British oil giant Shell has abandoned plans to construct one of Europe’s largest biofuel plants in the Netherlands, opting to focus on its fossil fuels business instead. The company had initially announced the project in 2021 as part of its efforts to support Europe’s emission reduction targets. However, due to weak market conditions, Shell suspended construction of the renewables biofuel factory in Rotterdam last year.
The facility, which was intended to produce sustainable aviation fuel (SAF) and diesel from waste, would have had a significant portion of its capacity dedicated to SAF production. This biofuel, made from plant and animal materials like cooking oil and fat, produces lower carbon emissions than traditional jet fuel. The European Union requires airlines to gradually increase their use of SAF to power planes as part of its climate change mitigation plans.
Shell’s decision to abandon the project comes as the company, along with its rival BP, has been reevaluating its climate objectives and prioritizing its oil and gas business to boost profits. This shift has drawn criticism from environmental activists. According to Machteld de Haan, Shell’s downstream, renewables and energy solutions president, the project’s insufficient competitiveness was a key factor in the decision to abandon it.
Airlines have been facing challenges in adopting SAF due to its limited availability and high cost. Despite the EU’s requirements, the industry has been slow to transition to sustainable fuels. Shell’s abandoned project would have contributed to increasing the supply of SAF, but its cancellation may further hinder the industry’s progress.
The company had previously warned investors that its second-quarter results would be affected by a significant write-down due to the shelved project. As Shell and other energy giants continue to navigate the evolving energy landscape, their decisions will have significant implications for the environment and the transition to sustainable energy sources. The abandonment of the biofuel plant project highlights the ongoing challenges in balancing economic interests with environmental objectives.
