Maritime industry forecasts severe biofuel shortage

The shipping industry is forecasting a severe shortage of biofuels by 2028. Illustration.

According to a new report published on June 3 by Rystad Energy, from now until 2028, the demand for biofuels in the maritime sector is forecast to far exceed the global supply capacity. This is a direct threat to the greenhouse gas emission reduction target that the industry is pursuing.

Supply cannot keep up with demand

Biodiesel and bio-GNL have the great advantage of being able to be used on current ships without the need for complex technical modifications. However, global production is still very limited.

By 2028, the maritime industry is expected to need more than 140 million tonnes of biofuel equivalent. But even in the most optimistic scenario, total global capacity is only about 120 million tonnes. And if only second-generation sustainable biofuels are counted, the actual figure could be as low as 40 million tonnes.

As for bio-Methane, supply is even tighter. Currently, more than 84% of global biomethane is used for power generation, 10% for road transport, and only about 6% for other sectors, including shipping.

Growing pressure from emissions regulations

The International Maritime Organization (IMO) is tightening greenhouse gas regulations through its emission intensity assessment (GFI) system. In this context, biofuels are seen as a more reasonable “transition” solution, compared to alternative fuels such as ammonia and methanol – which require huge infrastructure investments.

“The shipping industry cannot afford to ignore the risk of biofuel shortages,” warned Junlin Yu, senior analyst at Rystad Energy. If biofuels meet the full-lifecycle emissions standards, shipping lines could also benefit from IMO emissions incentives.

The race for clean fuel is getting fiercer

Securing the supply of biodiesel and bio-diesel will be a key factor in determining compliance with emissions regulations until 2028. The shipping industry is engaged in a strategic race to gain access to biofuels – a competition that has been described as a “battle for survival”.

At Rystad Talks Energy: Full Steam Ahead on May 28, senior leaders from Rystad Energy and DNV Maritime will discuss this major challenge, as the maritime industry accelerates its energy transition under pressure from increasingly stringent global environmental policies.