Biofuels in Shipping – Current market and guidance on use and reporting
Executive summary
With the decarbonisation of shipping in increasing focus, the use of biofuels1 is on the rise. Decarbonisation targets have been set by the International Maritime Organization (IMO), and greenhouse gas (GHG) regulations are adding to the cost of using conventional fossil fuels, incentivising shipowners to explore different ways to reduce emissions. Building on previous research, this paper incorporates the latest developments with global biofuel supply, and its uptake in shipping, while also providing a technical overview of best practices for the use of the biofuels FAME and HVO on ships. The report also contains an overview of how biofuels can be used for compliance with key GHG regulations. In 2023, global production of liquid biofuels (ethanol, FAME, and HVO primarily) and biogases reached about 111 million tonnes of oil equivalent (Mtoe)2 and 41 Mtoe respectively. Out of this, we estimate that about 15% (liquid biofuels)3 and 65% (biogases) of total global production was based on advanced feedstocks (i.e. non-food and non-feed feedstocks). A very small share of total liquid biofuels production is consumed by ships: around 0.7 Mtoe in 2023, which amounted to about 0.6% of global supply. The vast majority (about 98.9%) is consumed by road transport, with aviation accounting for about 0.5%
While shipping’s share remains low, this still represents strong growth on previous years. This is reflected by the increasing number of ports offering biofuel bunkering. Through a systematic review of public information, DNV has identified more than 60 different ports where a biofuel bunkering has taken place since 2015. Based on interviews with eight different biofuel suppliers, we have identified three key factors influencing the maritime biofuel market going forward: the voluntary market, GHG regulations in shipping, and supply-side constraints. Today, the voluntary market is the single most important demand-driver for biofuels within the international shipping market, with societal demand leading to pressure from cargo owners to seek emissions reductions. However, in the future, additional biofuel demand is expected to be unlocked by GHG regulations such as FuelEU Maritime and IMO mid-term GHG measures. On the other hand, supply-side constraints such as sustainable feedstock scarcity, competition with other sectors, and logistical challenges, will negatively impact the size of the marine biofuel market. A diverse range of biofuels exists, each with varying potential for maritime applications. Currently, products of FAME and HVO (commonly known as biodiesel and renewable diesel, respectively) are the most established for use in shipping, each possessing distinct properties and characteristics.
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