Maximizing the Potential of Biofuels in Shipping

March 27, 2025

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(DNV) Biofuels are an increasingly attractive decarbonization option for shipowners. A new white paper from DNV analyses an evolving supply picture, while also providing technical guidance to shipowners planning to use it as a drop-in fuel. -- Growing international pressure to decarbonize shipping has seen a significant increase in demand for biofuels in recent years. With several biofuels seen as “sustainable”, these can provide immediate decarbonization results for shipowners. However, as the new DNV white paper explains, supply is limited, and some technical and operational considerations should still be taken into account by shipowners before and during their use.

Biofuel as a decarbonization option

Although most biofuels contain carbon, which is released as CO2 during combustion, many can still lead to significant reductions in carbon emissions.

“This is because of the carbon cycle,” says Øyvind Sekkesæter, Consultant in Maritime Environmental Technology at DNV and lead author of DNV’s white paper. “When biomass grows, it absorbs CO2 from the atmosphere. This can, in theory, negate the release of CO2 when biofuel is burned.”

“However, in a life cycle perspective, there will still be emissions related to the harvesting of biomass, transportation and processing, meaning that 100% carbon neutrality is difficult to achieve in practice. This is particularly relevant now that shipping regulations, such as FuelEU Maritime, consider emissions on a ‘well-to-wake’ basis.”

Drop-in capability

Perhaps the most attractive aspect of biofuels is their ability to be used as a “drop-in” fuel on existing vessels. This means that biodiesels like FAME (fatty acid methyl ester) and HVO (hydrotreated vegetable oil) – the two most commonly used biofuels in shipping today – can be used to fuel vessels designed for operation on conventional fuel oils, while liquefied biogas, or bio-LNG, can be used directly on board LNG-capable vessels. They can be either stand-alone fuel products or blends with conventional fuels.

“This drop-in capability is very important, because it means that many biofuels can be applied directly to the existing fleet, where other decarbonization options might be difficult,” says Sekkesæter. “This is understandably an appealing choice for shipowners as it enables them to significantly reduce emissions without, for example, large-scale investment in engine retrofitting.”

Supply of biofuels

According to the white paper, the total global production of liquid biofuels (primarily ethanol, FAME and HVO) and biogases reached about 111 and 41 million tonnes of oil equivalent (Mtoe) respectively in 2023. The paper also estimates that about 15% of liquid and 65% of gaseous biofuels were based on advanced feedstocks as defined according to the EU Renewable Energy Directive.

End-use sectors for liquid biofuels (left) and gaseous biofuels (right) in 2023, based on IEA

Shipping’s share of global supply is extremely low. In 2023, this was around 0.7 Mtoe, accounting for about 0.6% of the global supply of liquid biofuels. This was similar to aviation, which accounted for around 0.5% of global supply in 2023. Road transport remains the prevalent user of biofuels, taking 98.9% of global liquid biofuel supply in 2023.

In 2023, biofuels accounted for just 0.3% of marine energy use.

Bunkering of biofuels mapped out

For biofuels to play a major role in maritime decarbonization, supply and availability in major bunkering hubs will need to increase. Through a systematic review of public information, the DNV white paper has identified more than 60 ports where biofuel bunkering has taken place since 2015. While bunkering availability is quite geographically diverse, it is mainly concentrated in Europe and East Asia. Availability in North America, South America and Africa is more limited in comparison.

“While our research shows us that the supply of biofuels is still relatively low, bunkering has taken place in quite a high number of ports,” says Sekkesæter. “Additionally, data from Singapore and Rotterdam – the two largest bunkering hubs – shows that biofuel consumption in shipping is growing quite quickly.”

Increasing biofuel sales in Singapore and Rotterdam

Total sales of bio-blended fuel in Singapore and Rotterdam increased from about 300,000 tonnes in 2021 to more than 1.6 million tonnes in 2024. The most common blend sold in Singapore has so far been B24 (meaning 24% biofuel by volume), while in Rotterdam it has been B30. In both cases, the biofuel blends primarily incorporate FAME and VLSFO (very low sulphur fuel oil).

