Green Horizons: Navigating the Sustainable Future of Marine Fuels

Biofuel

Author

Andrew Dyer

Consultant

The Marine Sector

There are a wide variety of vessels and crafts which operate in the marine environment from small leisure vessels and tugs through to fishing boats, cruise ships, ferries, containership and oil tankers. Vessels provide for domestic needs such as food production and transport as well as the vast majority of international trade. Although undoubtedly important, the sector has a significant environmental impact through greenhouse gas (GHG) emissions and air pollution. Following efforts to decarbonize other transport sectors such as road and aviation, attention is increasingly turning to the maritime sector with technological solutions and policies gaining traction.

Fuel options

Electrification may be possible for some vessels (short charters) and is a key measure for reducing air pollution from vessels in port. However, in most cases drop-in sustainable fuels which can be incorporated into existing fueling and bunkering systems will be required for long duration shipping routes. Some fuels such as methanol or ammonia may require specific modifications to engines, bunkering infrastructure and safety measures.

Currently most ships of 5000 Gross Tonnage (GT) and above operate using fossil oils such as Heavy Fuel Oil (HFO), Light Fuel oil (LFO) or Marine Diesel/Gas oil (MDO/MGO) which are relatively high in sulphur and tend to produce harmful emissions when combusted. There are some vessels operating using Liquefied Natural Gas ¹which is more clean burning with other fuels such as ethane, LPG (propane), LPG (butane), methanol and ethanol used only in small volumes. VLSFO (very low sulphur fuel oil) has been introduced as a higher quality, low sulphur variety of MDO which is a cleaner burning fuel for vessels introduced to comply with International Maritime Organisations 2020 regulation (IMO 2020). The regulation was introduced to reduce sulphur oxide emissions from ships either through use of low sulphur fuels or through the fitting of flue gas scrubbing systems.

Alternative fuels

There are some fuels which have been identified as an alternative to these current fossil fuels.

Biofuels:

Bio-diesel – diesel fuels such as FAME or HVO produced using chemical conversion of bio-derived feedstocks such as used cooking oil (UCO).
Bio-LNG – Methane produced through decomposition of organic feedstocks such as food waste via anaerobic digestion or captured from landfills.
Bio-methanol – Methanol produced from methane of biological origin, via fermentation of plant sugars or from thermochemical conversion of organic plant materials (i.e. gasification followed by methanol synthesis from syngas).

E fuels (Renewable fuels of non-biological origin – RFNBO)

E-diesel – diesel range molecules produced from carbon dioxide and hydrogen generated using renewable electricity (electrolysis of water).
E-LNG – methane produced from carbon dioxide and hydrogen generated using renewable electricity (electrolysis of water).
E-methanol – methanol produced from carbon dioxide and hydrogen generated using renewable electricity (electrolysis of water).
E-ammonia – ammonia produced from carbon dioxide and hydrogen generated using renewable electricity (electrolysis of water).

Low-carbon fossil fuels

Blue-Ammonia – Ammonia produced from methane with carbon dioxide captured and permanently sequestered.

These alternative low-carbon marine fuels are generated by a range of processes and from different feedstocks meaning that the greenhouse gas impact (or Carbon Intensity (CI)) from producing them (or from generating the energy required to produce them) is different for each. Figure 1 shows the well-to-wake (WtW) emissions (gCO2eq/MJ) associated with using these marine fuels. The GHG impact (CI), on a WtW basis, includes emissions from producing (or refining) of the fuel, transportation of the fuel to its point of use, and emissions during combustion of the fuel.

E-ammonia (NH3) is produced by combining nitrogen (N2) with hydrogen (from electrolysis of water using renewable electricity) meaning it can have very low production emissions. Generation of the greenhouse gas nitrous oxide (N2O), during combustion, can also contribute to CI on a WtW basis but as e-ammonia is at an early stage of development the impacts of this are not yet fully defined.

Figure 1: Carbon Intensities (CI) of different types of alternative low-carbon marine fuels (gCO2eq/MJ) ²

New Marine Policy

Although plans for decarbonisation of marine fuels have lagged behind other transport fuel sectors such as road and aviation, the momentum behind policy invention is increasing. A new marine policy landscape is being spearheaded by FuelEU Maritime (FEUM) and EU ETS in Europe, the Maritime decarbonisation Strategy and ETS in the UK and the IMO net-zero Framework which sets Global standard for marine fuel emissions.

