Current Market Challenges and Impacts on Bio-Bunkering Implementation

The maritime industry sits at the center of one of the most challenging decarbonization positions. With global shipping responsible for roughly 3% of worldwide CO₂ emissions and new regulations applying mounting pressure, the sector needs scalable low-carbon fuels as quickly as possible.

Marine biofuels have emerged as one of the most feasible near-term options in shipping. They offer immediate carbon-intensity reductions, often require minimal engine modifications, and can act as true “drop-in” replacements for conventional marine diesel.

Yet despite their promise, marine biofuels face their own set of headwinds. Competition from the road transport sector, energy-density disadvantages, supply constraints, and uncertainty around future production pathways are all significant challenges.

Today, marine bio-bunkering stands at a crossroads. The industry is assuredly growing fast, but it is limited by the bottlenecks that define the broader advanced biofuels market.

Regulation Driving Demand in Marine Biofuels

Two regulatory forces are accelerating the shift toward low-carbon marine fuels:

1. FuelEU Maritime

• FuelEU Maritime (EU) requires a rising share of renewable and low-carbon fuels in the marine energy mix
• Starts at 2% renewable fuels by 2030
• Reaches 40% by 2050
• Penalizes shipowners who fail to meet carbon-intensity targets

Biofuels such as FAME, HVO, and renewable synthetic diesel offer a direct, compliance-ready pathway. These options avoid the operational disruption of LNG (liquefied natural gas), ammonia, hydrogen, or methanol retrofits.

2. Global Regulatory Alignment

• IMO’s revised GHG strategy
• Regional demand from EU ports
• Corporate decarbonization commitments among shippers, retailers, and consumers

Together, these forces create demand certainty, encouraging more suppliers to invest in bunkering-grade biofuel production. But demand certainty and demand capacity are two different things.

The Road Sector’s Supply Dominance

Scaling remains a challenge across the biofuel industry. As we see increases in biofuel adoption, production itself has seen a strain. The dynamic has left some supply challenges with direct impacts in the marine biofuels sector.

According to recent IBIA Convention 2025 discussions, the road sector consumes the overwhelming majority of available biofuel supply. In particular, road transport utilizes HVO/renewable diesel, the very fuels shipping would most prefer to use.

Why does road transport win in this scenario?

• Higher willingness to pay
• Direct incentives for LCFS (Low Carbon Fuel Standard) and RFS (Renewable Fuel Standard)
• Major fleet decarbonization pressure
• Larger, established distribution networks

And why does the marine industry only gets what’s left?

• Lower-price expectations
• Bio-bunkering currently tends to be opportunistic rather than contracted
• Some ports lack standardized certification and supply infrastructure
• Without long-term offtake agreements, suppliers hesitate to commit

In practice, the marine industry is a growing demand center, but it's not yet a priority allocation for producers. The result is an uneven supply landscape with price premiums and availability fluctuating by port, season, and competing road-sector pull.

Energy Density: The Physics Problem Shipping Can’t Ignore

Even when supply is available, marine biofuels come with a built-in challenge:
they contain less energy per liter than conventional marine diesel.

Typical energy densities:

• Marine Diesel: ~38–40 MJ/L
• HVO: ~3–5% lower
• FAME: Up to 10–15% Lower
• Ethanol-Based Fuels: Even Lower

Accordingly, these findings yield multiple operational implications:

• Ships must burn more fuel to maintain speed
• Range decreases if tank size remains the same
• Peak power can dip in unmodified engines
• More frequent filter changes and maintenance is necessary for some FAME blends
• There are several potential impacts on maneuvering performance during port operations

For long-haul deep-sea vessels, these density penalties are especially problematic. A small percentage difference can translate into major operational impacts (and increased costs).

This is one reason why bunkering suppliers report that biofuel adoption is easiest in short-sea and regional ferry segments first—but not in deep-sea freight.

Next-Generation Biofuels' Potential (and Challenges)

Emerging technologies aim to overcome the energy-density challenge:

Power-to-Liquid (PtL) Synthetic Fuels:

• Combine green hydrogen with captured CO₂
• Deliver energy density equal to fossil diesel
• Extremely high production costs
• Require abundant renewable electricity

Algal Biofuels:

• Can rival fossil hydrocarbons in lipid content
• Offer rapid advances in reactor design and strain engineering
• Remain difficult to produce and extremely expensive to scale

These “next-gen” fuels could make marine biofuels a no-compromise solution.
But they will likely not reach large-scale commercial availability until the 2030s.

Why Marine Biofuels Still Matter Today

Even with supply and density challenges, marine biofuels remain the lowest-friction pathway to compliance. These fuels…

• …are compatible with existing engines.
• …require minimal vessel modification.
• …provide immediate carbon-intensity reductions.
• …create a hedge against future regulation.
• …benefit from EU blending mandates.

For many operators, the strategy is shifting toward dual-fuel or blended approaches:

• HVO or FAME blends reduce FCI (Fuel Carbon Intensity) by 20–50%
• Maintaining diesel share preserves range and engine performance
• Blends minimize exposure to compliance penalties
• They help companies build experience with low-carbon fuel handling

This hybrid model is the dominant short-term compliance strategy.

Market Outlook: Growing Demand, Tight Supply, Rising Premiums

Short-Term Market Outlook (2025–2030):

• Expect volatile supply as road transport continues to dominate allocations
• Fastest growth in short-sea shipping, cruises, ferries, and EU coastal traffic
• HVO premiums remain high as FAME pricing moves with feedstock markets
• Bio-bunkering infrastructure expands selectively, concentrated in major EU ports

Medium-Term Market Outlook (2030–2040):

• FuelEU Maritime mandates create structural demand pull
• Stronger incentives may shift more producer allocation to marine
• PtL fuels begin entering the market at premium prices
• Greater adoption of standardized sustainability certification across ports

Long-Term Market Outlook (2040–2050):

• Synthetic fuels and advanced biofuels reach meaningful scale
• Energy density gap narrows
• Marine biofuels become a viable long-term decarbonization pillar
• Supply tightness eases as global production capacity diversifies

Bio-Bunkering: A Sector Ready (But Waiting) to Accelerate

Marine biofuels offer the most practical, immediate, and scalable pathway to reducing emissions from shipping today. But their growth is constrained by two realities:

1. The road sector captures most of the available supply
2. Energy-density limitations still affect ship performance and range

Despite these challenges, regulatory momentum and technological progress are pushing the market forward. Marine biofuels may not yet be the final destination for maritime decarbonization. But they are the most viable bridge fueling the journey.

With strategic investment, improved supply chains, and next-generation fuels on the horizon, bio-bunkering is positioned to evolve from a compliance tool into a core component of zero-carbon maritime operations.

Stay Informed on Bio-Bunkering with Live Webinar

The bio-bunkering industry is moving quickly. With regulations, emerging technologies, and new adoption sites, keeping up with what's next will pose a serious challenge.

To help make it easier for you, join us for a live webinar covering the 2026 biofuels market:

Mat Stone, ResourceWise's VP of Business Development and Low Carbon Fuels, will address a wide range of topics relevant to the biofuels and bio-bunkering market:

• Broad-Scope Biofuels Outlook
• Feedstock Dynamics
• Policy, Markets, and Fundamentals
• Marine Biofuels Trading Trends
• German RED III Rollout
• SAF Market Outlook

You won't want to miss this critical update on what to watch out for in the biofuels market for the year ahead. Register today to secure your spot.