Shell to temporarily suspend European biofuel project

Shell will halt construction work at a biofuel plant in Rotterdam due to weak market conditions, the oil giant said on Tuesday, as international oil companies continue to reassess their low-carbon energy projects.

Shell subsidiary Shell Nederland Raffinaderij will temporarily halt construction work at its 820,000 tonnes per year biofuels plant at Shell Energy and Chemicals Park Rotterdam in the Netherlands “to focus on project implementation and ensure future competitiveness in the current market environment,” the company said.

“The temporary suspension of construction on site will allow us to assess the most commercially viable way to deliver the project,” said Huibert Vigeveno, director of Downstream, Renewables and Energy Solutions at Shell.

“We are committed to achieving net zero emissions by 2050, and low-carbon fuels are a key part of Shell’s strategy to help us and our customers decarbonise cost-effectively,” Vigeveno added.

Last month, another British giant, BP, said it was scaling back plans to develop new sustainable aviation fuel (SAF) and renewable biodiesel projects at its current sites, halting planning for two potential projects while continuing to assess progress on three of them.

Earlier this year, Shell reaffirmed its ambition to become a net-zero energy company by 2050, but relaxed its carbon intensity target for 2030 as it moved away from selling clean energy to retail customers.

Shell is also withdrawing its interim 2035 target of a 45 percent reduction in net carbon intensity, “given uncertainty around the pace of change in the energy transition,” the energy giant said.

Shell also noted that investment in oil and gas will be necessary because demand for oil and gas is expected to decline at a slower rate than the natural rate of decline of global oil and gas reserves, which is 4-5% per year.

In summer 2023, Shell unveiled a new strategy to further invest in oil and gas production and selectively invest in renewable energy solutions, angering climate activists and some institutional investors.

Shell Chief Executive Wael Sawan said it would be “dangerous and irresponsible” to cut global oil and gas production because the world still desperately needs the hydrocarbons.

By Tsvetan Paraskov for Oilprice.com

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