The UK’s largest bioethanol plant, operated by Vivergo Fuels, is set to shut down following the government’s refusal to provide emergency funding. The decision comes after months of negotiations regarding the plant’s future, which have now culminated in its imminent closure due to unsustainable operational costs.
Vivergo Fuels, owned by ABF, announced that its facility in Hull would cease operations after the UK government confirmed it would not support a business that could only be profitable under a more favorable regulatory environment. The firm’s leadership attributed the closure to the current administration’s trade policies, which they claim have allowed cheaper, higher-volume bioethanol from the United States to flood the UK market.
In June 2023, the UK reached a trade agreement with the US, allowing greater access to the UK agricultural sector. In return, tariffs imposed by former President Trump on automotive, steel, and aluminum exports were reduced. This deal also included cuts to tariffs on US beef and bioethanol, a fuel derived from crops such as wheat. As a direct consequence of these changes, Vivergo’s management expressed concerns that the terms of the agreement rendered the plant unviable.
Despite ongoing discussions with the Department for Business since June, Vivergo’s efforts to secure emergency funding were ultimately unsuccessful. A spokesperson from the department stated, “We have worked closely with the companies since June to understand the financial challenges they have faced over the past decade.” The spokesperson further emphasized that providing direct funding would not offer value to taxpayers or resolve the long-term issues facing the industry.
Reports indicate that the Hull plant has not turned a profit since 2011. An independent consultant’s assessment, commissioned by the government, concluded that keeping the plant operational would not be a prudent use of taxpayer resources. As a result, the closure is expected to lead to significant job losses, impacting many of the plant’s 160 staff. While some employees may be redeployed within ABF, others will face unemployment, raising concerns about the wider implications for those involved in the supply chain.
Vivergo’s leadership has expressed frustration over the situation, claiming that they have made every effort to maintain operations. A spokesperson stated, “We have been fighting for months to keep this plant open. We initiated and led talks with government in good faith.” The company presented a plan aimed at restoring profitability within two years, claiming alignment with the government’s green industrial strategy.
The closure not only threatens local jobs but also has broader implications for the agricultural sector. Bioethanol production supports the wheat market, and its byproducts are often used as cattle feed. Vivergo warned that the shutdown would have repercussions for the thousands who rely on its supply chain, stating that “henceforth, jobs in clean energy will now move overseas – principally to the US but also to other countries with a more sensible regulatory environment.”
As the situation unfolds, the decision to close the plant represents a significant loss for the UK’s bioethanol industry and underscores the challenges faced by domestic producers in a competitive global market.
