Royal Dutch Shell has cut its crude processing capacity at its Singapore hub in half and reduced fuel exports, executives said on Tuesday, as the company transitions away from fossil fuels in order to reduce emissions and meet global low-carbon energy needs.

Shirley Yap, senior vice president of chemicals and products at Shell Singapore, told reporters that the refinery on Pulau Bukom will continue to produce naphtha for its ethylene unit.

Shell has also begun testing new chemical feedstocks at the cracker, including pyrolysis oil and bionaphtha, she said, as the company seeks to supply olefins with a lower carbon footprint to customers such as Japanese chemical maker Asahi Kasei Corp.

Shell is a major fuel supplier in Asia, and the recent drop in exports has tightened supplies and pushed margins for regional refiners back to pre-pandemic levels.

“The reality is that we’ve cut a significant portion of our capacity, and there is demand for fuels today, so we have to ensure that we’re doing it at a pace that is in step with our customers and in step with society,” said Shell Singapore Chairman Aw Kah Peng.

“But at the same time… it can’t be turned on with a flick of a switch because infrastructure needs to be built, but we want to be there as soon as possible,” she explained.

In 2023, Shell will construct its first pyrolysis oil upgrader, which will produce 50,000 tonnes per year (tpy) of treated pyrolysis oil for its 800,000 tpy cracker on Bukom.

Although the process is not commercially proven and consumes a lot of energy, pyrolysis melts plastic waste into products such as pyrolysis oil, which can be upgraded as raw material for plastics and chemicals.

Shell Singapore is also planning a carbon capture and storage (CCS) hub and a 550,000 tpy biofuels plant to convert waste and vegetable oils into sustainable aviation fuel (SAF). Shell intends to produce approximately 2 million tpy of SAF globally by 2025, despite the fact that SAF accounts for less than 0.1 percent of today’s global jet fuel demand.

According to Shell Downstream Director Huibert Vigeveno, the projects are part of Shell Singapore’s plans to cut emissions from its operations by half by 2030, from 2016 levels on a net basis.

Shell did not provide project investment figures.

Investors, activists, and governments are putting increasing pressure on energy companies to abandon fossil fuels and rapidly ramp up investment in renewables.

Shell has pledged to cut emissions from its operations in half by 2030 and to reduce its net carbon footprint by 45 percent by 2035. more info

Bukom, along with other Shell chemical plants on Jurong Island, forms one of the major’s five Energy and Chemical Parks worldwide, and the only one in Asia.

Shell intends to construct two chemical conversion units in Asia to convert waste plastics into pyrolysis oil for Singapore, similar to units built in the Netherlands with joint venture partner BlueAlp and set to go into operation in 2023.

Shell previously announced that it would test hydrogen fuel cells for ships in Singapore, and that it is looking into developing a solar farm in a landfill near Bukom.