Energy giant shifts focus to lower-cost refinery co-processing as EU targets face uncertainty as major projects stall. BP has cancelled plans for a major biofuels facility at its Rotterdam refinery, marking another setback for Europe’s effort to expand advanced biofuels production. The company confirmed on Sept. 22 that it will not proceed with the standalone plant and will instead concentrate on co-processing biofuels in existing refineries, which require less capital and carry lower risks.
A BP spokesperson said the project no longer met the company’s capital return thresholds, aligning with standards applied to its oil and gas businesses. The Rotterdam biofuels plant was part of a larger portfolio of projects that BP once projected could supply 50,000 barrels per day of biofuels by 2030. None of those projects reached a final investment decision.
Currently, BP produces about 10,000 barrels per day of biofuels through co-processing at refineries and through its Brazilian joint venture with Bunge, which produces sugarcane-based ethanol. The company’s Castellon site in Spain remains the only large-scale biofuels project under review.
Parallel moves by Shell
BP’s decision comes shortly after Shell cancelled its own biofuels facility in Rotterdam. That project was designed to produce 820,000 tonnes annually of renewable diesel and sustainable aviation fuel (SAF). Shell executives said the facility had become “insufficiently competitive” and reported impairment charges of up to $1 billion.
The cancellations by Europe’s two largest oil companies eliminate what was expected to be more than a million tonnes of new European capacity. Both firms are redirecting investment toward conventional oil and gas projects, where financial returns are more predictable.
Industry and policy pressures
The withdrawals highlight the challenges facing advanced biofuels despite European Union (EU) policy support. Companies have cited high feedstock costs, uncertain regulatory frameworks, and shareholder pressure for stronger returns as reasons for moving away from large-scale biofuels projects.
“Standalone plants demand billions in upfront capital with long payback periods,” said an industry analyst based in London. “In the current market, those economics are difficult to justify compared to oil and gas developments.”
The EU has set binding targets for sustainable aviation fuel, requiring airlines to use at least 6% SAF by 2030, with higher thresholds in subsequent years. The loss of capacity from the Rotterdam biofuels plant projects has raised concerns about the bloc’s ability to meet those commitments. Airlines and policymakers have warned that without large-scale production facilities, meeting SAF quotas will become increasingly difficult.
Broader energy strategy
BP and Shell have both scaled back parts of their renewable and low-carbon portfolios in recent years, focusing instead on projects that deliver quicker financial returns. While both companies continue to invest in biofuels through smaller initiatives and partnerships, they have shifted emphasis toward upstream oil and gas, liquefied natural gas (LNG), and selective renewable projects.
BP’s strategy includes expanding its role in co-processing biofuels at refineries, a method that allows blending renewable feedstocks with conventional crude oil. This approach is considered less risky and more flexible than building entirely new facilities. Shell has adopted a similar approach, integrating biofuels production into existing operations where possible.
Market implications
The cancellations are likely to reshape Europe’s biofuels outlook. Without the Rotterdam biofuels plant facilities, growth in advanced biofuels capacity will depend on smaller projects, joint ventures, and emerging technologies. Industry observers note that investment decisions may hinge on future EU policy clarity and potential subsidies or incentives to offset high costs.
For now, the exits from BP and Shell underline the difficulty of scaling Rotterdam biofuels plant in Europe while maintaining financial discipline. With mounting climate targets and limited new capacity in development, the EU faces a narrowing path to meeting its renewable fuel mandates.
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