What Maritime Carbon Math Is Revealing About Biofuel Feedstock Risk

As of 2026, shipping companies must surrender EU Emissions Trading System (EU ETS) allowances for 70 percent of covered emissions, rising to 100 percent from 2027 onward. Assuming full-phase-in, EU Allowance prices would run around $100 per tonne of CO2 equivalent, which translates to roughly $319 per tonne of Very Low Sulfur Fuel Oil (VLSFO) consumed on intra-EU voyages.

For a large container ship on the North Europe-Asia corridor, the annual carbon bill would range from $8.7 million to $12.4 million. For bulk carriers and tankers with meaningful EU port exposure, the range would amount to $1.4 million to $2.7 million per year.

Those are the figures operators are now modelling against their fuel and technology options. The number on the other side of the ledger, what it actually costs to avoid those liabilities, is what determines which decarbonization tools get serious consideration.

The Portfolio Conversation

Onboard carbon capture and storage (OCCS) has moved from a research curiosity to active fleet-planning discussions, driven partly by European Union Emissions Trading System (EU ETS) numbers and partly by regulatory progress. At the International Maritime Organization’s Marine Environment Protection Committee (MEPC) 83rd session in April 2025, the International Maritime Organization (IMO) approved a work plan toward a formal regulatory framework for OCCS, with work scheduled through 2028.
The European Union FuelEU Maritime regulation (FuelEU Maritime) did not include OCCS when it took effect in January 2025, citing limited maturity, limited demonstrated results, and the absence of an international framework for traceability and long-term sequestration, though the door remains open to future recognition.

What has changed in how serious buyers are framing the conversation is the portfolio logic. DNV’s position, articulated in their February 2026 OCCS report, is that no single technology wins. Efficiency improvements come first. Alternative fuels are essential. Carbon capture joins as a third tool for fleets managing both decarbonization pressure and fuel availability constraints. As DNV’s Head of Shipping Advisory for West Europe and the Middle East told The Maritime Executive in the March-April 2026 issue: “It’s not which one will win; it is rather all of these will be in place.”
That framing has direct implications for biofuel and biomass feedstock suppliers. Alternative fuels are not optional in this picture. They are structurally required. The question is whether supply chains can deliver at the volume, consistency, and verification standard that fleet planning actually requires.

Where OCCS Gets Stuck

DNV’s analysis of what constrains OCCS scale is instructive, and not only for what it says about carbon capture. The binding constraint is not shipowners, and it is not the capture technology itself. The bottleneck is port-side infrastructure: CO2 terminals and permanent storage access. Investments in that infrastructure are being driven by land-based carbon needs, not shipping.Rotterdam’s CO2next and Aramis projects are targeting final investment decision (FID) in 2026 or 2027. Maritime OCCS will benefit from that infrastructure, but it was not built for shipping and shipping cannot accelerate it.

This matters for understanding how decarbonization infrastructure develops. Technologies ready for deployment at sea are waiting on ashore systems. Carbon Ridge’s centrifuge-based system has been running aboard Scorpio Tankers’ STI Spiga since July 2025, delivering approximately 70 percent CO2 removal for an Long Range 2 product tanker (LR2) at a 3-ton-per-hour configuration. The scale question is not whether capture works on a ship. It is whether captured CO2 can be offloaded reliably, at a competitive cost, into a verified storage value chain. The cost of offloading, not the cost of capture, drives the commercial case.
Biofuel supply faces an analogous structural gap. The conversion technology for maritime biofuels is not the constraint. Conversion capacity exists or is being built. What is missing, and what limits serious offtake contracting, is the same thing that limits OCCS at scale: a verifiable, consistent upstream supply chain that can meet the quality and volume requirements of industrial buyers over a multi-year horizon.

The Traceability Gap

One observation from Carbon Ridge’s CEO, Chase Dwyer, quoted in the same Maritime Executive feature, is worth examining closely for what it implies about alternative fuels. He noted that carbon capture has a specific advantage over alternative fuels in one dimension: traceability. A capture system generates a data chain from the exhaust inlet to permanent storage, tracking inlet CO2, captured CO2, supply chain losses, and parasitic energy use. That chain produces a verified net reduction figure that can withstand a regulatory audit. Alternative fuels, by contrast, often exhibit upstream opacity, making lifecycle emissions difficult to verify. The pathway from feedstock origin through processing to the ship’s fuel tank involves multiple actors, variable feedstock quality, and certification frameworks that range considerably in rigor.

This is not an argument against alternative fuels. DNV’s model depends on them. Fleets running on low-GHG fuels reduce the base liability that carbon compliance and capture both work against. But Dwyer’s observation accurately describes a supply chain problem that biofuel producers and feedstock suppliers have not yet fully resolved, and one that fleet buyers are beginning to probe more carefully during contracting.

