BP has put its $600 million Kwinana Renewable Fuels project on hold, marking another clean energy development delayed due to shifting market conditions and policy challenges. The company stated it is “adjusting the pace of delivery” for the renewable fuel hub to improve capital efficiency and align better with government policies. The decision reflects growing concerns about the financial viability of sustainable fuel projects, particularly in the absence of strong incentives to drive demand, according to the Financial Review.

The Kwinana Renewable Fuels project was planned as a key biofuel production site at BP’s former Perth oil refinery, which ceased operations in 2021. The refinery, originally opened in 1955, had been slated for redevelopment into a renewable fuel hub capable of producing sustainable aviation fuel (SAF) and renewable diesel. These biofuels, known as drop-in fuels, are designed to directly replace fossil fuel-based aviation and diesel fuels without requiring modifications to existing aircraft or heavy transport engines. The plant would have utilized feedstocks such as waste oil, tallow, and used cooking oil to produce low-carbon fuels, reducing emissions in sectors that are difficult to decarbonize.

BP had previously highlighted that the initial focus of the project would be on supplying fuel to local industries, including mining operations. The company had also reported interest from potential customers in Europe and Japan. However, the success of such a facility was expected to depend on government incentives and financial support, particularly in the early stages of production. Without strong policy backing, the economics of large-scale SAF and renewable diesel production remain uncertain.

The decision to delay the project comes amid a broader cooling of enthusiasm for green hydrogen and renewable fuel investments. Several high-profile hydrogen projects have faced setbacks, with developers reassessing their feasibility due to funding challenges. One major hydrogen project was recently withdrawn from consideration after its backers failed to secure the required level of government support. This reflects a growing trend where companies are struggling to justify large-scale investments without sufficient subsidies or market guarantees.

BP had hoped to secure funding from a national program designed to support flagship hydrogen and renewable fuel projects. The company was one of six shortlisted applicants for financial backing, though final funding decisions have not yet been announced. Initially, BP had planned to make a final investment decision later this year, with production expected to begin in 2027. However, the company has not provided a revised timeline following its decision to slow the project’s development.

This announcement follows another setback in Australia’s renewable energy sector, where a major offshore wind project in Western Australia was recently canceled in favor of focusing resources on developments along the east coast. BP’s decision to pause the Kwinana project highlights the ongoing challenges facing renewable fuel investments, particularly in regions where government incentives remain uncertain.