Biofuels Without Big Oil: Can Niche Players Carry the Load?
Posted by | Rauf Mammadov
During 2024 and 2025, a wave of withdrawals by the world’s largest oil companies signaled a sharp cooling of enthusiasm for biofuels. These shifts highlight broader biofuels market trends and the ongoing energy transition challenges facing oil majors.
Shell, once set to build one of Europe’s largest advanced biofuel plants in Rotterdam to turn waste feedstocks into sustainable aviation fuel (SAF) and renewable diesel, first suspended construction in mid-2024 and by September 2025 had abandoned the project altogether, citing a lack of competitiveness. BP followed suit, canceling its own Rotterdam facility and shelving projects at Kwinana in Australia, Lingen in Germany, and Cherry Point in the U.S. Instead, Shell is doubling down on its Brazil ethanol joint venture (BP Bunge Bioenergia) and shifting toward lower-cost co-processing within existing refineries. Its earlier target of producing 100,000 barrels per day of biofuels by 2030 has been quietly scaled back. Other majors have likewise retreated. Chevron furloughed workers at its Oeding biodiesel plant in Germany amid profitability pressures.
The retreat ultimately boils down to economics and corporate discipline. Full-scale biofuel plants have proven commercially unfeasible under current market conditions: volatile feedstock costs, thin or negative margins, and regulatory uncertainty all undermine profitability. At the same time, international oil companies are becoming leaner, divesting non-core assets, and prioritizing projects with faster payback and higher returns.
In this environment, capital is flowing back to conventional oil and gas, while biofuels are relegated to the margins and kept alive through trading, co-processing initiatives, or joint ventures rather than multibillion-dollar standalone builds.
One notable exception is TotalEnergies. While it has also scaled back in certain areas, the company has more decisively integrated biofuels into its downstream strategy by converting conventional refineries into either full biofuel production sites or co-processing facilities. Its La Mède refinery was converted into a biorefinery in 2019, and its Grandpuits complex outside Paris is being repurposed into a zero-crude platform focused on biofuels, bioplastics, and recycling. This approach has allowed TotalEnergies to maintain momentum in biofuels where peers are retreating, albeit in a more cautious, site-specific way.
What’s Next?
The withdrawal of international oil companies matters because they were the actors best positioned to scale biofuels globally. With their capital strength, infrastructure, and trading networks, IOCs could have driven the kind of industrial build-out needed to push costs down and bring sustainable fuels into mainstream markets. That opportunity is now slipping away. Without their participation, the sector risks remain fragmented–dominated by niche players facing the same profitability and feedstock challenges–but without the balance sheets to weather downturns or drive economies of scale.
Biofuels are unlikely to disappear, but their trajectory has shifted from a vision of mass adoption to one of limited, policy-driven niches—such as aviation or marine fuels where few alternatives exist. For the broader energy transition, this retreat underscores a sobering reality: decarbonization will not be evenly spread across all technologies.
Where economics and scale don’t align, even strong climate narratives can falter. The IOCs’ pullback signals that the heavy lifting may now fall to governments, airlines, shipping firms, and specialized producers—but without the majors’ heft, scalability and cost reductions will be far harder to achieve. TotalEnergies’ refinery conversions show one possible pathway, but so far, it remains the exception rather than the rule.
Fuld & Company provides energy market intelligence and strategy consulting to help global energy players navigate the evolving energy transition landscape.
Tags: competitive strategy consulting, Energy, Market Analysis, Renewables, Sustainability
