Shell temporarily pauses construction at Rotterdam biofuels facility to enhance future competitiveness

Shell Nederland Raffinaderij B.V., a subsidiary of Shell plc, has announced a temporary pause in construction activities at its biofuels facility located at the Shell Energy and Chemicals Park Rotterdam, Netherlands. This strategic decision is aimed at addressing project delivery challenges and ensuring the future competitiveness of the facility, which is designed to produce up to 820,000 tonnes per year of biofuels.

The pause in construction will result in a reduction of contractor numbers on-site and a slowdown in activity, which is intended to help control costs and optimize project sequencing. “Temporarily pausing on-site construction now will allow us to assess the most commercial way forward for the project,” explained Huibert Vigeveno, Shell’s Downstream, Renewables and Energy Solutions Director. This measure is seen as a prudent step to reassess the project’s path forward in light of current market conditions.

Despite this pause, Shell remains committed to its broader environmental goals, including achieving net-zero emissions by 2050. Low-carbon fuels are a crucial part of Shell’s strategy to reduce emissions both within its operations and for its customers. “We are committed to our target of achieving net-zero emissions by 2050, with low-carbon fuels as a key part of Shell’s strategy to help us and our customers profitably decarbonise,” Vigeveno added. Shell emphasizes the disciplined use of shareholder capital to deliver more value with fewer emissions.

Following the decision to pause construction, Shell will conduct an impairment review for the project. Details of this review will be included in Shell’s second-quarter update note, which is scheduled for publication on Friday, July 5, 2024. Shell initially took the final investment decision for this biofuels facility in September 2021, with the aim of producing sustainable aviation fuel (SAF) and renewable diesel from waste materials.

Shell is recognized as one of the world’s largest energy traders and blenders of biofuels. Through its Raizen joint venture in Brazil, Shell stands as the largest producer of second-generation ethanol and the leading sugar cane ethanol producer globally. Furthermore, as announced during Shell’s Capital Markets Day in June 2023, the company plans to invest $10-$15 billion from 2023 to 2025 in developing a range of low-carbon energy solutions. These investments are targeted at enhancing capabilities in e-mobility, low-carbon fuels, renewable power generation, hydrogen, and carbon capture and storage technologies.