Drop-In Biofuels: The Alternative That Needs No New Vessel

Every conversation about alternative marine fuels eventually arrives at the same obstacle. Methanol, ammonia, and hydrogen all require a different ship. New engines, new tanks, new bunkering infrastructure, crew trained on a toxic or cryogenic fuel, and a capital commitment made against a supply picture nobody can forecast.

Biofuels sidestep most of that. Approved blends burn in engines already in service, delivered through bunkering infrastructure that already exists, by barges that already serve the port. For an operator with a fleet that will be trading for another fifteen years, that is a materially different proposition from the one we examined in our piece on the green methanol record at Yangshan.

It is also not quite as frictionless as the drop-in label suggests. There are compatibility questions, fuel system considerations, and engine maker approvals to confirm. And there is a problem methanol does not have, which is that the sustainability attribute you are paying for is verified on paper rather than in the fuel.

What a Drop-In Fuel Actually Is

Two products dominate and they behave differently.

FAME, fatty acid methyl ester, is the workhorse. Produced by transesterification of vegetable oils, animal fats, or waste oils, it should comply with EN 14214 at the point of blending. FAME is the most prominently used biofuel in marine applications.

Strictly, FAME is not defined as a drop-in fuel, though it is used as one. That distinction matters when things go wrong, because FAME introduces handling characteristics that conventional fuel oil does not have.

HVO, hydrotreated vegetable oil, also called renewable diesel, is produced by hydrotreating similar feedstocks and should comply with EN 15940. HVO is a genuine drop-in. It has substantially better storage stability than FAME and is considerably less susceptible to microbial contamination, though it is not immune, particularly where water is present in the system.

HVO is more expensive, because hydrotreating consumes hydrogen and the output competes with aviation demand for the same molecules. Whether it is the better choice for a given operator depends on price, availability, and the feedstock behind it rather than on handling characteristics alone.

The Blends, and What Changed in 2025

Marine biofuel is sold as a blend, and the number after the B is the percentage of renewable content.

B24 became the established commercial grade for a regulatory reason. Carriage requirements historically limited conventional bunker tankers to blends containing no more than 25 percent biofuel, with anything above that requiring an IMO Type II chemical tanker, which is rare among the world’s bunkering fleet.

That changed in 2025.

At MEPC 83, held from 7 to 11 April 2025, the IMO approved interim guidance subsequently issued as MEPC.1/Circ.917, on the carriage of blends of biofuels and MARPOL Annex I cargoes by conventional bunker ships. The guidance provides that conventional bunker ships may transport blends of not more than 30 percent biofuel by volume, provided all residues and tank washings are discharged ashore unless the oil discharge monitoring equipment is approved or certified for the blend being shipped.

The guidance also confirms that an IOPP certificate showing oil tanker, issued to a conventional bunker ship carrying blends between 25 and 30 percent biofuel, does not need to be modified.

Three qualifications matter:

It is interim and not mandatory. The guidance applies pending further development of carriage requirements, or revision of the existing requirements in the IBC Code and MSC-MEPC.2/Circ.17. It will nonetheless be applied by flag administrations and their recognized organizations in accepting the carriage of biofuel blends.

Above 30 percent, the regime changes. For bunker ships carrying more than 30 percent biofuel, MARPOL Annex II and Chapter 17 of the IBC Code apply. For ships other than bunker ships, blends of 25 percent or less are treated as MARPOL Annex I cargo and anything above 25 percent falls under Annex II and the IBC Code.

Port state approval may still be needed. Singapore implemented the guidance early, from 7 March 2025, and reminds Singapore-registered conventional bunker ships to obtain approval from the competent port state authority before calling at a foreign port carrying blends above B25 and up to B30.

The change came from industry pressure. IBIA raised the incongruity at MEPC 81 in March 2024, noting that B30 had already been agreed as compliant with NOx requirements under MARPOL Annex VI, with the matter then passing through ESPH 30 in October 2024 and PPR 12 in January 2025 before approval at MEPC 83.

B30 is therefore now deliverable by conventional bunker tonnage subject to those conditions, which removes the structural constraint that had capped most of the market at B24. B24 nevertheless remains an established and widely traded grade.

B100 is pure renewable fuel, commonly FAME-based though the designation does not itself identify the product. It is available in Rotterdam, where supply runs through river barges, and has been priced out of the Singapore market.

Where ISO 8217:2024 Fits

The 2024 edition of the marine fuel standard, which we covered separately, was substantially about this.

Annex A, covering bio-based liquid fuels including FAME, was rewritten. A new Annex K addressing the characterization of residual marine fuels was added. The four-table structure introduced in 2024 includes dedicated tables for bio-distillate fuels and bio-residual blends, which did not exist in the 2017 edition.

Before that, biofuel was sold against ISO 8217:2017 with an explicit carve-out. Specifications complied with the 2017 standard except for the clause governing FAME levels, which was handled by contractual agreement instead. That is the formulation MPA used when it opened Singapore to biofuel deliveries and it remains on a good deal of paperwork.

