ABF shuts down UK’s biggest bioethanol plant after funding support is ruled out

Image: Vivergo Fuels in Hull Credit: PA

Associated British Foods has confirmed that Vivergo Fuels, the UK bioethanol plant based at Saltend, will be shutting its doors.

The announcement follows the Government’s decision not to provide direct funding for the bioethanol sector. Officials argued that such support would not represent value for taxpayers.

The industry had already been thrown into uncertainty after the UK signed a trade deal with the United States. That agreement removed the 19 per cent tariff on ethanol imports, opening the door to cheaper and less tightly regulated products from overseas. Vivergo had previously warned that without this protective barrier, it would struggle to compete.

ABF said it had invested more than £700m in Vivergo over the past decade, "sustaining operations through extended periods of losses caused by regulatory distortions and market imbalances".

In May, Vivergo and Ensus, which operates a plant in Redcar, jointly wrote to the Prime Minister, warning that the removal of the 19 percent tariffs on American ethanol made domestic production "commercially unviable."

A spokesperson for ABF said: "It is deeply regrettable that the Government has chosen not to support a key national asset. We have been left with no choice but to announce the closure of Vivergo, and we have informed our people.

"We have been fighting for months to keep this plant open. We initiated and led talks with the 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.

"In making this decision, the Government has thrown away billions in potential growth in the Humber and a sovereign capability in clean fuels that had the chance to lead the world. Hugely significant investment was lined up to go into the area, from ABF and other companies. Jobs in clean energy will now move overseas – principally to the US but also to other countries with a more sensible regulatory environment.

"This plant should always have been profitable under the right regulatory environment, as similar plants in Western Europe demonstrate. The Government's own commissioned analysis spells out that Vivergo could and should be profitable under that environment.

"The loss of Vivergo will be felt most acutely by our dedicated workforce and their families and by the thousands whose livelihoods depend on our supply chain – from farmers to hauliers and engineers. We are hugely disappointed, on their behalf, that the press was informed of this decision before we were told – and before we had a chance to communicate to our staff. Our focus is now on supporting the working people at our plant in Hull."

Ensus said it was currently exploring options to continue to supply from its facility.

Grant Pearson, chairman of Ensus UK, said: "I met with Sarah Jones, the Minister for Business, today 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 North East of England, and 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."

At present, the UK has only two bioethanol production plants. Vivergo in Saltend and Ensus in Redcar both produce green fuel that is blended with petrol to reduce harmful emissions. Beyond fuel, Vivergo also plays a significant role in the agricultural sector. It makes animal feed and carbon dioxide, creating a vital market for approximately 150 million pounds of wheat each year. Much of this wheat comes from farms in East Yorkshire and is of a grade unsuitable for bread or pasta.

The closure will have wide-reaching consequences. Around 160 people are directly employed at the Saltend site, but the company estimates that about 4,000 additional jobs across the supply chain depend on its operations.