Reported bunker sales of bio-blended fuel from Singapore and Rotterdam

Sales from these two ports were estimated to account for around half of all biofuel supply to shipping in 2023.

Demand for these blends is clearly on the rise, despite their additional cost to shipowners. “Both B24 and B30 have traded at a price premium of 30% to 60% relative to VLSFO since 2023,” says Sekkesæter.

The key drivers of biofuel markets

Drawing on in-depth interviews and written surveys with key players at the heart of the global biofuel ecosystem, including biofuel suppliers and shipowners, the DNV white paper identifies the three most important factors influencing the evolution of biofuels in shipping in the coming years: the voluntary market, greenhouse gas (GHG) regulations and supply-side constraints.

“The voluntary market is currently the primary driver of demand for biofuels in the shipping industry, as societal expectations push cargo owners to reduce their Scope 3 emissions,” says Sekkesæter. “Looking ahead, further demand will be stimulated by greenhouse gas regulations like FuelEU Maritime and IMO’s mid-term GHG measures.

“Conversely, supply-side constraints like sustainable feedstock scarcity, competition with other sectors and logistical challenges will limit the growth of the marine biofuel market.”

Technical considerations for the use of FAME and HVO

Aside from supply and market considerations, the white paper also functions as a technical guide for prospective biofuel users in shipping. This includes an extensive analysis of both FAME and HVO, drawing on interviews with shipping companies to ascertain practicalities and formalities related to their bunkering and usage.

Comparison of selected fuel characteristics for pure FAME and HVO, using MGO as the baseline

“These fuels possess distinct properties and characteristics, and even though feedback indicates that both FAME and HVO perform well technically, their compatibility with on-board systems can vary from ship to ship,” says Per Einar Henriksen, Senior Consultant at DNV and co-author of the report. “For example, due to FAME’s differing properties compared to standard fuel oils, some users need to replace certain components or make upgrades before use, while others experience a seamless transition without requiring any modifications.”

Key recommendations before use of biofuels

The paper outlines key considerations for using both FAME and HVO fuels, including on-board preparations, potential modifications and inspections, while emphasizing the importance of consulting equipment manufacturers to address any uncertainties.

“It is recommended that shipping companies and operators conduct thorough preparations before introducing a new biofuel, such as performing risk and feasibility assessments,” says Henriksen. “While industry feedback indicates that operating on these fuel types generally proceeds well and without significant problems, it is essential to know what is being bunkered and ensure it complies with existing fuel standards and expected operating conditions. This is particularly important as there is an increasing range of off-specification fuels being marketed today as biofuels.”

How can biofuels help achieve compliance with GHG regulations?

As shown in the white paper, the use of eligible biofuels can give significant benefits with respect to the Carbon Intensity Indicator as well as EU ETS and FuelEU Maritime regulations, including emissions reductions and a reduction in well-to-wake fuel intensity. It is also expected that biofuels meeting sustainability and other criteria yet to be specified will be credited with GHG reduction for the upcoming IMO mid-term GHG measures.

To demonstrate compliance with each regulation, relevant biofuels must be documented to meet sustainability and GHG-reduction requirements through a Proof of Sustainability (PoS) or similar documentation. Along with the PoS, other essential documents such as bunker delivery notes and annual reports (DCS, MRV and FuelEU Maritime) are required for verification by the verifier/authorities.

Biofuels as part of the future maritime energy mix

The decarbonization of the maritime industry is starting to build momentum. However, this is a complex process which will involve a range of different fuels, technologies and other measures, such as energy efficiency.

“Biofuels can play a significant role in the maritime energy transition,” says Øyvind Sekkesæter. “We hope that stakeholders throughout the industry can draw on insights from this paper as they increase their uptake of biofuels over the coming years.” READ MORE