The UK’s largest bioethanol plant is to shut, its owner has said, after the government decided not offer the struggling factory an emergency funding settlement after months of fraught negotiations.
Vivergo Fuels had been locked in talks over its future with the business department since June, after it warned an element of the UK-US trade deal had left its operations financially unviable.
But in a statement on Friday, the ABF-owned firm said its Hull plant would not be able to continue operations after the government confirmed it would not “support a businesses that would be profitable under a sensible regulatory environment”.
The plant’s top brass held the Starmer administration’s decision to abolish a 19 per cent tariff on bioethanol imports from America responsible for its closure, saying it had opened the UK market up to cheaper fuel produced at greater quantities in the US.
As part of the trade pact agreed with the US in June – Starmer and business secretary Jonathan Reynolds allowed the US greater access to the UK’s agricultural sector in exchange for bringing down tariffs that Trump had applied on automotive, steel and aluminium exports.
Tariffs on US beef were brought down alongside the reduction in trade duties on bioethanol, a fuel which derives from wheat and other cereals produced by arable farmers.
ABF Sugar, the bioethanol arm of London-listed conglomerate ABF, immediately warned that the terms of the deal had left its Vivergo plant unsustainable, and shortly after entered emergency talks with the government over its future.
The government’s decision not to prop the group up with emergency funding comes after it missed several deadlines set by Vivergo for negotiations, as the two parties tried to reach a settlement.
But the Department for Business confirmed on Friday it would not release any emergency loans or grants for the plant.
A spokesman said: “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.”
City AM understands that the plant had not been profitable since 2011, and that the government commissioned a report from an independent consultant, which judged saving the plant would not be an effective use of taxpayer money.
But the decision is likely to lead to dozens of job losses. It is understood that some of the plant’s 160 staff will be handed jobs elsewhere at ABF, but the closure will mean others are let go.
Vivergo warned it will also have ramifications for the “thousands whose livelihoods depend on [its] supply chain”. Bioethanol acts as a floor to the wheat market, and its waste product is often used as cattle feed.
“We have been fighting for months to keep this plant open. We initiated and led talks with government in good faith,” a spokesman for the firm said.
“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.”
He added: “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.”
Credit: Oilprice.com
