Owners of the UK’s largest bioethanol plant have blamed the government for the closure of its “clean fuels” operation.
The opportunity for the UK to “lead the world” has been lost due to a deal to allow US ethanol to be imported tariff-free, says Hull-based Vivergo Fuels, which has announced its closure.
The Associated British Foods (AB Foods) owned company says the removal of the 19 per cent levy means its plant in Redcar, Teesside, is also likely to close, with 270 jobs at risk across the two sites.
It has been warned that the government’s decision creates uncertainty over a further 4,000 jobs in the supply chain of bioethanol – a petrol substitute produced from agricultural products – including farmers and hauliers.
The deal with the US covers a quota of up to 1.4 billion litres, which is roughly the size of the current UK market.
AB Foods say clean energy will now move overseas, and a spokesperson added:“In making this decision, the government has thrown away billions in potential growth in the Humber, a sovereign capability in clean fuels that had the chance to lead the world.
“We have been fighting for months to keep this plant open. We initiated and led talks with government in good faith. We presented a clear plan to restore Vivergo to profitability within two years under policy levers already aligned with the government’s own green industrial strategy.”
Jamie Burrows, chair of the National Farmers’ Union combinable crops committee, described the news as a “huge blow”, and added: “Bioethanol production in the UK is such an important industry. The volume of wheat entering the supply chain has been as high as 1.2m tonnes. It also plays a key role in producing a vital source of animal feed as a by-product and CO2 used by the wider food supply chain.
“We need the 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 further market opportunities to incentivise growers to support the country’s biofuel plants.”
The US trade deal has been hailed as a victory for the car industry, which has had tariffs slashed from 27.5pc to ten per cent. The steel industry is still facing 25pc tariffs, but the UK government is hoping these will be scrapped.
The government said it had to prioritise the 320,000 jobs in auto, steel and aerospace and added that financially supporting the Humber plant “would not provide value for the taxpayer or solve the long-term problems the industry faces”.
The UK sector had complained that US imports already had an unfair advantage as their ethanol is certified as a waste byproduct here, whereas domestically-produced bioethanol is not. This leads to US rivals being able to undercut them, and they will be at an even greater disadvantage once tariffs are removed, they said.
Production in Hull has now ceased and the site is being prepared for demolition by the new year.
