Shell halts construction of biofuel refinery in Rotterdam to cut costs

Shell is halting construction at its main biofuels plant in the Netherlands to adapt to market conditions, adding to a series of European energy companies that are holding back on green investments as shareholders favor basic operations, faster returns and less capital-intensive operations.

Europe’s energy sector appears to be over-investing in green technology. Shell has joined a group of companies cutting capital spending by suspending construction of a giant biofuel plant.

Work in Rotterdam began in 2021, with the plant set to begin operations now. However, the company has since pushed back its target date to 2025 after struggling with technical delays. Now, with the latest decision, the plant is not expected to be completed before the end of the decade.

Shell aims to ‘maintain capital discipline’ by suspending biofuel refinery project

Shell said it intends to “maintain capital discipline.” In its latest announcement, the company said it expects to incur impairments of between $0.6 billion and $1 billion related to the halt in construction in the Netherlands. The project involves converting waste cooking oil and animal fat into sustainable aviation fuel (SAF) and biodiesel.

As explained by the company, the number of contractors on site will be reduced, work will be slowed down and the investment will be re-evaluated.

Slowing demand growth is putting downward pressure on biofuel prices. Shell last year scrapped an investment in SAF production in Singapore. The company previously said it was cutting at least 200 jobs in its low-carbon division, affecting its offshore wind and hydrogen segments.

That’s why Shell is focusing more on its core sectors: oil and gas.

Statkraft narrows its green energy goals

Similarly, BP, formerly known as British Petroleum, has just decided to halt all new investment in offshore wind. It has also suspended two of its biofuel projects in Germany and the United States.

Green energy is mostly capital intensive, with many uncertainties about returns. Especially with new technologies like renewable hydrogen and synthetic fuels. That’s why shareholders are demanding more basic operations and faster returns.

Norwegian state-owned utility refocuses on domestic hydropower

Statkraft has lowered its green energy targets. The new target annual additions of solar, onshore wind and battery storage are 2 GW to 2.5 GW of combined capacity from 2026. This compares to 2.5 GW to 3 GW from 2025 and 4 GW per year from 2030, according to the previous update.

The Norwegian state-owned energy company aims to develop 6 GW to 8 GW of offshore wind by 2040. It had previously targeted 10 GW. Statkraft has lowered its green hydrogen target to 1 GW to 2 GW by 2035, from a previous target of 2 GW by 2030.

Instead, it is focusing on expanding its core business, hydropower, in its home country. The utility said it plans to bring in investors for its biofuel business Silva Green Fuel and electric vehicle charging network operator Mer. That would help lower risk and keep up the pace of investment.

HELLENiQ Energy warns of grid crisis and restrictions

Across the continent, HELLENiQ Energy is also putting the brakes on, citing an unclear investment landscape in Europe and the country. The Greek company is reviewing the growth of its renewables portfolio.

CEO Andreas Shiamishis told shareholders that the green energy segment faces serious challenges. Nevertheless, the company will focus more on synergies, he suggested.

The European Union needs a comprehensive strategy with a step-by-step approach to climate and energy goals, the CEO stressed. He emphasized the limitations and constraints of the network and said that renewable energy sources cannot develop without the development of the energy grid. There is no specific debate on this issue “apart from some general positions, which, however, have no practical impact,” Shiamishis said.

New technologies require caution, he said. That doesn’t mean that whoever moves first will win, but rather that they will probably lose, the company’s CEO warned.

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