Mixed outlook for biofuels in the offshore vessel market

In offshore vessel markets such as Brazil – the world’s largest and most important OSV market – adoption of biofuels could become widespread, thanks to the country’s abundant natural resources and state oil company Petrobras’ plan to drive the use of ethanol on offshore vessels. But in another large market, Norway, the adoption of biofuels could be stifled, rather than encouraged, by the country’s new greenhouse gas (GHG) emissions regulations.

Speaking to OSJ in June 2026, DNV senior consultant maritime environmental advisory, Øyvind Sekkesæter, said compared to other segments of the shipping industry, such as containerships and car carriers, biofuel use is currently limited in the OSV segment. “This is because, at least for the time being, OSVs are not covered by regulations that have driven the adoption of biofuels elsewhere,” he explained.

For instance, offshore vessels are not covered by the FuelEU maritime regulation, part of the European Commission’s fit for 55 legislative package, that promotes the use of renewable, low-carbon fuels and clean energy technologies for ships. The regulation was fully applied from 1 January 2025, and sets maximum limits for the yearly average GHG intensity of the energy used by ships above 5,000 gross tonnage (gt) calling at European ports, but it does not apply to offshore ships.

“However,” said Mr Sekkesæter, “thing are due to change with another piece of legislation, the EU Emissions Trading Scheme (EU ETS) regime, and that will have implications for OSV owners.”

Since 2024, cargo and passenger ships of or above 5,000 gt have had to comply with the EU ETS, following the extension of the EU ETS to maritime transport emissions. As of 1 January 2024, the EU ETS, together with the monitoring, reporting and verification (MRV) of ships’ emissions, became one of the European Commission’s main tools to reduce GHG emissions. Under the emissions trading scheme, shipping companies had to surrender (use) their first ETS allowances by 30 September 2025 for emissions reported in 2024. The share of emissions that must be covered by allowances gradually increases each year: in 2025, 40% of emissions reported for 2024 had to be covered by emissions allowances; in 2026, 70% of emissions reported for 2025; and in 2027 and beyond, 100% of reported emissions.

As Mr Sekkesæter explained, the scope of the EU ETS is changing, and from 2027, it will require other vessels, including OSVs of 5,000 gt or more – and potentially OSVs in the 400-5,000 gt range – to comply with its requirements.

Mr Sekkesæter said one of the quickest and easiest ways for OSV owners to comply with the EU ETS will be to convert from fuel oil to alternative fuels, such as biofuels. “Another point in favour of the use of biofuels is that there aren’t any major barriers to its use – OSV owners won’t need to modify their vessels to any great extent to use them, and a growing number of bunker operators also offer biofuels, particularly in Europe and southeast Asia,” he told OSJ.

As a result of the upcoming amendments to the EU ETS, therefore, biofuels seem to offer OSV owners in northwest Europe a way forward, but this will not be the case in Norway, where recently unveiled national regulations limiting GHG emissions from OSVs actually exclude the use of biofuels in favour of other approaches.

In May 2026, the Norwegian Government announced regulations requiring companies operating on the Norwegian Continental Shelf to reduce GHG emissions from vessels used in offshore oil and gas activities from 2029 onwards. The measures form part of Norway’s wider strategy to accelerate decarbonisation across the offshore sector.

Announcing the new rules, the Norwegian Government said the requirements can be met using a range of low- and zero-emissions technologies, but biofuels will not qualify, a decision that the Norwegian Shipowners’ Association criticised, arguing that they are one of the few immediately available options to decarbonise existing vessels. The Government’s decision to specifically omit the use of biofuels is said to be due to what it sees as their ‘limited availability’, a view that is at odds with the growing number of ships regularly bunkering with biofuels in northwest Europe.

In contrast to the Norwegian Government’s attitude to the potential use of biofuels on OSVs, in Brazil, state oil company Petrobras is actively encouraging the use of one particular biofuel, ethanol. It is mostly produced by fermenting sugars derived from crops like sugarcane, corn or other biomass, of which Brazil has abundant supplies. 

In 2025, shipowner CMM entered into a memorandum of understanding with Wärtsilä to develop the first platform supply vessels powered by ethanol, based on the use that leverages Wärtsilä’s multifuel engine platform, the Wärtsilä 32. In 2024, the enginebuilder conducted tests using ethanol as a primary fuel in a full-scale Wärtsilä 32 engine; these tests confirmed the engine’s ability to operate efficiently on a range of fuels, including diesel, biodiesel, heavy fuel oil, methanol and ethanol. 

CMM has secured preliminary financial approval from the Brazilian Merchant Marine Fund to build 10 offshore vessels incorporating the use of ethanol and says doing so could potentially reduce CO2 emissions from the vessels by 70%.

In 2024, Brazilian energy firm Raízen and Wärtsilä signed an agreement intended to drive bioethanol uptake in the shipping industry. The aim of the initiative is to study how ethanol as a marine fuel can help reduce GHG emissions and provide options for customers seeking to use alternative, sustainable fuels.

Speaking at the time that the agreement was initialled, Raizen vice president of trading, Paulo Neves, said: “Ethanol is a promising marine fuel that is readily available now. By working with Wärtsilä, we hope to support the marine sector’s global decarbonisation efforts, with ethanol being a viable contributor towards a portfolio of low-carbon solutions.” The companies said they also plan to work with ship designers and shipowners, and on regulations and compliance requirements for the use of ethanol as fuel.