Major oil companies Royal Dutch Shell and BP have shelved plans to invest in four bio-fuel projects.
The decision to retract is expected to cut down an investment of about $57m in global bio-fuel production during the first quarter of 2013.
The companies claimed that the technology it uses to produce renewable fuel will not be economical at least until 2020.
In an interview with Bloomberg, BP biofuels program head Phil New said that the projects are very capital intensive.
"There’s lots of difficult engineering. It will take time for scale-up," advised New.
Earlier in December 2012, BP stated that it would invest $350m to increase its Tropical ethanol project capacity in Brazil by two-fold.
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By GlobalDataShell alternative energy head Matthew Tipper was quoted by Bloomberg as saying, "All of these technologies are capable of working technically.
"It was purely on cost that this technology couldn’t be taken forward. Fuels have to be cheap enough to burn. Otherwise no-one will buy them."
The current quarterly is said to be witnessing the lowest investment in the sector since 2006, with highest peak registered during last quarter of 2007, when the companies invested about $7.6bn.
With these reductions in the investments, the US and Europe are anticipating challenging hurdles to meet their targets and narrow down fossil fuel pollution.
International Energy Agency executive director Maria van der Hoeven told the news agency: "Progress in deploying these technologies has been slower than many had anticipated and what’s needed to keep on track with our aspirations. Many potential producers have found it difficult to secure the capital they need."
