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Shell has stopped construction on one of its biggest energy transition projects, a huge plant in Rotterdam that was intended to convert waste into jet fuel and biodiesel.
The plant, which was given the green light in 2021, was supposed to start production this year.
Shell said on Tuesday it would “temporarily pause” work to control costs. It added that it would run an impairment review for the project and give an update at its quarterly results in July.
Europe’s biofuels markets have come under pressure from Chinese imports, with the fallout reverberating across the industry. Shares in Neste, a Finnish biofuels specialist, have tumbled by almost half this year.
“Temporarily pausing onsite construction now will allow us to assess the most commercial way forward for the project,” said Huibert Vigeveno, Shell’s downstream, renewables and energy solutions director.
Sustainable fuels remain a “key part” of Shell’s strategy, he added, but the company would spend money in a “measured and disciplined way”.
Biofuels are considered more sustainable than fuels refined from crude oil because the carbon dioxide emitted when they are burnt is offset by the carbon dioxide absorbed by the plants they were made from.
The Rotterdam plant, at Shell’s Pernis refinery, was designed to produce about 820,000 tonnes of biofuels a year, split between sustainable aviation fuel and biodiesel, from used cooking oil and animal fats. It is likely that Shell would also have supplemented the plant with certified sustainable vegetable oils.
When it was announced, Shell said the plant would produce enough biodiesel to reduce emissions by 2.8mn tonnes of carbon dioxide a year, the equivalent of taking a million cars off the road.