Biodiesel becomes more competitive than conventional marine fuel, boosting feedstock demand

Biodiesel for shipping has become cheaper than most conventional marine fuels when emissions-related costs are taken into account, which could accelerate its adoption by the global fleet. Rising petroleum product prices and tighter environmental requirements in Europe are shifting the economics of alternative fuels in favor of biodiesel.

Prices for some types of marine biodiesel have fallen sharply in recent months, while marine gasoil has become significantly more expensive. According to Argus, once the cost of carbon allowances and EU emissions-reduction requirements are included, biodiesel can now be cheaper than nearly all major conventional marine fuels.

This is already supporting stronger demand. Sales of marine biodiesel blends in the second quarter of 2026 rose sharply year on year and more than doubled from the previous quarter. Additional support has come from FuelEU Maritime, the EU Emissions Trading System and national rules aimed at reducing the carbon intensity of fuels.

One of biodiesel’s main advantages is that it can be used in most modern marine engines with little or no major retrofit. At the same time, its lower energy density means vessels may need roughly 7–10% more fuel per voyage. Despite rapid growth, biofuels still account for only about 0.6% of global marine fuel consumption.

Further expansion of biodiesel use could intensify competition for used cooking oil, palm industry residues and other biofuel feedstocks. These resources are already sought by road transport and aviation, meaning stronger demand from shipping could affect the broader oils and fats market and support feedstock prices.

Tags: biodiesel, fuel, marine fuel