The FuelEU used cooking oil methyl ester (Ucome)–marine gasoil (MGO) abatement ex-emissions trading system (ETS) price was negative on 7 April, underscoring how the US-Iran war has distorted marine fuel economics by driving fossil fuel prices sharply higher.
The abatement price — which reflects the cost of meeting FuelEU requirements by using biodiesel instead of conventional MGO — fell below zero on 2 April for the first time since the assessment began at the start of 2025. It has remained negative since then, standing at -€23.46/t CO2 equivalent (CO2e) on 7 April.
It follows a sharp rally in oil markets triggered by the conflict. The front-month Ice gasoil futures contract reached an all-time high of $1,569.75/t on 2 April, lifting MGO values and narrowing the cost gap between fossil fuels and biofuels. As a result, the typical "green premium" associated with biodiesel use was eroded.
FuelEU Maritime regulations, which entered into force in 2025, require vessels operating in EU waters to cut greenhouse gas intensity by 2pc. The negative abatement price indicates that, at current values, using Ucome-based marine fuel is cheaper than using MGO on a compliance-adjusted basis.
The shift follows an earlier distortion seen during the conflict, when B100 advanced fatty acid methyl ester (Fame) delivered into the Netherlands moved to a discount to MGO delivered into the Amsterdam-Rotterdam-Antwerp (ARA) hub once ETS costs were included.
In parallel, traded FuelEU compliance surpluses for 2026 were reported at around €185/tCO2e on 8 April. This means it is currently cheaper to generate compliance using marine biodiesel blends than to buy surpluses to meet the FuelEU requirements.
This is in stark contrast to last year, when shipowners largely opted to purchase overcompliance instead of using biodiesel — mainly due to cheaper compliance generated via manure-based bio-LNG.
Despite these shifts, physical demand for marine biodiesel has yet to rise meaningfully. Market participants have reported limited increases in buying, but overall demand remains subdued even where biodiesel blends now offer a lower compliance-adjusted cost.
This may be because of ongoing price volatility and uncertainty about the direction of the US-Iran war, which is keeping many shipowners focused on securing fossil fuel supplies for their vessels for the coming weeks. Another reason could be a lack of availability of marine biodiesel blends at smaller ports, and concerns from shipowners about engine compatibility for pure biodiesel. Demand for FuelEU compliance surpluses for 2026 has also softened, with plenty of offers but no bids.
