UPM scraps plans to develop second biofuels refinery in Rotterdam

Finnish biofuels company UPM said on Tuesday May 27 that it will halt the development of its planned second biomass-to-fuels refinery at the Port of Rotterdam, making the company the latest European producer to shelve or pause plans for new production capacity.

The announcement comes amid wider reports of general market uncertainty in the European biodiesel space, as producers struggle to operate profitably against a backdrop of consistently high feedstock prices.

“The complexity of a multi-feedstock greenfield investment leading to comparatively high capital (CAPEX) and operating (OPEX) costs, combined with a market that demands competitive production economics, would compromise the long-term business case and expected returns,” a UPM spokesperson told Fastmarkets on Tuesday.

Background and delays in UPM’s biofuels refinery plan

As previously reported by Fastmarkets, the proposed 500,000-tonne-per-year biofuels refinery, which would use advanced feedstocks, was earmarked to be one of Europe’s biggest biorefineries, with the capability to produce advanced biofuels as well as sustainable aviation fuel (SAF).

Despite the announcement, UPM remains “committed to the biofuels business and believe[s] that biofuels markets will provide lucrative business options for UPM,” Harald Dialer, executive vice president of the company’s Biorefining and Technology arm, said.

But the executive added that any future investment “will have to perform against long-term profitability and pay-back expectations” and confirmed that UPM does not currently have any firm plans for “growth investments”.

Plans for the now shelved biorefinery were first revealed by UPM at the start of 2021. But, in 2022, the company indicated that the final investment decision for the facility would likely be delayed until the following year. This was then subsequently pushed back to 2026, after the company was expecting to complete its testing and evaluation of the project.

UPM’s alternative strategies for biofuels production

Dialer said that the company was currently evaluating options to debottleneck and increase output at its 44 million-gallon-per-year Lappeenranta biofuels plant – the company’s sole biofuel – producing facility, located next to the UPM Kaukas pulp and paper mill.

“We don’t foresee one major investment, but a series of gradual optimization steps over time,” Dialer said, adding that UPM is confident that it can increase production capacity onsite.

Broader challenges for biofuels investments in Europe

UPM is one of several biofuels producers that have either paused or cancelled plans to develop new facilities in Europe, while many plants have also closed in the past couple of years.

In 2024, Shell announced a temporary pause of the on-site construction of its 820,000-tonne-per-year biofuels plant also in the Netherlands at the Shell Energy and Chemicals Park Rotterdam.

In July, the company cited project delivery challenges and its need to ensure future competitiveness amid current market conditions as the reasons for its decision. As of this May, the project remains on hold, with no clear timeline available for resuming construction

Want keep ahead of the biofuels market? Keep an eye on our hub for the latest releases.

What to read next
Vegoils futures traded broadly in positive territory on Wednesday July 1. In Asia, crude palm oil (CPO) futures rose steadily on higher related vegoils, while soyoil futures rallied on the Chicago Mercantile Exchange amid a drop in US stocks and as US biofuels developments were in focus.
Fastmarkets has corrected its daily AG-PLM-0012 refined bleached deodorised (RBD) palm olein, fob Indonesia price assessment, which was published incorrectly on July 7 due to an input error.
The corrections are as follows: AG-BRY-0004 Barley Feed barley FOB Argentina $/mt Incorrect prices: August $119.00 per tonne Corrected to: August $219.00 per tonne Fastmarkets’ pricing database has been updated to reflect this change. These prices are part of the Fastmarkets Ags Grains package. For more information or to provide feedback on this correction notice or […]
This consultation was done as an adhoc methodology review process, aiming to better reflect the physical market under indexation, considering its reduced liquidity linked to the combination of seasonal demand patterns and the implementation of cross-border import tariffs between the US and China. No feedback was received during the consultation period and therefore Fastmarkets will […]
The corrections are as follows: AG-WHE-0028 Wheat 13.5% FOB Canada CWRS $/mt Incorrect prices: M1 July $279.00 per tonne M2 August $53.75 per tonne M3 September $55.50 per tonne M4 October $48.25 per tonne M5 November $48.25 per tonne M6 December $50.25 per tonne M7 January $41.00 per tonne M8 February $39.25 per tonne M9 March […]
The Wheat 10% FOB US Pacific Northwest SW market typically trades on an outright price basis instead of as a premium to Chicago Mercantile Exchange futures. For that reason, Fastmarkets proposes to discontinue the AG-WHE-0025 Wheat 10% FOB US Pacific Northwest SW Premium c$/bu assessment while keeping its AG -WHE-0027 Wheat 10% FOB US Pacific Northwest SW […]