Maritime shipping is the backbone of global commerce, with more than 80% of the world’s goods transported by sea. Maritime shippers operating in both inland and international waters rely heavily on fuel oil, consuming about 5% of the world’s annual oil supply. However, under growing regulatory pressure to achieve net-zero emissions by 2050, the industry has turned to biofuels to reduce emissions.

Maritime biofuels represent a rapidly evolving sector that challenges regulators to establish cohesive rules across international, national and local jurisdictions. These regulatory complexities, combined with rising demand, make it essential for both consumers and producers to anticipate market shifts driven by policy changes. The following analysis highlights key developments expected in 2026 and explores how industry stakeholders can better position themselves to capitalize on the expanding biofuel market.

Global Maritime Policy Shifts
Representatives from the IMO’s 176 member states, including the United States, met in London last October to vote on a new emissions tax, tradable permit system, and fuel standard for the maritime shipping industry. The vote, held at the Extraordinary Marine Environment Protection Committee meeting, would have amended Annex VI of the MARPOL Convention. The vote was considered a formality after the IMO announced a 2050 net-zero emissions goal (Net-Zero Framework) last April, but was delayed to October 2026 after the U.S. voiced extreme opposition to the measure. The Net-Zero Framework, if ratified, would target implementation for 2028, although it is unclear whether the U.S. would continue to participate in the IMO if implemented.

If adopted, this Net-Zero Framework would require ships in the IMO’s 176 maritime jurisdictions to reduce their greenhouse gas fuel intensity (GFI) or else purchase credits to cover the excess emissions. Biofuels, like those made from soybean oil or waste cooking oil, have less GFI than traditional heavy oil fuel, meaning the policy would likely increase the demand for alternative fuels to reduce the need to purchase fuel credits. In addition to considering how supply chains may be impacted by the shifted demand, those operating ships in international waters should also start considering how they will implement a compliance strategy to conform with the upcoming regulations.

The European Union also recently implemented its FuelEU maritime program last January. The program requires ships trading within the EU or European Economic Area to reduce greenhouse gas intensity using renewable or low-carbon fuels. The regulation will require ships to use on-shore power or alternative zero-emission technology from January 2030 onward at European ports. FuelEU also sets maximum limits for the yearly average GFG intensity used by ships above 5,000 gross tonnage at European ports. The carbon intensity requirement applies to all energy used on voyages within the EU or EEA and to only half of the energy used on voyages into or out of the EU or EEA. However, the FuelEU maritime regulation bars the use of crop-based biofuels from eligibility in European markets, creating a market impediment for many U.S. biofuels. In contrast, fuel producers who use noncrop feedstocks like waste fats and grease may see an increase in demand under the EU framework.

U.S. Maritime Policy Developments
While still in a nascent stage, legislation has been introduced to expand federal incentives for maritime biofuel. Specifically, in mid-March of last year, a bipartisan and bicameral group of legislators introduced the Renewable Fuel for Ocean Going Vessels Act, which would amend the Clean Air Act to add “fuel for ocean-going vessels” to the definition of renewable fuel eligible for Renewable Fuel Standard credits. The RFS program under the CAA requires a certain volume of renewable fuel be used to replace the quantity of fossil fuel used in “transportation fuel, home heating oil or jet oil.” Under existing rules, biofuel producers must retire RFS credits if their product is used in ocean-going vessels. This bill would expand the existing market for maritime biofuel by designating such fuel as an “additional renewable fuel” eligible for credit under the RFS. Under the proposed framework, no entity would be required to use biofuel in maritime fuel, but such use would generate opt-in credits that could be purchased by obligated parties to meet RFS requirements.

Port-Level Biofuel Initiatives
Local ports are also developing their own biofuel goals. Nearly 53 ports have developed climate and air quality plans that set stricter goals than international or national regulations. The plans, like those in Seattle and Detroit, may impose fuel standard goals that increase the proportion of sustainable maritime fuel shippers may be expected to use in port. For example, the Port of Detroit Decarbonization and Air Quality Improvement Plan cites the Port of Detroit’s goal to have half of all large vessels visiting its port using biofuel by 2027. The Port of Detroit aims to sell enough biofuel to meet 100% of its customers’ biofuel demand by 2040. Seattle also recently passed a joint clean air strategy that targets the gradual phasing out of high- intensity fuels. Across the ocean, the Port Authority of Guam adopted a zero-emission target, and its recently released 2026 Look Ahead framework notes that energy resilience and continuing to meet its zero-emissions target is a priority. Many of these emission reduction strategies are more ambitious than the IMO’s Net-Zero Framework.

Overall, industry stakeholders should be aware that as local ports continue to develop green initiatives, updated fuel standards impact both the local demand for sustainable maritime fuel and the regulatory requirements placed on shippers.

In conclusion, commercial awareness of the changing regulatory framework governing maritime biofuel use will be paramount in 2026 as international, domestic and local regulators set sail toward fewer carbon emissions.

Authors: Brittany M. Pemberton, Partner, Bracewell
Shailesh Sahay, Partner, Bracewell
Lauren E. Davidson, Associate, Bracewell

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