Shell abandons Rotterdam Biofuel Plant as focus shifts back to fossil fuels

British oil major Shell has confirmed it is scrapping plans to complete one of Europe’s largest biofuel plants in the Netherlands, citing market pressures and a renewed focus on its fossil fuel business.

The company revealed on Wednesday that it has officially abandoned construction of the renewable energy facility in Rotterdam. Work on the plant, designed to produce sustainable aviation fuel (SAF) and renewable diesel from waste, was suspended last year after Shell flagged weak market conditions and rising costs.

Machteld de Haan, Shell’s president of downstream, renewables and energy solutions, said in a statement that the decision followed a thorough reassessment of its financial viability. “As we evaluated market dynamics and the cost of completion, it became clear that the project would be insufficiently competitive,” she said.

The Rotterdam plant was unveiled in 2021 as part of Shell’s strategy to support Europe’s push towards meeting its legally binding emissions reduction targets. However, Shell and its UK rival BP have increasingly scaled back their climate ambitions, redirecting investment into oil and gas to boost returns. The shift has sparked criticism from environmental campaigners, who accuse the industry of backtracking on commitments to transition away from fossil fuels.

More than half of the Rotterdam plant’s planned output was earmarked for SAF, a low-emission biofuel derived from waste materials such as used cooking oil and animal fats. SAF has been championed as a vital tool for decarbonising aviation, and under the European Union’s climate plans, airlines will be required to steadily increase its use in the coming years.

Airlines have consistently argued that SAF remains prohibitively expensive and scarce, factors that continue to slow its adoption despite regulatory pressure.

Shell had warned investors in 2024 that it faced a heavy write-down in its second-quarter earnings linked to the suspension of the project, underscoring the financial weight of its decision to walk away.