Shell (XLON:SHEL) has officially halted construction of its biofuel facility in Pernis, located in the Rotterdam port area, citing an unviable business model and unfavorable market conditions. The decision follows a previously announced pause in 2024 and marks a significant shift in the energy giant’s renewable fuel strategy.
Frans Everts, CEO of Shell Netherlands, stated on LinkedIn that despite strong intentions to resume construction, the project’s competitiveness had deteriorated. “We wanted to complete the plant, but the ability to operate it competitively kept slipping away,” Everts said.
Shell began building the facility in 2022, aiming to produce sustainable fuels for sectors such as aviation. However, rising construction costs and weak demand partly due to limited regulatory pressure on airlines to adopt sustainable aviation fuel (SAF) undermined the project’s viability.
The company explored multiple options to continue but ultimately concluded that the investment could no longer be economically justified. The initial pause already led to a write down of approximately €700 million. The financial impact of the final cancellation has yet to be disclosed.