The use of alternative fuels in ships faces the dual challenge of emission regulations and cost of use. In this paper, the impact of biodiesel blends from cooking waste as a carbon-neutral fuel for inland waterway vessels was investigated. The software AVL FIRE was used to simulate the detailed chemical combustion process of a marine diesel engine running on D100 (pure diesel), B5 (5% biodiesel by volume), B10 (10% biodiesel by volume), and B15 (15% biodiesel by volume). The results showed that B5, B10, and B15 all provided a better air-fuel mixture and significantly reduced soot production. Based on the performance and emission values, B5, B10, and B15 cause relatively small differences in engine performance compared to diesel and are readily applicable in practice. Optimizing exhaust gas recirculation (EGR) and varying injection timing can further optimize biodiesel fuel combustion while reducing NOx and soot emissions. The results of this study are helpful for the application of waste cooking oil biodiesel fuel and reducing exhaust gas emissions from ships.