Ørsted has scrapped plans for a European plant to develop green fuels, the latest sign that companies are pulling back from flagship projects designed to accelerate the world’s shift away from fossil fuels.

The world’s largest offshore wind developer said on Thursday that it would no longer build a plant to develop fuels for industries from shipping to aviation, saying that the still nascent market was growing more slowly than expected.

Work on the plant in the Swedish town of Örnsköldsvik began just over a year ago. It was intended to produce about 55,000 tons per year of e-methanol, which is made by combining hydrogen and carbon dioxide.

“The business case has deteriorated during maturation due to the inability to sign long-term offtake contracts at sustainable pricing and significantly higher project costs,” said Ørsted chief executive Mads Nipper.

Ørsted, blighted by a botched expansion into the US, joins companies including Shell and Fortescue in either abandoning, pausing or scaling back renewable energy projects.

Last month, Shell paused the construction of a plant in Rotterdam meant to convert waste into jet fuel and bio-diesel, saying it needed to “ensure future competitiveness given current market conditions”.

Ørsted’s decision on Örnsköldsvik left the Danish company with an impairment charge of DKr3.2bn ($470mn) in the first half, which also included the costs of a delay to an offshore wind farm in the US and other factors.

The company had previously described the plant in Örnsköldsvik as “the largest e-methanol project under construction in Europe”. 

Ørsted’s first-half results showed signs that it was beginning to recover from a bruising period in which an overly aggressive expansion in the US forced it to write down the value of several projects and suspend its dividend.

Nipper said he was “pleased” with the company’s half-year results, with operations performing well and higher earnings from offshore wind farms.

The company reported a pre-tax profit of DKr3.9bn, up from DKr2.4bn in the same period last year, although revenues fell to DKr34.2bn from DKr40.3bn.

It also raised its full-year forecasts for the offshore wind business, although the overall forecasts for the company were unchanged because of a weaker performance from its bioenergy division.

Analysts at RBC said it was a “strong performance” in offshore wind but said that would be tempered by the impairment in other parts of the business.

Ørsted took full control of the project in Örnsköldsvik, known as FlagshipONE, in 2022 as part of a strategy to try to take the lead in greener fuels. However, it is now trying to focus on high return projects.