Introduction
The shipping industry is at a crossroads. With the EU Emissions Trading System (EU ETS) now covering maritime emissions, operators face soaring compliance costs that threaten profitability. Carbon prices are climbing, and the pressure to decarbonize is mounting. Amid this challenge, biofuels have emerged as a potential lifeline—a solution that promises lower emissions without requiring a complete overhaul of existing fleets. But is this promise real, or just a costly illusion? In this article, we break down the numbers, explore the economics, and reveal whether biofuels can truly help you navigate the storm of ETS compliance.
Understanding EU ETS and Its Impact on Fuel Costs
The EU ETS requires companies to purchase EU Allowances (EUAs) for every tonne of CO₂ emitted. For shipping, this means burning conventional fuels like heavy fuel oil (HFO) or marine gas oil (MGO) comes with a hefty carbon bill.
- Emission factor: ~3.114 tCO₂ per tonne of fuel
- Current EUA price: ~€80/tCO₂ (expected to rise beyond €120/tCO₂)
For operators consuming thousands of tonnes annually, ETS costs can easily reach millions. This is where biofuels enter the conversation.
Why Biofuels Are Attractive Under EU ETS
Certified biofuels under RED II sustainability criteria can be treated as zero-emission fuels for ETS purposes. This means:
- No EUAs required for certified biofuel emissions
- Direct ETS cost savings
- Compliance with FuelEU Maritime Regulation starting in 2025
Plus, many biofuels—such as FAME blends, bio-methanol, and bio-LNG—can be used in existing engines with minimal modifications, making them a practical short-term option compared to hydrogen or ammonia.
Cost Modeling: Biofuel vs Conventional Fuel
We modeled a scenario for 10,000 tonnes of fuel under different biofuel shares.
EU ETS Maritime Payments
Assumptions:
- Conventional fuel: €650/tonne
- Biofuel: €950/tonne
- EUA price: €80/tCO₂ (and later €120/tCO₂)
Scenario 1: EUA €80/tCO₂
| Biofuel Share | Total Cost (€) |
|---|---|
| 0% | 8,991,200 |
| 10% | 9,042,080 |
| 25% | 9,118,400 |
| 50% | 9,245,600 |
Insight: At €80 EUA, biofuel adoption increases total cost because the fuel price premium outweighs ETS savings.
Scenario 2: EUA €120/tCO₂
| Biofuel Share | Total Cost (€) |
|---|---|
| 0% | 10,236,800 |
| 10% | 10,163,120 |
| 25% | 10,052,600 |
| 50% | 9,868,400 |
Insight: At €120 EUA, 50% biofuel share saves ~€368,400 compared to 0% biofuel. Higher carbon prices make biofuel economically attractive.
Challenges Limiting Short-Term Adoption
- High Cost & Limited Supply
- Certification Complexity
- Operational Risks (e.g., fuel stability issues)
Break-Even Analysis
At €120 EUA, break-even occurs between 25% and 50% biofuel share. If biofuel prices drop to €800/tonne, cost parity could occur even at €80 EUA.
Conclusion (Optimized for Engagement)
Biofuels are not a silver bullet—but they are a strategic bridge. As carbon prices rise and regulations tighten, biofuels can help operators reduce ETS costs, meet compliance targets, and avoid penalties. The key is timing: early adopters who secure certified supply and optimize blending strategies will gain a competitive edge. Looking ahead, biofuels will pave the way for next-generation zero-carbon fuels, but for now, they remain one of the most practical short-term solutions in the race to decarbonize shipping.
Major Ports Offering Biofuel Bunkering
Biofuel bunkering is now available at over 80 ports worldwide, with strong hubs in Europe, Asia, and the Americas. Key locations include:
- Rotterdam (Netherlands) – Europe’s largest bunkering hub, offering B20–B100 blends and advanced infrastructure for biofuels.
- Singapore – Global leader in bunkering, now supplying B24 biodiesel blends and expanding certification frameworks.
- Panama – Strategic hub for biofuel blends on major trade routes.
- Northern Europe (Denmark, Sweden) – Growing uptake due to supportive policies.
- Piraeus (Greece) – Launching biofuel bunkering services in 2025, allowing up to 100% FAME content under new ISO 8217:2024 standards.
- Other hubs: Antwerp-Bruges, Fujairah, Hong Kong, Houston, Las Palmas – increasingly offering biofuel blends alongside conventional fuels.
Current Marine Biofuel Prices
Prices vary by region and type (FAME biodiesel, HVO renewable diesel):
- Europe: ~$1.30/kg (≈ $1,300/tonne) for biodiesel blends.
- Asia-Pacific: ~$0.97/kg (≈ $970/tonne) for biodiesel.
- South America: ~$1.25/kg (≈ $1,250/tonne).
HVO (Hydrotreated Vegetable Oil) typically commands a premium, often exceeding $1,500/tonne due to higher production costs and sustainability certification requirements.
Key Trends
- Premium vs Conventional Fuel: Biofuels cost significantly more than VLSFO (~$600/tonne) or MGO (~$800/tonne), but ETS savings and compliance benefits can offset part of the premium.
- Supply Expansion: Bunker Holding and other suppliers are scaling up biofuel availability globally, focusing on blends like B24–B30 for compatibility. [bunker-holding.com]
- Regulatory Push: FuelEU Maritime and EU ETS are accelerating demand for certified biofuels.
The Maritime-Hub Editorial Team
Disclaimer: The views and opinions expressed in this article are solely those of the author and do not necessarily reflect the official policy or position of Maritime-Hub. Readers are advised to research this information before making decisions based on it.
