As biofuel consumption in shipping accelerates, mutual insurer NorthStandard has issued a white paper advising shipowners to strengthen due diligence procedures amid a growing number of fuel-related claims.
Biofuels have emerged as a preferred short-term decarbonisation pathway for many operators, largely because they can be blended with conventional fuels and used without major technical modifications to onboard systems. According to Rotterdam-based fuel testing agency Veritas Petroleum Services (VPS), global biofuel uptake surged by 1,200% between 2021 and 2025, reaching approximately one million tonnes.
To date, most vessels have relied on blends containing 5–10% bio-components. However, regulatory pressure is intensifying. Under FuelEU Maritime rules, vessels were required to cut greenhouse gas (GHG) intensity by 2% in 2025, a target that will rise to 6% by 2030 and 14.5% by 2035. Achieving the IMO’s 2040 target of a 65% reduction in GHG intensity could require biofuel blends of 30–40%, increasing to 80% reductions by mid-century.
At the same time, the European Union Emissions Trading System (EU ETS) is now fully operational for maritime transport. Ships operating within EU or European Economic Area (EEA) waters must purchase allowances covering 100% of their GHG emissions, while voyages to or from EU/EEA regions require coverage for 50% of emissions.
Against this backdrop, NorthStandard’s Loss Prevention Director for Nordic North Europe stressed that regulatory tightening and rapid demand growth are increasing exposure to operational risks. “Biofuels remain the leading short-term decarbonisation pathway for shipping,” he noted, “but buyers must implement stronger due diligence as feedstocks diversify and market demand accelerates.”
The insurer’s warning follows a number of recent claims tied to fuel quality. According to the white paper, fuels marketed as B100 (100% biofuel) have, in some cases, proven to be bio-blends with inconsistent or unpredictable performance characteristics.
Reported issues include engine wear, corrosion, fouling, clogging, sludging, instability and poor ignition performance. The report stresses the importance of robust testing and quality assurance procedures before bunkering.
VPS Projects Director for Group Marketing & Strategic added that while established biofuels such as fatty acid methyl esters (FAME) and hydrotreated vegetable oil (HVO) generally demonstrate predictable performance, newer feedstocks — including cashew nut shell liquid (CNSL) — require a far more cautious approach.
Certification and traceability also remain critical. Chain-of-custody documentation must be embedded within contractual frameworks, audit processes and onboard reporting systems to ensure regulatory compliance.
As decarbonisation timelines tighten, biofuels are expected to remain central to short-term emission reduction strategies. However, NorthStandard’s paper underscores that operational discipline and fuel management expertise will determine whether biofuel adoption delivers environmental gains without exposing shipowners to technical and financial risk.
