The UK’s bioethanol industry is facing collapse after the government confirmed it will not offer a rescue package to the country’s two biggest producers.
Hull-based Vivergo Fuels and Ensus in Redcar, Teesside, had warned they would be forced to shut down following a US-UK trade deal that removed a 19% tariff on ethanol imports from America, allowing up to 1.4bn litres to enter tariff-free – equivalent to the size of the UK market.
Both firms say the agreement has left them commercially unviable, threatening 270 direct jobs and thousands more in the wider supply chain, as well as the UK’s capacity to produce low-carbon fuels.
Associated British Foods (ABF), owner of Vivergo, called the decision “deeply regrettable” and accused ministers of abandoning a “key national asset”. The company said it had submitted a plan to return the plant to profitability and warned the loss of production would send clean energy jobs overseas.
“This plant should always have been profitable under the right regulatory environment, as similar plants in Western Europe demonstrate,” the firm said.
The German-owned Ensus plant, which has also been approached for comment, produces bioethanol from wheat and accounts for 30% of the UK’s commercial carbon dioxide supply — used in soft drinks, healthcare and nuclear industries. The sector is also a major buyer of British wheat, supporting domestic agriculture.
A government spokesperson said it had engaged with both companies “to understand the financial challenges they have faced over the past decade” but concluded direct funding “would not provide value for the taxpayer or solve the long-term problems the industry faces”.
It added: “We recognise this is a difficult time for the workers and their families and will work with trade unions, local partners and the companies to support those affected.”
Industry sources say delays in the rollout of higher bioethanol blends, such as E10 petrol, have also undermined UK producers. The government has committed to ensuring 10% of aviation fuel comes from sustainable sources, including bioethanol, by 2030.
Ministers said they would continue to work on measures to secure the resilience of the CO₂ supply chain.
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UK bioethanol industry on brink as government rejects rescue deals