Talks to save Britain’s bioethanol industry ends in failure

The Government has decided against a rescue package for the UK’s bioethanol industry, which now faces  a very uncertain future.

The country’s two major producers, Hull-based Vivergo Fuels and the Ensus plant in Redcar on Teesside, had both previously warned that without government support they would be forced to close, after a deal to allow US ethanol to be imported tariff-free.

The bioethanol plant helps underpin £24.8 billion (€28.7 billion) in potential growth over the next 25 years for Hull and the surrounding area, with at least £7.3 billion (€8.5 billion) directly dependent on Vivergo.

Negotiations between the Government and Britain’s bioethanol industry began in June and ended this week.

Britain’s bioethanol industry was plunged into crisis by the Government’s decision to axe a 19% tariff on US bioethanol imports, allowing cheap, subsidised American fuel to flood the UK market.

In the just over 100 days between when the US-UK trade deal was announced on 8 May and the end of this week, the plant will have shouldered almost £10 million in losses. This equates to around £3 million (€3.5 million) per month, or £36 million (€41 million) per year.

The industry had already been in talks with Government over the UK’s unfair regulatory system that favours overseas producers, but the trade deal was a hammer blow for Britain’s domestic industry.

Bosses from the Ensus plant in Redcar, the other major bioethanol producer in the UK, joined Vivergo’s leadership in writing to the Prime Minister in May warning him their plants would close without immediate Government action as the deal rendered their businesses “commercially unviable”.

The trade agreement introduced a tariff-free quota of 1.4 billion litres, allowing US firms to sell their heavily subsidised ethanol into the British market, no longer requiring a 19% import tariff which was originally levied to help British producers compete on a more level playing field.

The tariff-free quota introduced by the deal represents the entire size of the UK market. According to the latest available UK Government figures, demand was equivalent to 1.406 billion litres in 2023.

This article has been republished from The Biofuel International.