Rotterdam biofuels project scrapped as it proves uncompetitive

Multinational energy group Shell will abandon its project to build a biofuels production facility in Rotterdam, the Netherlands. The company suspended the project last summer, but after a further techno-economic assessment, it will now scrap it entirely. Although the EU plans to use more biofuels in the future, demand is currently limited, while imports from third countries are putting further downward pressure on prices.

While the energy transition has gathered pace in recent years in electricity generation and, increasingly, heat production, the development of alternative solutions in the transport sector has been somewhat slower. The use of biofuels is one way to decarbonise the sector.

Shell's project was also intended to boost biofuel production, with planned annual output of more than 800 thousand tonnes. According to Argus, it would have been Europe's third-largest plant producing sustainable aviation fuel (SAF) and hydrotreated vegetable oil (HVO), or biodiesel.

However, the outlook for the plant had been uncertain for some time, with Shell suspending construction last July. The company has now cancelled the project, having already written off around $1 billion. Shell has been scaling back its activities in renewables in recent months. According to the website, the company said most of these activities were loss-making in the second quarter of this year.

"Following a thorough commercial and technical assessment to review the project's competitiveness, Shell has decided not to proceed with it," the company said, according to Argus.

Prices for sustainable aviation fuel have remained lower this year than in previous years. Argus Consulting expects the market to remain oversupplied at least until the end of the decade, when tighter regulations are expected to boost demand.

Trade in biodiesel is also affected by tariffs, which the EU previously imposed on imports from China, the United States and Canada. The United Kingdom is also examining the possibility of introducing tariffs to protect against price dumping.