Biodiesel emerges as credible option for ship owners

The price gap between conventional distillate fuels and B100 FAME (fatty acid methyl ester) has narrowed significantly in recent months and, while biodiesel still carries a slightly higher nominal price per tonne, its effective cost-per-voyage is now approaching parity, or even undercutting, fossil fuels when emissions-related costs are factored in.

Rising fuel costs, geopolitical instability and regulation shifts make biodiesel an increasingly attractive option for global shipping

“The economics have shifted quite materially,” said Paul Hoather, VPS UK sales manager. “Shipowners are no longer looking at biodiesel as a premium option. In many cases, it is becoming cost-competitive, particularly when you consider carbon pricing and regulatory compliance.”

The shift comes as marine distillates face sustained price pressure, driven in part by the war in Iran affecting global energy flows. However, biodiesel’s pricing is influenced more by agricultural feedstocks, insulating it from some of the volatility seen in oil markets.

This dynamic is prompting operators to reassess fuel strategies, particularly in Europe where emissions regulations are tightening under frameworks such as FuelEU Maritime.

Despite the growing appeal, experts caution that biodiesel requires careful handling. Its lower energy density, susceptibility to oxidation, and tendency to absorb water mean that fuel management practices must be adapted.

“Biodiesel is not a simple drop-in replacement without consideration,” Hoather said. “But with the right procedures in place, we’ve seen it used successfully with minimal technical issues.”

As shipping lines weigh cost pressures against decarbonisation targets, biodiesel is increasingly positioned as a viable bridge between traditional fuels and longer-term zero-carbon solutions.

Logistics UK’s Senior Policy Manager Alexandra Herdman said: “From a UK logistics perspective, we’re seeing a clear shift in how shipowners evaluate fuel choices.

“Biodiesel is no longer viewed as a niche or transitional option—it’s becoming a commercially credible solution as operators balance cost pressures with the need to meet tightening emissions regulations.

“The key now is ensuring crews and operators are equipped with the right handling and storage practices to use these fuels safely and efficiently.”