Abstract: As a hard‐to‐decarbonize sector, the shipping industry is experiencing demands to accelerate the transition from fossil fuels to alternative low‐carbon fuels, to significantly reduce the negative impacts on the environment. Biofuels are regarded as one of the solutions for decarbonization in the marine sector. This paper introduces a lignin‐derived drop‐in biofuel, 2‐methoxy‐4‐propylphenol (2M4PP), from non‐edible feedstocks and investigates engine performance using its 10% (by volume) blend with standard diesel fuel (DF) at variable engine speeds and loads. Results show insignificant difference between the in‐cylinder pressures of the proposed blend and DF. The diesel‐2M4PP blend emits less carbon monoxide (CO) and nitric oxide (NOx) than DF at all speeds by up to 39.6% and 10.7% respectively, although its brake‐specific fuel consumption (BSFC) is higher. A Ricardo wave model, which is validated with engine experimental data at 2400 rpm speed and full load, is investigated by adjusting injection pressure, injection timing, injection duration and nozzle diameter. The optimal parameters, i.e., 214 bar injection pressure, 6° injection timing, 41.4° injection duration, and 0.37 mm injector orifice, lead to the best engine performance with improved brake power, reduced NOx emissions, and limited influence on BSFC and hydrocarbon emissions compared to DF. © 2021 The Authors. Biofuels, Bioproducts and Biorefining published by Society of Industrial Chemistry and John Wiley & Sons Ltd.