British oil giant Shell is to abandon the construction of one of Europe’s largest biofuel plants in the Netherlands, as it focuses on its fossil fuels business.
Faced with weak market conditions, the company had last year already suspended construction of the renewables biofuel factory in Rotterdam that was intended to produce sustainable aviation fuel and diesel from waste, AFP reported. It has now been scrapped for good.
“As we evaluated market dynamics and the cost of completion, it became clear that the project would be insufficiently competitive,” Machteld de Haan, Shell’s downstream, renewables and energy solutions president, said on September 3.
The move marked another setback for Shell’s biofuel designs, after the company cancelled a similar project on Singapore’s Bukom Island in March 2023.
The latest decision came amid a wider shift away from renewable energy projects in the oil and gas sector as fossil fuel companies pursue higher profits.
In March last year Shell watered down a key emissions target, setting out a plan to reduce the carbon emissions intensity of the energy it sells by 15 per cent to 20 per cent by the end of the decade compared to its previous goal of 20 per cent.
Regarding the announcement it was abandoning the Rotterdam project, de Haan added: “This was a difficult decision, but the right one, as we prioritise our capital towards those projects that deliver both the needs of our customers and value for our shareholders.”
She said the company continued “to believe that low-carbon molecules, including biofuels, will underpin the future energy system” and that Shell was “one of the world’s largest traders and suppliers of biofuels, including sustainable aviation fuel”.
Shell began construction of the plant in Rotterdam in 2021, initially expecting to start producing up to 820,000 tonnes of biofuels, with plans to bring it online in April 2024. This was later pushed back to 2025.
The project was first announced as part of plans to help the European Union meet internationally binding emissions reduction targets.
Shell and rival UK energy giant BP have been walking back various climate objectives and focusing more on oil and gas to raise their profits, which has drawn criticism from environmental activists.
More than half of the Rotterdam facility’s capacity was intended to produce sustainable aviation fuel, a biofuel made from plant and animal materials such as cooking oil and fat, which produces lower carbon emissions than traditional jet fuel.
Under plans to tackle climate change, the EU requires airlines to gradually increase the amount of such fuel they use to power planes.
Airlines, though, have complained that it is not widely available and too expensive.
Shell warned investors last year that its second-quarter had suffered a significant write-down owing to the now-shelved project.
Following the Rotterdam announcement, Shell shares rose 0.9 per cent to 2,754 pence each on the morning of September 3 in London, Shares Magazine reported.
