Alternative bunker fuels like biofuels have yet to gain significant traction in the UAE port of Fujairah, the world's third-largest bunkering hub, even though EU regulations such as FuelEU Maritime and the EU Emissions Trading System (ETS) are driving demand expectations.
Discussions at the S&P Global Commodity Insights FUJCON 2025 this week highlighted a combination of structural and market-driven factors holding back adoption, with limited demand from key vessel types and insufficient infrastructure investment topping the list.
The introduction of FuelEU Maritime, which mandates a 2pc reduction in greenhouse gas (GHG) intensity for ships calling at EU ports starting this year, alongside the EU ETS carbon pricing mechanism was expected to spur demand for biofuels in Fujairah. Many vessels refueling in the UAE hub transit to Europe, making compliance with these regulations a potential driver for alternative fuel uptake.
A key reason cited is the limited presence of containerships and cruise ships in Fujairah's bunkering market. Globally, these vessel types are the primary consumers of biofuels due to their operators' commitments to decarbonisation and customer-driven sustainability demands. Fujairah's bunkering activity is dominated by bulk carriers and tankers, which have been slower to adopt alternative fuels.
"Containerships and cruise ships are leading the charge on biofuels in Singapore and Rotterdam, but they are just not a big part of the mix here," said Fujairah harbour master Mayed Alameeri. "We support the use of green fuels, but without that demand pull, there's little incentive to scale up."
This lack of demand has deterred investments in biofuel storage and supply infrastructure. Unlike in Singapore and Rotterdam, where biofuel bunkering is supported by dedicated facilities, Fujairah's infrastructure remains geared toward conventional fuels.
"There is no single shipowner who has partnered with a supplier in Fujairah on adoption of alternative fuels," said Hafnia Bunker general manager Kasper Sorensen. "It is very difficult to make a business case for investment."
While there have been sporadic inquiries from shipowners over the past year, these have been for small amounts — typically 150-200t — far below the scale needed to spur investment.
"You need steady offtake to justify the capex for tanks and blending," a Fujairah supplier said. "Right now, we're not seeing it."
Market dynamics also play a role. The price spread between biofuels and conventional fuels remains a hurdle, with Fujairah's B24 blend trading at a significant premium to very low sulphur fuel oil (VLSFO).
Mandates need certainty
The bunker market is under pressure to decarbonise as the International Maritime Organisation (IMO) targets a 50pc cut in shipping emissions by 2050 from 2008 levels.
Alternative fuels are central to this goal, but regulatory disparities complicate investment decisions, industry players said.
Regulatory uncertainty adds another layer of caution. While FuelEU's pooling mechanism allows shipowners to offset emissions across fleets, potentially enabling biofuel bunkering in Fujairah to count toward EU compliance, clarity on implementation is limited.
Bunker market participants urged the adoption of universal standards for alternative bunker fuels, warning that fragmented regulations are hampering the shift to lower-carbon options.
"Shipowners are still figuring out how to navigate these rules which are regionally divergent," said a shipping broker. "Until there's more certainty, many are sticking with what they know."
Still, some market participants expressed cautious optimism. Rising inquiries, although sporadic, suggest growing awareness of biofuels' role in meeting EU mandates.
"It's not a flood, but it's a trickle that could build," said a bunker trader. For now, Fujairah's biofuel market remains in a holding pattern, waiting for demand signals strong enough to shift the hub's bunkering landscape.
