Jesper Sørensen, Global Head of Alternative Fuels and Carbon Markets at KPI OceanConnect, shared with Singapore-based bunkering publication Manifold Times the effects FuelEU Maritime will have on the biofuel market in 2025 and that companies should view compliance as an opportunity to gain competitive advantage: 

Change is the only constant in shipping’s regulatory landscape. With new environmental rules stacking up, operators face growing pressure to adapt. Alongside the International Maritime Organization’s (IMO) decarbonisation strategy, the EU has introduced two major regulatory frameworks, FuelEU Maritime and the EU Emissions Trading System (EU ETS), that are set to reshape shipping operations in the years ahead.

Of these, FuelEU Maritime is the most direct in regulating the carbon intensity of fuels used on voyages to and from EU ports. It mandates a phased reduction in emissions over time, starting with a 2% cut in 2025 (against a 2018 baseline), but escalating to 6% by 2030, 14.5% by 2035, 31% in 2040, and 62% by 2045, before reaching 80% in 2050. The first verification deadline is due in early 2026, meaning companies need to act now to build robust compliance strategies.

How can biofuels support shipping’s decarbonisation?

Biofuels have emerged as a near-term solution for meeting FuelEU Maritime’s requirements. Recent projections suggest that demand for B100 biofuel could reach up to 700,000 tonnes in 2025 alone, as operators try to meet the 2% reduction mandate.

Biofuels, such as hydrotreated vegetable oil (HVO) and fatty acid methyl esters (FAME), are not the only compliance route under FuelEU, but they offer a practical starting point for many shipowners. Unlike LNG, methanol and ammonia, most biofuels can be dropped-in or used in existing engines with minimal modification, either in blended form or as B100. They also have a role as pilot fuels for other low-carbon alternatives.

Yet biofuels are not a silver bullet. Supply is still highly concentrated in key hubs like Rotterdam and Singapore, and availability is often determined by local feedstock sources.

A recent IEA report forecast that by 2030, aviation and shipping alone will account for over 75% of new biofuel demand, pushing consumption up by 30%. In the race for biofuel uptake, shipping will also face stiff competition for supply, especially from aviation and road transport, which often demand higher quality fuels and can absorb higher costs.

This creates a potential “biofuel crunch” for the maritime sector. To maintain access and cost competitiveness, shipping must begin investing in the development of alternative or advanced feedstocks, those that offer higher greenhouse gas (GHG) savings and can be refined to standards suitable for marine use. These alternatives could ensure ongoing supply, but they also raise questions about fuel quality, certification, and sustainability claims.

Sustainability declarations that verify feedstock origin and track the full chain of custody will become central to ensuring compliance. Shipowners will need to collaborate closely with trusted suppliers to mitigate the growing risks of fuel fraud, poor quality and reputational damage.

A well-to-wake lifecycle approach to emissions accounting is essential for accurately assessing the true carbon impact of marine fuels. First-generation feedstocks, which often fail to meet the necessary sustainability thresholds, are not compatible with this methodology and are increasingly being phased out of the biofuel value chain.

Certification systems can play a vital role in this transition by verifying sustainability declarations and ensuring compliance with rigorous traceability standards, to help confirm that biomass and bioenergy originate from responsible sources. This is crucial not only for meeting regulatory requirements, but also for protecting ecosystems, preserving biodiversity and supporting local communities.

As regulations become more stringent, counterparty risk assessments will grow in importance. Choosing the right suppliers and engaging with them early is vital. Those who can provide assurance on fuel provenance, compliance with FuelEU Maritime, and support with documentation will become indispensable partners.

Shipowners should also look to providers who can offer tailored fuel blends and bunker solutions that align with their compliance strategies. Flexibility, transparency and collaboration across the supply chain will all play a role in de-risking the energy transition.

Looking beyond FuelEU Maritime to understand the full regulatory picture

While FuelEU Maritime represents a major step forward in shipping’s decarbonisation, it is part of a wider wave of regulation transforming shipping’s environmental responsibilities. The EU’s inclusion of maritime under the Emissions Trading System (EU ETS) in 2024, for example, introduced direct carbon pricing. Similarly,  the IMO’s recent decision at MEPC 83 in April 2025 to move ahead with its Net-zero Framework makes it the first in the world to combine mandatory emissions limits and GHG pricing across an entire industry. These global measures will apply beyond EU waters, increasing the need for worldwide infrastructure to support alternative fuel uptake and enforce consistent standards.

Together, these developments underline the growing value of timely planning and strategic partnerships to maintain control over cost and carbon performance. Companies should not view compliance as a checkbox exercise, but rather as a key component of broader risk management and an opportunity to gain competitive advantage. It requires more than access to fuel and more than just access to fuel suppliers; it requires partnerships with integrated fuel partners who can align procurement, emissions strategy and risk management under an overarching fuel procurement and compliance strategy.

In the case of EU ETS, for example, operators must be prepared to surrender allowances (EUAs) for 2024 emissions by the 30 September 2025 deadline. A well-executed EUA strategy can minimise exposure to carbon price volatility and align closely with FuelEU Maritime compliance goals as well. Biofuels for instance offer significant cost reductions for complying with FuelEU Maritime and reducing EU ETS liabilities, but operators need to consider how their vessel routes match fuel availability to realise these benefits.

Regulatory momentum is only set to build in the coming years and long-term compliance strategies will require a multi-fuel approach, combining biofuels, LNG, methanol and ammonia, as well as energy efficiency technologies and operational measures. But shipping does not need to navigate this journey alone.

We can look to other industries, such as aviation, chemicals, and agriculture, where low-carbon fuels are already widely used. Shipping can tap into this knowledge, forging cross-sector partnerships to accelerate innovation, reduce costs and avoid pitfalls. These sectors offer valuable insights into infrastructure, handling and safety, lessons that the maritime world can adopt and adapt.

Regulations like FuelEU Maritime mark a critical turning point in shipping’s decarbonisation journey. While compliance is mandatory, it also offers an opportunity for transformation. By acting early, embracing innovation and building trusted partnerships across sectors, the maritime industry can lay the groundwork for scalable, secure, and sustainable solutions.

Photo credit: KPI OceanConnect
Published: 4 September, 2025