Europe

The European Union has launched two new policies which cover the emissions of vessels which operate through EU ports.

This policy came into effect from 1st January 2025 and targets an incremental reduction in marine fuel GHG emissions for ships of 5000GT and above, which call at European ports. The policy covers 100% of emissions of vessels travelling between EU ports and 50% for vessels coming from outside Europe into EU ports or from EU ports out of Europe.

The target is for a 2% reduction in well -to-wake (WtW) GHG emissions by 2025 gradually increasing to an 80% reduction by 2050 (against an emissions baseline of 91.16 gCO2eq/MJ in 2020). There are financial penalties for each tonne of fuel consumed above these emissions limits.

The regulation includes the option to introduce a 2% renewable fuel of non-biological origin (RFNBO) sub-target if the share of these is less than 1% by 2031.

There are additional mechanisms available to help meet these targets:

Pooling – Vessels can be grouped with the mean emission used to evaluate compliance – this can be done between companies so an over compliant company might share their savings with one which is under compliant.

Blending – Vessels can use fuel blends to help reduce emissions.

RFNBO multiplier – before 2034 there is a multiplier (x2) attached to RFNBOs to boost uptake of these fuels.

Banking and borrowing – Vessels can save emissions (bank) and use these in future threshold years or borrow against future years to meet compliance requirements in an early year (like a monetary loan these borrowed emissions earn interest).

Energy efficiency – Savings through efficiency gains can be used to reduce emissions.

UK ETS

The UK has been looking at the possibility of expanding its own ETS system to cover marine emissions with an interim response to consultations on this subject released in July 20256. The response confirms that the UK-ETS will expand to maritime emissions from or to UK ports from July 2026 including emissions from carbon dioxide, methane and nitrous oxide. Recent developments have also included a commitment from the UK and European Union to link the UK ETS to the EU ETS, which means that measures under the EU ETS are expected to now be mirrored under the UK scheme7.

Alignment with IMO

The UK government has also expressed support for a multilateral GHG emissions levy which would be applied globally through the International Maritime Organization (IMO). If this is adopted, it could be used as a replacement for UK and EU ETS when accounting for international emissions from the maritime sector.

Global

The International Maritime Organization (IMO) is in the process of introducing their Net Zero framework for international shipping. The draft framework was approved in April 2025 before formal adoption from October 2025 and entry in force from 20278. This regulation will set thresholds for how much GHG can be emitted for each unit of energy used each year (Greenhouse gas fuel intensity (GFI) thresholds) on a well-to-wake basis.

Ships which exceed thresholds will be required to purchase remedial units to balance their emissions deficit. A two tier system has been proposed with a higher threshold (IMO base target) at 85.8 gCO2eq/MJ and a (direct compliance target) at 73.3 gCO2eq/MJ.

EU Emissions trading scheme (ETS) ³

The EU-ETS has been extended to include marine transport (>5000GT) since 1st January 2024. These emissions are paid on a tank-to-wake (direct emissions) basis and, as with FEUM, cover 100% of travel between European ports and 50% for journeys into or out of European ports. Initially the scheme only covers carbon dioxide (CO2) emissions, but methane (CH4) and nitrous oxide (N2O) emissions are to be included from 1st January 2026.

Maritime decarbonisation strategy

In March 2025 the UK launched its Maritime Decarbonisation strategy5 with the aim of reducing greenhouse gas emissions from all parts of the UK maritime economy. In 2019, the UK tank-to-wake emissions from domestic maritime activity was 6.9 MtCO2eq – approximately 5.5 % of UK domestic transport emissions – this was from a broad range of different vessel types and activities including ferries, cargo transport, fishing and leisure. The strategy sets the goal for zero full lifecycle (WtW) GHG emissions by 2050 with milestone goals of 30% reduction by 2030 and an 80% reduction by 2040.

Footnotes:

¹ IMO, Fuel Consumption and Carbon Intensity https://futurefuels.imo.org/home/latest-information/fuel-consumption-dcs/

² European Commission, Wood Mackenzie

³ EU Decarbonising maritime transport – FuelEU Maritime https://transport.ec.europa.eu/transport-modes/maritime/decarbonising-maritime-transport-fueleu-maritime_en

⁴ EC, Guidance Document: The EU ETS and MRV Maritime general guidance for shipping companies https://climate.ec.europa.eu/document/download/31875b4f-39b9-4cde-a4e2-fbb8f65ee703_en?filename=policy_transport_shipping_gd1_maritime_en.pdf