Two things follow for a buyer:

Specify the edition and the table. A contract referencing ISO 8217 without an edition creates potentially material ambiguity, which contract interpretation and trade usage may resolve but which is considerably cheaper to avoid than to argue about.

Remember what the standard is. ISO 8217:2024 is a commercial specification, transactional between buyer and seller, rather than a mandatory regulation. Selling to it is an undertaking.

Testing has caught up. ASTM D7963 is used for FAME content in residual grades, with separate methods for distillates.

The Operational Considerations

The drop-in argument is strong and it is not absolute. Compatibility, fuel system materials, and engine maker approval all need confirming for a given vessel and blend, and FAME in particular introduces issues a crew accustomed to conventional fuel will not anticipate.

Stability and Microbial Growth: FAME is hygroscopic and supports microbial growth in a way fossil fuel does not. Long storage periods are the enemy.

Compatibility and Instability: Blending biofuel with conventional residual fuel raises the same compatibility questions as any commingling, and practitioners have flagged the need for different fuel management approaches to avoid destabilization of fossil and bio blends.

Mass Flow Metering: This one is specific and commercially significant. Research published by the Global Centre for Maritime Decarbonisation in August 2026 found that blending FAME with residual marine fuels can reduce viscosity sufficiently to put the finished blend outside a mass flow meter’s validated operating range.

The distinction matters. Being outside the validated range creates measurement uncertainty. It does not establish that a shortage occurred or that the meter misread. What it does is remove the assurance the meter was installed to provide, which as we set out in the piece on bunker quantity disputes was the answer to the measurement problem in the first place. The practical response is to evaluate meter suitability under actual transfer conditions and consider independent quantity verification on early stems.

Tank and Line Cleanliness: Switching to biofuel can lift deposits that years of residual fuel have laid down, with predictable consequences for filters and separators.

None of this makes biofuel unusable. It makes the first few stems an operational exercise rather than a purely commercial one, which is why engine makers and class societies publish specific guidance and why the CIMAC guideline on marine fuels containing biofuel is worth reading before the first delivery.

What It Costs

Biofuel carries a premium and the spread moves with feedstock prices rather than with crude.

As at early September 2026, pure B100 in Rotterdam was assessed around $1,304 per tonne, Singapore B30-VLSFO on UCOME around $1,051 per tonne, and Chinese UCOME cargoes, which supply a considerable share of Singapore’s feedstock, around $1,195 per tonne. Against that, HSFO was reported as more than $200 per tonne cheaper than bio blends in both Singapore and Rotterdam, with bio-bunker demand described as sluggish in Singapore.

Those are historical weekly assessments rather than current quotations and should be treated as indicative of the spread rather than of today’s price.

The regional pattern is the more durable point. Singapore blends have traded at discounts to ARA equivalents, and voluntary demand has shifted east of Suez while EU-facing operators buy in ARA for the regulatory credit.

Which is the real point about price. Biofuel does not compete with fossil fuel on cost. It competes once EU ETS and FuelEU Maritime obligations are priced in, and that is why the European market pays a premium the Asian market does not.

The Verification Problem

Here is the part that should concern any buyer, and it needs stating carefully because the evidence is more mixed than the headlines suggest.

The sustainability attribute you are paying for depends on the feedstock being what the documentation says. Certification confirms that a chain of custody was documented. It does not mean the product was physically tested.

Used cooking oil commands a premium over virgin oil precisely because it is a waste product and qualifies as sustainable. That creates an incentive to pass fresh product off as used, through adulteration by mixing virgin oil with genuine UCO, or through mislabeling.

Concerns about this are substantial and have been taken seriously by regulators. Germany notified the European Commission of alleged fraud in Chinese biodiesel imports in March 2023. Transport & Environment has documented weaknesses in verification, finding in a December 2024 briefing that just 9 percent of ISCC-certified UCO collecting points among Europe’s three largest foreign suppliers had received in-person audits, and noting that Europe imports around 80 percent of its UCO with roughly 60 percent coming from China. A Transport & Environment analyst quoted in trade press has estimated that around a third of imported UCO is fake and most likely sourced from virgin palm oil, pointing to collection rates from certain jurisdictions that are arithmetically implausible.

That estimate is an advocacy organization’s assessment of import data rather than an established finding, and the authoritative examination reached a more qualified conclusion.

On 18 July 2025 the European Commission concluded its examination of the German allegations, conducted under Article 30(10) of the Renewable Energy Directive. It identified systemic weaknesses in the way certification audits had been conducted and is taking action to address them. It also stated that the information gathered did not allow confirmation of the existence of fraud, while leaving German authorities free to carry out further verifications if they choose.

The Commission’s response has been structural rather than punitive. It is strengthening the Implementing Regulation on sustainability certification, reviewing the standards of voluntary schemes in cooperation with the European co-operation for Accreditation and national accreditation bodies, continuing technical work on fraud prevention, and planning the full mandatory rollout of the Union Database for renewable and recycled carbon fuels, which is intended to improve traceability beyond paper certification.

