Alder BioInsights News Review: Biofuels Issue 157, April 2025

Foreword

The maritime industry is placing greater emphasis on minimizing its environmental footprint, with biofuels gaining traction as a key solution for decarbonization. A significant forthcoming initiative is the International Maritime Organization’s (IMO) proposed dual-incentive mechanism, slated for implementation in 2028. This approach is designed to curb greenhouse gas (GHG) emissions from ships by pairing penalties for non-compliance with financial rewards for shipowners who exceed emissions reduction benchmarks.

The proposed dual-incentive mechanism, with suggested implementation date in 2028, will include two tiers: Tier 2 (Base Target) which represents a general emissions reduction target applied to all ships and Tier 1 (Direct Compliance Target) as a stricter emissions target. Ship owners whose emissions fall below Tier 1 will receive surplus credits, which can then be traded on the open market or banked. In case the emissions fall between Tier 1 and 2, vessel operators will be required to pay a fixed penalty of $100/t CO₂-equivalent. Lastly, ship owners whose emissions exceed the base target will incur a penalty of $380/t CO₂e.

In tandem with regulatory developments, key infrastructure projects are underway to support the growth of the biofuel market. In Brazil, Vast Infraestrutura, a Brazilian transhipment company providing logistics solutions for the energy market, and Be8, a Brazilian biodiesel producer, have announced a collaboration to develop a biofuels hub at the Port of Açu…