Europe‘s Biomass Development Focus Shifts

Recently, Europe has been adjusting its strategy for sustainable chemicals and polymers, indicating a priority shift toward biofuels. Industry insiders believe this could stall the momentum for large-scale production and use of renewable feedstocks in the chemical industry.

In recent years, anticipating rapid growth in demand for biofuels and chemicals, several major renewable product companies announced plans for multiple bio-based feedstock projects. However, during the first half of this year, several large companies abandoned these commitments to ensure profitability and operational sustainability.

In February, Finland’s Neste announced it would delay the expansion of its 1.3 million ton-per-year biofuel and biorefinery plant in Rotterdam, the Netherlands, pushing the start-up date to 2027. The expansion would have increased the site's total renewable output capacity to 2.7 million tons per year. Neste also confirmed it would put its renewable and circular polymers and chemicals projects on hold for at least two years. The company stated that refocusing on its core businesses—renewable diesel and sustainable aviation fuel (SAF)—is part of measures to improve financial performance.

In May, Finnish paper giant UPM-Kymmene announced it had canceled plans to build a 500,000-ton-per-year biomass-based fuels and chemicals production facility in Rotterdam. Although design and basic engineering work were completed, the company said, after thorough technical, commercial, and strategic evaluation, it decided to halt all further activities. However, UPM will continue construction of its biomass-based chemicals plant in Leuna, Germany, which is expected to begin operations later this year.

Last July, Rotterdam was already shaken when Shell announced an indefinite suspension of all construction work on its planned 820,000-ton-per-year biofuels plant at the port’s energy and chemical park. At the time, Huibert Vigeveno, Shell’s downstream, renewables, and energy solutions director, said pausing the biofuels project would allow the company to assess the most commercially viable path forward.

Neste’s current focus on more mature renewable fuel businesses stems largely from uncertainty in the sustainable chemicals and polymers market. In a recent quarterly earnings call with analysts, Neste CEO Heikki Malinen frankly stated that the temporary retreat from the renewable chemicals market is due to factors such as the lack of a clear regulatory framework and uncertain demand.

According to S&P Global Commodity Insights’ latest Process Economics Program (PEP) report, bio-based polymers currently account for less than 1% of global annual plastic production. Malinen, who took over as CEO last year, also questioned where Neste can currently derive value within the supply chain. Nevertheless, Neste has not abandoned its longer-term sustainability goals for chemicals and plastics. The company is on track to complete its 150,000-ton-per-year liquefied waste plastic upgrading unit in Porvoo, Finland, which will provide direct feedstock to Borealis’ steam cracker. Neste remains committed to its previously set target of processing over one million tons of waste plastic annually by 2030. The company continues searching for new renewable feedstocks, which Malinen described as “a constant hunt for new sources and alternative products.” Neste still believes biomass feedstocks will be widely developed before 2040.

Malinen highlighted Neste’s work on lignocellulosic biomass, calling it “a different type of facility, a different technology.” On June 11, Neste and Chevron Lummus Global announced they have partnered to develop a new technology converting lignocellulosic biomass into high-quality, low-emission renewable fuels such as SAF and renewable diesel. They are now evaluating whether the technology holds potential commercial viability.

UPM President and CEO Massimo Revelli described the company’s Leuna biomass chemicals project in Germany as “an entirely new business.” Speaking at the company’s Q1 financial briefing in April, Revelli said commercial production is expected to begin in the second half of 2025. Despite canceling the Rotterdam bio-project in May, he remained optimistic about the Leuna plant’s prospects, noting strong commercial interest during the briefing. The facility will produce 220,000 tons per year of monoethylene glycol, monopropylene glycol, and lignin-based renewable functional fillers from wood-based raw materials.