ISCC’s own position is worth stating fairly. The scheme has emphasized that certification is not designed to replace the role of law enforcement or regulatory oversight, which is a reasonable statement of what a voluntary audit scheme can achieve. Industry participants have also noted they do not see alternatives with demonstrably better fraud prevention mechanisms.

A study commissioned by Pacific Environment and carried out by the Maritime Energy and Sustainable Development Centre at Nanyang Technological University, released on 8 September 2026, argues that paper-based checks will not be sufficient as the IMO develops certification rules for its Net-Zero Framework. It reviews ISCC, RSB, RenovaBio, California’s Low Carbon Fuel Standard, and the US Renewable Fuel Standard, and proposes exploring physical fingerprinting of fuels alongside stronger traceability safeguards. Fingerprinting is a proposed improvement rather than an implemented method capable of verifying every commercial marine biofuel feedstock today. The study notes ISCC’s dominance, with more than 90 percent of biofuels in the UK ISCC-certified and 7,546 ISCC certificates issued in 2024 against 72 for RSB.

The honest summary for a buyer is therefore narrower than the headlines. The central risk is not a proven industry-wide fraud rate. It is the difficulty of independently verifying feedstock origin, in a system where the regulator has itself identified systemic weaknesses in the audit process on which the sustainability attribute depends.

The Exposure That Follows

For a shipowner the question is what happens if the documentation supporting a compliance claim is later found invalid.

The two regimes work differently and should not be conflated. Under EU ETS, qualifying sustainable biofuel can receive a zero CO2 emissions factor, removing the corresponding allowance surrender obligation. FuelEU Maritime instead assesses the greenhouse gas intensity of the energy used on board and calculates a compliance balance. A certification failure affects the two calculations differently.

The consequence is reassessment rather than an automatic reversal. If documentation supporting an EU ETS emissions reduction or a FuelEU compliance balance is subsequently found invalid, the owner may face reassessment of its reported emissions or compliance position. What follows depends on the circumstances, the applicable verification procedures, and the regulatory requirements, and the effect of an upstream certificate suspension on already-verified transactions requires case-specific assessment rather than a general answer.

The commercial loss sits with you in the first instance. You paid a premium for a sustainability attribute. If it was not delivered, your recourse runs against your supplier under the supply contract, subject to whatever time bars and liability caps that contract contains.

The reputational exposure is real. Carriers selling biofuel insetting services to cargo customers are passing the attribute onward, and a failure in the chain reaches the customer-facing claim.

What to Ask Before You Buy

Specify the fuel properly. ISO 8217:2024, the applicable table, the blend percentage, whether FAME or HVO, and the feedstock.

Require the right document, not just a certificate. Where biofuel is bought for EU ETS or FuelEU Maritime compliance, require Proof of Sustainability documentation issued under a scheme recognized for that purpose under the applicable EU requirements. This is the correction most worth making to an existing procurement process. ISCC EU addresses compliance with EU renewable energy sustainability requirements. ISCC PLUS is a separate voluntary scheme used for broader sustainability claims. A supplier holding some form of ISCC certification does not by itself establish regulatory eligibility, and the Proof of Sustainability should be traceable to the delivered batch.

Put the certification risk in the contract. What happens if the documentation is later invalidated, who bears the loss of the compliance position, and whether that warranty survives beyond the quality claim time bar. This is the clause nobody drafts and it is the one that matters.

Confirm the delivery vessel can carry the blend. MEPC.1/Circ.917 permits conventional bunker ships up to B30 subject to the residue and ODME conditions, and port state approval may be required for blends above B25. A contract for B30 in a port without compliant delivery tonnage is a contract that will not perform.

Address the metering question. Where delivery is on mass flow metering and the blend is FAME on a residual grade, ask whether viscosity sits within the meter’s validated range under actual transfer conditions.

Plan the first bunkering as an operation. Tank condition, compatibility with fuel remaining on board, filter and separator monitoring, storage period, and engine maker approval for the blend.

Do not treat HVO and FAME as interchangeable. The handling characteristics differ materially and so does the price.

The Bottom Line

Biofuels are among the most immediately deployable decarbonization options for the existing fleet. Approved blends work in engines already in service, through infrastructure already in place, which is why biofuel bunkering has scaled faster than anything else in the transition.

The regulatory constraint that capped most of the market at B24 was relaxed in 2025, and B30 is now deliverable by conventional bunker tonnage subject to conditions. The operational issues are real and documented. The price premium is the point rather than the problem, since the fuel exists to reduce a regulatory cost.

What remains unresolved is verification. The entire value proposition rests on a feedstock claim confirmed on paper, in a system where the European Commission has identified systemic weaknesses in certification auditing while declining to confirm fraud in the case it examined, and where the proposed fixes are still being built.

Methanol’s problem is availability. Biofuel’s problem is provenance. The second is the better problem to have, and it is one that belongs in your supply contract rather than in your assumptions.