Almost 90% of the world's in-service tonnage — 89.8% — can operate only on oil fuels, leaving drop-in biofuels such as FAME and HVO as the only near-term decarbonisation lever for most operators, classification society DNV has found.

The figure, drawn from DNV's Maritime Forecast to 2050, also shows that 60.6% of the tonnage on order and 79.5% of the ships by number face the same oil-only constraint. That reinforces shipping's exposure to fuel-quality risk as suppliers pivot to agricultural and industrial bio-residues to satisfy demand.

NorthStandard, the P&I Club, has now published detailed loss-prevention guidance for members handling the new generation of waste-derived fuels, warning that chemically variable feedstocks could destabilise engines, foul fuel systems and complicate pollution response.

What is driving the shift to bio-residues?

Three EU policy levers are reshaping the marine bunker market. FuelEU Maritime already allows operators running on lower-emission fuels to sell surplus compliance credits to those in deficit.

A proposed revision to the EU ETS would add a technology-neutral Sustainable Maritime Alternative Propulsion (SMAP) framework to close the cost gap between fossil and low-carbon fuels. The Renewable Energy Directive (RED III) names eligible residue streams: used cooking oil (UCO), animal fats, palm oil mill effluent, tall oil and lignocellulosic residues, alongside forestry, agricultural and industrial waste.

"These are prudent alternatives to food-crop feedstocks," Mark Smith, Director of Decarbonisation at NorthStandard, wrote in a whitepaper. "Bio-residues can … be used to derive fuels or fuel blends which promise to 'drop-in' as replacements for conventional oils to help ships reduce greenhouse gas emissions."

DNV's forecast makes the same point harder: "This implies reliance on drop-in fuels such as fatty acid methyl ester (FAME) or hydrotreated vegetable oil (HVO) for decarbonization, unless these vessels are converted to use alternative fuels or equipped with onboard carbon capture and storage."

The IMO's Net Zero Framework (NZF) had also envisaged GHG pricing supported by a credit mechanism, although administrations remain divided. The 85th Marine Environment Protection Committee session, scheduled for 30 November to 3 December, will test whether the proposal can move forward.

Why are waste-derived fuels riskier?

Residues are not conventional marine fuel. NorthStandard argues they should be treated as waste-derived fuels requiring enhanced quality management and pollution preparedness. The Club sees four pressure points:

• Competition for feedstock: RED III applies across industries, so aviation and heavy transport will chase the same residue pool.
• Variable chemistry: buyers face chemically inconsistent feedstocks and blends drawn from multiple streams.
• Traceability and fraud: pressure on documentation could lead to misclassification of sustainability values in Proof of Compliance records, raising chain-of-custody disputes.
• Engine and storage damage: oxidation instability, acidity swings, cold-flow problems and degradation during storage can foul injectors, wear fuel pumps, increase sediment and trigger blockages in purifiers and filters. Microbial growth rises where residual contaminants or water are present.

Fuel incompatibility — when biofuel specifications are not reliable — can also damage seals, gaskets, coatings and certain alloys. Batch-to-batch inconsistency affects performance within a single voyage and machinery condition over time, with higher maintenance costs a likely outcome.

What is NorthStandard telling members to do?

The P&I Club recommends owners enforce stringent tank cleaning before biofuel use and approach fuel-testing agencies for enhanced checks covering microbial growth, chemical contamination and other biofuel-specific parameters rather than relying on standard panels.

Members should use reliable suppliers, demand detailed fuel specifications and quality declarations, and avoid blending with other fuels unless compatibility testing confirms suitability. NorthStandard also points members to VPS fuel insights for ISO 8217 off-spec data, supplier and port-level off-spec trends.

The Club further advises minimising fuel storage duration, monitoring temperature and water drainage, and watching purification, filtration, sludge production and fuel-transfer systems for abnormalities. Owners should track fuel pumps, injectors and cylinder condition more closely.

Operators should also ensure transfer procedures, spill-contingency plans, the Shipboard Oil Pollution Emergency Plan (SOPEP) and crew training are wholly suitable for biofuels, and retain full fuel composition documentation including blend information, to support any spill clean-up that may behave differently from conventional oil.

NorthStandard flags International Sustainability & Carbon Certification (ISCC EU) as the principal scheme to confirm a fuel derives from waste or residue rather than crops, verify lifecycle GHGs and support third-party compliance audits.

The outcome of MEPC 85 and any movement on the EU ETS revision will shape how quickly SMAP-style support closes the price gap with conventional bunkers — and with it the pace at which complex residue streams migrate into ship tanks.