Associated British Foods is to close its Vivergo Fuels bioethanol plant by the end of August, in the wake of the government decision not to support the UK sector from tariff-free US imports. Ensus UK, part of Sudzucker, which operates the other major UK bioethanol plant, is still reviewing its options.
The two companies have the capacity to convert up to two million tonnes of feed wheat to bioethanol each year, plus co-products – some 60% of input volume becomes high protein DDGS feed alongside carbon dioxide for use in a variety of essential food service and medical applications.
Both companies had warned government that the unexpected and last-minute concession made in the US:UK trade deal agreement in May to allow 1.4 billion litres of tariff-free US bioethanol imports (formerly subject to a 19% import levy) into the UK would undermine the domestic bioethanol manufacturing sector. Ensus and Vivergo had written to the Department of Business and Science warning of the effect of the US tariff-free quota on top of their existing concerns over imports, tariffs and fuel certificates, and been in discussion with government over the sector’s future viability.
However, a government statement released late on Friday, when the world’s attention was on the Trump: Putin meeting in Alaska, refused any support.
“We have worked closely with the companies since June to understand the financial challenges they have faced over the past decade and have taken the difficult decision not to offer direct funding as it would not provide value for the taxpayer or solve the long-term problems the industry faces,” said a government spokesman.
“We recognise this is a difficult time for the workers and their families and we will work with trade unions, local partners and the companies to support them through this process. We also continue to work up proposals that ensure the resilience of our CO2 supply in the long-term in consultation with the sector.”
The spokesman claimed the decisions was in the national interest, as the US trade deal “protected hundreds of thousands of jobs in sectors like auto and aerospace”.
ABF says its decision to close the Vivergo plant followed extensive discussions with the government to find a regulatory and financial solution that would enable it to operate on a profitable and sustainable basis.
“These discussions were necessary because Vivergo’s commercial viability was undermined by the way in which UK regulations were being applied to favour foreign producers, an issue subsequently made much worse by the government’s decision in May to remove the tariffs on US bioethanol coming into the UK market. These two actions meant Vivergo would inevitably continue to be heavily loss-making without corrective government intervention to provide short-term financial support and a longer-term regulatory solution.
“The government has decided not to offer either short-term financial support or the long-term regulatory certainty we sought,” ABF continues. “Given these circumstances and the financial losses already incurred, ABF has therefore determined in the interests of its shareholders that it cannot continue to support Vivergo. ABF will start an orderly closure process immediately. Vivergo will have ceased all production of bioethanol and animal feed by 31 August 2025.” The company had already ceased new deliveries of wheat feedstock to the facility.
For Ensus, chairman Grant Pearson says: “I met with Sarah Jones, the minister for business, to receive the government’s response to our request for financial support and the policy changes required to ensure that the Ensus facilities can continue to operate. The minister confirmed that they value both our contribution to the UK economy, the jobs we provide and support in the northeast of England – in particular, our production of biogenic CO2 which is a product of critical national importance.
“They are therefore looking at options to secure an ongoing supply of CO2 from the Ensus facility. This is positive news. However, it is likely to take time to agree upon and finalise and therefore urgent discussions will be taking place to provide a level of assurance to the Sudzucker and CropEnergies boards that there is a very high level of confidence that an acceptable long-term arrangement can be reached.”
AIC chief executive Robert Sheasby adds: “It is very disappointing that, after lengthy representations to the government alongside other industry associations, a solution has not been found for the UK bioethanol sector.
“In addition to the direct risk to jobs and the reduced demand for UK-grown wheat, we must also not overlook the loss of 600,000 tonnes of domestically produced animal feed and carbon dioxide.
“British arable farmers rely on a diverse consumer base to maintain a competitive sector. AIC members who purchase wheat from farmers will now need to find new markets for the displaced grain, which represents approximately 7% of this year’s projected wheat harvest.”
NFU combinable crops board chair Jamie Burrows describes the Vivergo closure as a huge blow. “Not only is it terrible news for those hundreds of workers who will lose their jobs but also for the thousands of people whose livelihoods depend on that supply chain – that includes local farmers who have lost a vital market for their product.
“We need government to recognise the potential economic growth and value of this market by ensuring crops grown for biofuels are used increasingly in road transport and aviation. This will open up further market opportunities to incentivise growers to support the country’s biofuel plants.”