Recycled carbon fuel developer XFuel says it can bring waste-derived marine gas oil to market at a price that rivals conventional fossil MGO, avoiding the premium typically associated with alternative marine fuels, according to an interview published by Ship & Bunker.
Speaking to Ship & Bunker’s Martyn Lasek, XFuel chief executive and co-founder Nicholas Ball said the company’s fuel can be produced “significantly below the price of fossil MGO” under current market conditions, allowing XFuel to price its product between fossil MGO and biodiesel, the next-best alternative, which Ball described as “multiple times more expensive than fossil pricing.”
The Technology and Feedstock
According to Ship & Bunker, the fuel is produced using XFuel’s Chemical Liquid Refining (CLR) process, which refines, cracks and deep-desulphurises impure hydrocarbon liquids in a single step. Ball told the publication that the process converts more than 90% of usable hydrocarbon into product, and traced its origins to oil and gas industry techniques from the 1950s and 1960s that were not commercially viable at the time.
The feedstock for XFuel’s first plants is MARPOL Annex I sludge, the oily residue generated by vessels during fuel oil use. Ball said much of this material is currently incinerated on board “for no value,” sometimes requiring additional fuel to dry it out first. He estimated the global feedstock pool at 5 million to 10 million mt annually, based on sludge representing 1.5% to 3% of fuel consumed.
Economics and Emissions Classification
Ball told Ship & Bunker that XFuel’s economics depend on the price spread between IFO and MGO, since the company buys waste priced against fuel oil and sells a distillate-grade product. He noted that this spread has widened considerably this year, citing Ship & Bunker’s own G20 index data showing the MGO-HSFO spread at $706/mt this quarter, compared with averages of $298/mt in 2024 and $293/mt in 2025.
The fuel is set to be classified under EU regulation as a recycled carbon fuel (RCF) rather than a biofuel, since its feedstock is fossil in origin. Ball said the company expects to meet the Renewable Energy Directive’s 70% emissions savings threshold for its first production run, with certification still pending. He also described the fuel as “a fully compliant ISO 8217 DMA product,” noting that in-engine testing commissioned by the company has not raised compatibility concerns.
Scale and Outlook
According to Ship & Bunker, XFuel’s first plant, planned for the Tarragona region of Catalonia and backed by a EUR 4.1 million grant, will convert around 16,000 mt of feedstock into roughly 14,000 mt of product annually — a fraction of global marine fuel demand, which Ship & Bunker pegs at around 275 million mt. Ball said the product would likely be blended with conventional MGO rather than sold as a standalone fuel, and that future growth would come from replicating modules near major ports rather than building larger facilities.
Ball also addressed regulatory risk, telling Ship & Bunker that XFuel’s projects would remain viable even if the IMO’s Net-Zero Framework fails to advance or regional schemes such as EU ETS and FuelEU Maritime face rollback, since the company’s core competitiveness rests on parity with fossil fuel pricing rather than regulatory mandates. Shipowners NYK and Stolt-Nielsen are listed among the company’s investors and future customers.
Does This Matter to You?
This development may be of interest to those monitoring emerging compliance fuel options ahead of tightening EU and IMO emissions frameworks. If XFuel’s pricing claims hold up at scale, it could offer a lower-cost route to emissions savings under FuelEU Maritime and the EU ETS compared with other alternative fuels currently commanding significant premiums.
However, as Ship & Bunker notes, the initial production volume is very small relative to global demand, meaning any near-term impact on bunker availability or pricing is likely to be limited. Those tracking feedstock supply chains, sludge disposal economics, or blend component development may find the RCF classification and ISO 8217 DMA compliance particularly relevant, as these details could affect how the fuel integrates with existing bunkering and engine compatibility practices.
Gulf Bunkering does not provide operational or security guidance. This article is for informational purposes only. Operators should consult flag state authorities, P&I clubs, and relevant advisories for decisions relating to transit planning.
Sources: Ship & Bunker
