Bio-LNG as Alternative Fuel for Shipping: Its Business Case under EU ETS, FuelEU Maritime, and the IMO Net-Zero Framework

With EU ETS and FuelEU Maritime dominating shipping's decarbonisation agendas at the moment and the IMO Net-Zero Framework on the horizon, shipping companies are looking for the best alternative fuels that meet both operational and regulatory needs. Among these, Bio-LNG is emerging, not just as alternative fuel, but as a key option foshipping to comply with FuelEU Maritime, the EU Emissions Trading System (EU ETS), and the IMO Net-Zero Framework.

In today’s newsletter, we look at the numbers behind Bio-LNG, its growing use in FuelEU Maritime, and the business case for scaling its adoption going forward.

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Regulatory Pressure: Bio-LNG as a Strategic Response For Shipping

FuelEU Maritime assigns a well-to-wake GHG intensity to each fuel type, measured in grams of CO2 equivalent per megajoule (gCO2e/MJ). Fuels with emissions below the regulatory limit generate surplus; fuels above it cause deficits and penalties, as previously described in various newsletters.

The IMO’s new Net-Zero Framework builds on the same principle—assigning compliance surpluses and deficits based on each fuel’s lifecycle intensity and the compliance tier, with surplus trading and penalties set to begin in 2028.

Bio-LNG has the potential to generate substantial surplus under both, FuelEU Maritime and the IMO Net-Zero Framework.

How Bio-LNG Performs Under FuelEU and IMO

Similar to our previous study on the impact of the different regulations on the fuel costs per t fuel, this newsletter shows the impact on the Bio-LNG costs and compares it to LNG. For this purpose, the study assumes three different scenarios:

1. Bio-LNG with negative intensity under FuelEU and IMO Net-Zero Framework (BioLNG-CI)

2. Bio-LNG with neutral (0) intensity under FuelEU and IMO Net-Zero Framework (BioLNG0)

3. Bio-LNG with negative intensity under FuelEU and neutral (0) intensity under the IMO Net-Zero Framework (BioLNG-CI/0)

Table 2: Effect of IMO and EU regulations on fuel costs in 2028 with special emphasis on Bio-LNG

The impact on the fuel costs is significant. While HFO (VLSFO) and all fossil LNG types are penalized when considering both EU and IMO regulations, Bio-LNG can profit from significant surplus commercialisation opportunities. Even in the scenario with neutral intensities, the fuel costs are reduced by a minimum of 1060 USD per tonnes Bio-LNG. At a current price in Rotterdam of 1,495 USD per tonnes according to S&P Platts, Bio-LNG would only cost 435 USD per tonnes. At the same time, the best case scenario for fossil LNG (LNGDiesel SS and no EU regulations) would be almost double the cost at 796 USD per tonnes.

In the best case scenario (BioLNG-CI) and considering IMO as well as EU regulations, Bio-LNG would be generating additional returns of 1,645 USD per tonnes.

Table 3: Effect of IMO and EU regulations on fuel costs in 2030 with special emphasis on Bio-LNG

Table 3 and Table 4 showcase that this picture remains valid for 2030 and 2035 respectively. Despite decreasing revenue from surplus due to higher ambitions set by the regulations, the penalties for fossil fuels also increase. In 2030, even the best case scenario for fossil LNG does not end up with a tiny surplus as in 2028 but a penalty.

Table 4: Effect of IMO and EU regulations on fuel costs in 2035 with special emphasis on Bio-LNG

It is imperative that bio-LNG resembles a remarkable business case under the current and future regulatory environment and it is a potential way out of penalties for vessels currently running on LNG.

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Conclusion: Awareness & Action

The current and upcoming regulatory architecture rewards alternative fuels such as Bio-LNGs and penalizes its fossil counterparts. Bio-LNG offers numerous benefits for Shipping:

• Surplus earnings under FuelEU and IMO that may result in significant additional revenue beyond the actual fuel costs

• No retrofit needs for existing LNG vessels

• Compatibility with pooling and banking strategies of LNG and IMO

Whether your focus is avoiding penalties, building surplus, or monetizing early compliance, Bio-LNG provides a compelling case. As demand rises, early adopters should secure supply and maximise returns. Don't leave the opportunity to finnish state-owned energy companies. ;)

BetterSea’s FuelEU Maritime Compliance Platform with integrated marketplace provides you with a fast, streamlined, end-to-end process covering all potential compliance options, including external pooling and surplus trading. It allows you to comprehensively strategize your FuelEU and EU ETS compliance on a ship-specific level amidst volatile markets. Book a demo below!

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Stay tuned for more insights on navigating maritime decarbonisation compliance in our upcoming newsletters. If you have any questions or need further guidance, feel free to reach out!

Best regards,

The BetterSea Team

Contact Us: info@bettersea.tech

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Assumptions: No consideration of ZNZ rewards, no consideration of RU cost increases from 2031 onwards, WTW GHG EFs and related factors for all fuels (except Bio-LNG, see assumption in text) derived from FuelEU (based on AR5 as can be expected for 2028) or MEPC 81/16/Add.1 Annex 10 (if WtT EF missing in IMO, EUR/USD conversion factor: 1.14, FuelEU surplus value: 250 €/t CO2e, IMO SU value: 250 €/t CO2e, EUA value: 60 €, no change in EUA or surplus values over time, fuel price source is S&P Platts March 2025