. Widespread approvals in all major salmon-producing regions—EU, Norway, UK, North America, Chile, Australia, and New Zealand.
Food safety. No detectable pollutants or microplastics. Closed fermentation eliminates exposure to ocean-borne contaminants.
Ecological safety. Low risk of effluents or pathogen release. Reduced risk of contamination, and pollution compared to fish oil production. Considered sustainable by several certification schemes.

Promising support from regulators and certifiers

Closed fermentation systems virtually eliminate contamination and pathogen risks, while certification schemes reinforce traceability and consumer assurance. Growing regulatory confidence, combined with consistent evidence of ecological and food safety advantages, positions algal oil as the most dependable replacement for fish oil in high-value feeds.

Algal oil is a lipid extracted from microalgae that naturally produce long-chain omega-3 fatty acids — eicosapentaenoic acid (EPA) and docosahexaenoic acid (DHA) — essential for fish health and growth.

Production involves three main stages:

Cultivation: Microalgae are grown at scale in either heterotrophic systems (fermenters supplied with organic carbon) or phototrophic systems (closed photobioreactors or open ponds using light and CO₂).
Harvesting: Once sufficient biomass is reached, the algal culture is concentrated and the cells are disrupted to release their lipids.
Processing and end use: After harvesting, the algal biomass is processed according to the desired product — either refined into oils and concentrates or used as whole-cell material in aquafeeds.

Algal oil has diverse applications across sectors, including aquafeed

Algal oils are used across several markets, including human nutrition, nutraceuticals, pet food, and aquafeeds, reflecting growing demand for sustainable omega-3 sources. In aquaculture, they are positioned as direct substitutes for fish oil, providing essential EPA and DHA without reliance on wild-capture fisheries. Their inclusion in aquafeeds represents part of a wider transition toward alternative protein and lipid ingredients — such as single-cell oils, microbial meals, and circular feed inputs — aimed at improving the resilience and sustainability of global aquaculture supply chains.

$2.8bn

Global market for EPA & DHA omega-3 ingredients in 2024

100%

Viable replacement rate of fish oil in aquafeed formulation

36,000 MT

Projected supply of algal oil by 2030.

Recommendations

To accelerate adoption and realise the full environmental and food-security potential of algal oils, coordinated action is needed across government, industry, investors, and regulators:

Algal oil suppliers: Integrate renewable energy and industrial by-products to lower per-tonne impacts.

Aquafeed producers: Establish multi-year offtake agreements with algal oil producers to secure predictable supply and secure investment.

Investors: Support the expansion of industrial production and improve biomanufacturing efficiency to achieve economies of scale and improved sustainability.

Policy makers: Expand regulatory approvals in emerging markets such as Asia, to drive further adoption of algal oil in aquafeeds

NGOs: Educate consumers on algal oil’s climate, food safety and biodiversity benefits, to build long-term market demand.

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Read the executive summary