The question buyers are increasingly asking is whether the biofuel they are contracting for is traceable to the same standard that carbon markets and classification societies are starting to require. IInternational Sustainability and Carbon Certification (ISCC), the Roundtable on Sustainable Biomaterials (RSB), and the European Union Renewable Energy Directive III (RED III) provide certification frameworks, but certification at origin does not automatically produce consistency in volume, moisture content, or biomass specification across growing seasons and geographies. A supplier can be certified and still deliver feedstock that varies enough to affect conversion efficiency or fail quality tests at the processing gate.

What Feedstock Reliability Actually Requires

DNV’s scaling model for OCCS reduces to three variables: regulation, offloading infrastructure, and offloading price. A comparable analysis for biomass feedstock supply reduces to similar categories: regulation, processing infrastructure, and delivered feedstock cost. The third variable in each case depends on the first two, but it also depends on something neither model captures cleanly: supply chain predictability over time.

For OCCS, predictability means knowing that CO2 offload facilities will be available at the port at an agreed cost throughout the operating life of the capture system. For biomass, it means knowing that feedstock volumes will be available at consistent specifications across growing seasons, weather events, and the logistical gaps between harvest cycles and delivery windows.
This is where plantation-level management becomes a commercial variable, not just an agronomic one. A fleet planning a biofuel offtake agreement over five years is exposed to the same category of risk that DNV identifies for OCCS: the ashore infrastructure needed to make the technology commercially viable may not be ready, may cost more than modeled, or may face regulatory uncertainty that delays deployment. For biofuels, the equivalent risk is the feedstock supply that cannot maintain specification consistency across the contract period.

Buyers who understand this are beginning to ask different questions at the contracting stage. Certification origin matters less than yield data across multiple growing seasons. Single-site supply matters less than aggregated supply from multiple sources with known variability profiles. Price per tonne matters, but so does the supplier’s ability to demonstrate what drives variability and how it is managed.

What Is Changing in Buyer Behavior

Carbon Ridge’s CEO framed the OCCS market’s current moment by comparing it to scrubbers in 2016 or 2017: a technology that was ready, waiting on the regulatory cost of not installing to become concrete enough to force fleet-wide decisions. Scrubbers followed a recognizable adoption pattern: pilot installations, regulatory clarity, fleet planning, then accelerated uptake once the commercial case closed.

Biofuel adoption in the maritime sector may be approaching a similar inflection point. The regulatory cost of not switching is now quantifiable. EU ETS exposure is concrete. FuelEU Maritime is in effect. CORSIA timelines are set. What has not yet closed is the supply-side confidence problem: buyers who want to commit to biofuels at scale cannot find sufficient evidence that feedstock supply will remain stable over a multi-year contract period.

That is a planning problem more than a technology problem, and it has a different solution than the scrubber analogy might suggest. Scrubbers were a retrofit decision made at the ship level. Biofuel contracting is a supply chain commitment made at the fleet level, requiring upstream supply chain evidence that the scrubber comparison does not capture.
Implications for Biomass Suppliers
The EU ETS numbers are the commercial forcing function that simultaneously changes the OCCS and biofuel calculations. A fleet operator paying $1.4 to $2.7 million per year in carbon liabilities for a single vessel is running a fundamentally different spreadsheet than one that faced no compliance cost two years ago. The question on the biofuel side of that spreadsheet is not whether the fuel works. It is whether the supply chain behind it can be stress-tested to a standard that justifies a long-term commitment.

For biomass feedstock suppliers, this means the credibility question has shifted. The early conversation was about whether biomass could meet fuel specifications. That question has largely been answered for the relevant species and processing pathways. The current conversation is about whether supply chains can produce consistent volume and quality throughout the contract period, with traceability documentation that meets certification and regulatory audit requirements.
This is an operational question, not a marketing one. Suppliers who can demonstrate yield consistency across sites and seasons, document feedstock specification variability and how it is managed, and show a logistics chain with identifiable handoff points are addressing the actual risk that fleet operators are trying to underwrite. Those who cannot will find that certification alone does not close the contracting gap.

The infrastructure parallel that runs through the OCCS conversation – ready technology waiting on ashore systems developing on a different timeline – is a fair description of where biomass feedstock supply sits relative to maritime biofuel demand. Demand is real and growing. Specifications are defined. The gap is in supply chain depth and the evidence base to support long-term commitments at the volume and consistency the market requires.

 

Source Note: This post is adapted from original reporting and analysis by Sean M. Holt, MBA, President, International, Phi Earth Technologies, and a regular contributor to The Maritime Executive.