Biofuel
Bio bunker fuels promise cleaner shipping but supply is limited, says Rystad Energy
Company gave an insight on the capacity to produce biofuels falling behind the rising demand of biofuels and urging shipowners to act quickly in securing dependable biofuel supplies.
Advisory, research and energy intelligence company Rystad Energy on Tuesday (27 May) gave an insight on the capacity to produce biofuels falling behind the rising demand of biofuels and urging shipowners to act quickly in securing dependable biofuel supplies:
The shipping industry’s target of net-zero carbon emissions has boosted demand for biofuels, which are compatible with existing ship engines and therefore can be adopted relatively easily. However, Rystad Energy analysis shows that the capacity to produce biofuels—such as biodiesel and bio-liquefied natural gas (bio-LNG)—is not keeping up. Unconstrained biodiesel demand exceeds total supply and the outlook for bio-LNG is equally restricted, in both allocation and production.
Biofuels could be a more cost-effective alternative to traditional marine fuels such as very low-sulphur fuel oil (VLSFO), particularly when aligned with the low-emission thresholds established by the International Maritime Organization’s Greenhouse Gas Fuel Intensity (GFI) standard. In a scenario without supply constraints, global demand for biodiesel in shipping could exceed 140 million tonnes of fuel oil equivalent by 2028. However, even under ideal conditions, total biofuel production capacity is expected to peak at around 120 million tonnes. When sustainability criteria are applied—prioritising cleaner, second-generation biofuels—this potential supply drops sharply to just 40 million tonnes. Taking into account production risks, actual output levels, and competition from other sectors, the volume of biofuels realistically available for shipping diminishes even further.
“Demand for biodiesel, if unrestricted, outstrips the total supply. The situation with bio-LNG is also constrained, with challenges for both production and allocation capacity. While projected demand is a relatively modest at 16 million tonnes in fuel oil equivalent by 2028, the apparent surplus in supply is misleading. Over 84% of global biomethane is already committed to electricity generation, with an additional 10% allocated to road transport. This leaves only 6% available for all other sectors, including maritime, making actual access far more limited than the numbers suggest,” said Junlin Yu, Senior Data Analyst, Shipping at Rystad Energy.
This is a supply crunch that the shipping industry cannot afford to overlook. While future-facing fuels such as ammonia and methanol offer long-term promise, they come with high costs and infrastructure challenges, leaving many shipowners hesitant and waiting for clearer market signals.
In the meantime, biofuels stand out as the most practical route to meet the IMO’s tightening emissions standards. However, this transitional solution is fragile. Without careful planning and proactive action, the bridge to compliance could quickly erode.
“Biodiesel and bio-LNG can be cost-effective under the IMO Net-Zero Framework, but only if their lifecycle greenhouse gas (GHG) emissions are low enough to qualify for IMO incentives. However, demand for bio-LNG in maritime transport far exceeds current production, revealing a significant supply gap. To navigate the changing regulatory landscape, shipowners must act quickly, securing dependable biofuel supplies and aligning with GFI targets. In the race for cleaner shipping, success hinges not just on choosing the right fuel, but on securing it ahead of competitors,” added Yu.
Biofuels are currently more cost-effective than traditional marine fuels, especially when they meet strict low-carbon standards. While blending biofuels at 30% or 50% can help meet emission targets in the short term, fully switching to 100% low-emission biofuels offers the greatest long-term savings and rewards. Notably, bio-LNG stands out as a cheaper option than biodiesel, particularly when supported by government subsidies, making it a promising fuel for the shipping industry’s transition to cleaner energy.
Note: Rystad Energy is hosting a webinar titled ‘Full Steam Ahead – LNG, Biofuels, and the Future of Maritime Energy’ on 28 May. Rystad Energy CEO Jarand Rystad will join DNV Maritime CEO Knut Ørbeck-Nilssen to explore how maritime leaders can chart a course toward net-zero emissions. Registration for the event can be found here.
Photo credit: Venti Views on Unsplash and Rystad Energy
Published: 28 May, 2025
Alternative Fuels
DNV: Alternative-fuelled vessel orders hit highest monthly level since October 2024
LNG-fuelled vessels accounted for the vast majority of August activity while the strong summer performance marked a significant acceleration in ordering activity after a relatively slow start to the year.
Latest data from classification society DNV’s Alternative Fuels Insight (AFI) platform alternative-fuelled vessel ordering was strong in August, with 52 new vessels added to the platform.
This is the highest monthly total since October 2024 and follows another active month in July, when 47 vessels were added to the database.
LNG-fuelled vessels accounted for the vast majority of August activity, with 46 orders recorded. The container segment led the way with 30 orders, while the car carrier segment contributed a further 12 LNG-fuelled vessels. In addition, four ethanol-fuelled bulk carriers and two hydrogen-powered bulk carriers were added during the month, as well as one LNG bunker vessel.
The strong summer performance marked a significant acceleration in ordering activity after a relatively slow start to the year. In total, 242 alternative-fuelled vessel orders have been placed in the first eight months of 2026, representing a 27% increase compared with the same period in 2025.
LNG remains the dominant fuel choice, accounting for 63% of all alternative-fuelled vessel orders registered so far this year. Container vessels represent the largest share of these LNG orders (59%), followed by car carriers (30%).
Jason Stefanatos, Global Decarbonization Director at DNV Maritime, said: “The past two months have been particularly strong for alternative-fuelled vessel ordering, with August recording the highest monthly total we’ve seen since October 2024. This has helped lift year-to-date orders to a level well above the same period last year.
“LNG remains the leading fuel choice, driven largely by activity in the container and car carrier segments. These sectors have been among the earliest adopters of alternative fuels, supported by predictable liner operations and increasing demand from cargo owners to reduce emissions across supply chains.
“For many owners, LNG offers a combination of emissions reductions, fuel availability and future flexibility while the longer-term fuel landscape continues to evolve.
“At the same time, the latest figures include orders for ethanol- and hydrogen-fuelled vessels, highlighting that owners continue to explore a range of decarbonization pathways. Different segments are making different fuel choices, but the overall level of activity demonstrates continued investment in lower-emission shipping.”
Photo credit: DNV
Published: 4 September, 2026
Alternative Fuels
Hercules Tanker Management’s ‘Ultra-Spec Series’ tanker “Vanessa” begins maiden voyage
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Alternative Fuels
NYK and Stolt-Nielsen target LNG, bio-LNG bunkering growth through Avenir LNG JV
NYK says joint venture will pursue opportunities in LNG and bio-LNG bunkering, supporting the maritime industry’s transition to lower-emission fuels.
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