Op-Ed: Advanced feedstocks offer commercially sustainable GHG compliance

By Jesper Sørensen, Global Head of Alternative Fuels and Carbon Markets

The regulatory landscape for shipping is evolving rapidly, and shipowners and operators now face a continuous cycle of planning, monitoring, reporting and compliance under new GHG-related regulations.

The final quarter of 2025 sees FuelEU reporting approach the end of its first year, in which operators must reduce the GHG intensity of their vessel operations to, from and within EU ports by 2% overall, compared to a 2020 baseline. Reporting for FuelEU must be completed by the end of March 2026. The initial 2% step alone is expected to require 600-700 mt of biofuel (B100) in 2025. At the same time, EU ETS introduces a growing cost of emissions. By September 2025, operators must surrender emissions allowances (EUAs) covering 40% of their emissions from 2024. This increases to 70% for 2025 and 100% for 2026.

FuelEU Maritime imposes costs on those operators whose vessels do not meet the reduction thresholds or who fail to make arrangements to offset their emissions. Because compliance is aggregated across the fleet, operators with higher-emitting vessels can still achieve compliance by switching to lower-GHG fuels later in the year to avoid penalties.

Crucial to getting this calculation right is understanding the GHG savings available from biofuels, and how they can be combined with traditional fuels to reduce emissions and deliver regulatory compliance. FuelEU Maritime requires emissions to be calculated on a whole-life basis. This well-to-wake (WtW) approach accounts for emissions during production, fuel transport and supply, known as well-to-tank (WtT), and consumption onboard, known as tank-to-wake (TtW). The baseline GHG intensity for FuelEU Maritime was set at 91.16 grams of CO2 equivalent per megajoule (91.16 gCO2e/MJ), based on GHG intensity for vessels measured in 2020. A 2% reduction, as required in the years 2025-2029, requires fuel with a GHG intensity of 89.34 gCO2e/MJ.

Marine Gas Oil has a well-to-wake GHG intensity of 90.8 gCO2e/MJ comprised of a WtT intensity of 14.4 gCO2e/MJ and a TtW intensity of 76.4 gCO2e/MJ. A WtW GHG intensity above the 2% reduction target means that operators using fossil MGO, with no biofuel content, will not comply with FuelEU Maritime during the 2025 monitoring period. 

Beginning with biofuels

In the short term, biofuels remain the most practical way for operators to meet the first FuelEU Maritime targets. Hydrotreated vegetable oil (HVO) and fatty acid methyl esters (FAME), including used cooking oil methyl ester (UCOME), are already being used across the sector. These fuels can be introduced with minimal disruption to existing vessels, providing a straightforward route to reducing emissions today.

HVO has a negative WtT GHG intensity (-54.8 gCO2e/MJ), due to its avoided emissions from waste disposal. Trials show encouraging results. Blends of HVO and FAME have demonstrated well-to-wake GHG reductions of over 20% compared with conventional marine fuels. Their drop-in nature makes them attractive to shipowners and operators who need immediate solutions.

Biofuels provide near-term value, but they are only part of the solution. Availability, sustainability, and certification are becoming just as important as technical performance.

Why advanced feedstocks are essential

The next step in shipping’s energy transition lies in advanced feedstocks. These are produced from agricultural residues, municipal waste, algae, and lignocellulosic material. Advanced biofuels intended for FuelEU Maritime must meet defined sustainability and quality requirements to ensure they deliver genuine GHG reductions.

Recent pilots highlight their potential. One test using 100% renewable biofuel made from advanced feedstocks achieved up to an 85% reduction in GHG emissions compared with fossil fuels. This level of performance will be critical to meeting FuelEU Maritime’s long-term trajectory with regulators, financiers and cargo owners.

The supply of advanced feedstocks is still developing, but this is where shipping can show leadership. By actively encouraging demand, supporting certification schemes and forming partnerships across the supply chain, the industry can help accelerate production and secure access to these fuels for maritime use.

Certification: building trust and assurance

Certification is a cornerstone of FuelEU Maritime. Put simply, if a fuel is not certified by an accredited scheme, it does not count toward compliance. Operators will need sustainability declarations that confirm feedstock origins, lifecycle GHG performance, and compliance with RED II, making certification an essential part of how biofuels flow into the marine market under FuelEU. Suppliers and traders serving FuelEU-regulated customers increasingly align with recognized schemes, such as ISCC to ensure their products can be verified for regulatory use, helping create consistency and clarity across the supply chain.

Certification further provides broader value: it strengthens confidence in reported GHG reductions, reduces reputational exposure, and contributes to a more transparent market where high-quality fuels can compete fairly. Many established companies in the marine fuels sector already operate within accredited certification frameworks, ensuring the fuels they handle meet regulatory expectations and support the sector’s broader energy transition.

Progress will not come from shipowners alone. The transition to advanced biofuels requires the combined efforts of the entire maritime ecosystem: suppliers, traders, ports, financiers and regulators. Each has a role to play in creating the conditions that make advanced fuels viable at scale.

That means aligning on certification standards and supporting long-term agreements that give producers the confidence to expand capacity. Collaborative action will allow the maritime sector to accelerate adoption and avoid bottlenecks as regulatory requirements increase.

FuelEU Maritime is an important GHG regulation and together with EU ETS presents an opportunity to create competitive advantage. Getting fuel choice right to reduce GHG intensity ensures FuelEU compliance and avoids penalties, while also lowering obligations to pay for emissions under the European Union’s emissions trading system.

Aside from adopting biofuels, under FuelEU Maritime shipping companies have access to multiple mechanisms to meet their annual GHG-intensity targets in a cost-efficient way. Pooling, banking and borrowing provide flexibility and support compliance planning. Pooling allows operators, to combine the performance of multiple vessels or collaborate with other companies and balance under- and over-performance across a shared pool. Banking enables operators that over-comply in a given year to carry those excess credits forward, creating a buffer for future compliance periods. Conversely, borrowing lets companies draw a limited number of credits from the following year if they fall short, helping smooth out fluctuations in fuel availability, pricing and operational constraints. Together, these solutions give operators flexibility to manage uncertainty and plan strategically as the evolving market for low- and zero-carbon fuels develops.

As regulation of GHG emissions develops around the world, fuel strategy needs to integrate with carbon-market planning, turning compliance, into an increasingly important element of commercial strategy.

By building partnerships across the value chain and supporting the development of new supply, maritime can secure access to the fuels that will drive progress in the decades ahead. At the same time, working with experts in shipping’s green transition allows ship owners and operators to build long-term strategies for fuel selection and blending, assessing various approaches for their strengths and limitations in light of wider operational goals. Those who move early and embrace this opportunity will not only achieve compliance but also minimize risk and gain an advantage in an increasingly competitive market.

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