APPEC 2026: Future of bio-bunkers determined by economics and regulations, highlights Dan-Bunkering

Bio-bunkers are not capacity constrained; they are economics constrained, and policy asymmetry is dictating where volumes materialise, according to international bunker trading firm Dan-Bunkering.

Mahnoor Samee, New Fuels Lead – APAC, Dan-Bunkering, was sharing a presentation Bio-Bunker Dynamics: Where is it Heading? with delegates at APPEC 2026 on Thursday (10 September) when she noted the following:

Disconnect in Production Margins

The primary constraint on marine biofuel, particularly Fatty Acid Methyl Ester (FAME), is not a lack of production capability, but a severe margin squeeze.

European FAME plants are operating at only 52% capacity, yet producers are unable to scale due to unfavourable economics.

Producers face a ‘falling ceiling’ as EU pooling credit prices have dropped by 50% in the past six months, and a ‘rising floor’ as Used Cooking Oil (UCO) feedstock costs have climbed significantly across the same period.

Consequently, the premium between UCO and Used Cooking Oil Methyl Ester (UCOME) has averaged around USD 80 pmt, well below the USD 300-400 pmt industry experts deem necessary for a sustainable business.

Contrasting Regional Demand

Demand for biofuels is meanwhile highly bifurcated and driven primarily by regional policy rather than global market trends.

In Singapore, bio-bunker sales have fallen by 45-60% year-over-year; as conventional fuel prices spiked, shipowners shifted to cheaper compliance alternatives such as pooling.

In contrast, Rotterdam has reached two-year highs in biofuel sales, supported by the Dutch ticket incentive system, which stabilises end-user pricing.

China has also seen a fourfold increase in demand over the past two years, driven by high EU exposure and voluntary emission goals, aided by lower logistics costs and strong trade routes to Europe.

Regulatory Fragmentation

Regulatory uncertainty remains a significant barrier to investment. The International Maritime Organization (IMO) is currently debating four conflicting proposals – ranging from delayed targets to tripled penalties – which has stalled projects and left the industry without a clear framework to engage.

In addition, the emergence of approximately 40 different carbon schemes globally, including the potential expansion of the UK Emissions Trading System (ETS) to include international voyages has created significant planning risks for shipowners.

The implementation of Renewable Energy Directive (RED) III in Europe has further complicated the landscape, creating a “RED III premium” that has caused some volume to shift to nearby ports like Antwerp to avoid higher costs, though Rotterdam remains resilient due to its national incentive schemes.

A critical challenge for the industry is how bunker buyers value biofuels. Many stakeholders compare the listed price of biofuel directly against conventional fuel or pooling, failing to account for “stacked benefits.”

When factoring in FuelEU compliance, reduced EU ETS carbon bills, and improved Carbon Intensity Indicator (CII) ratings, the “true premium” is significantly lower – estimated at USD 5-90 pmt rather than the sticker price of USD 300-400.

Policy Continues to Drive Demand

Looking toward 2030, the market faces a clear reality: 95% of the global fleet will still rely on conventional engines, making drop-in biofuels the only scalable emissions lever.

To unlock this potential, the industry requires a predictable carbon price and a mechanism to guarantee demand, similar to the Sustainable Aviation Fuel (SAF) levy model recently adopted in Singapore.

Without these structural changes, Asia’s technical capacity may remain underutilised, and the market will continue to consolidate in policy-advantaged hubs.

Photo credit: Manifold Times
Published: 17 September 2026