The operators of the two largest UK bioethanol facilities have warned the government that last week’s trade deal with the US means they face “an existential threat” with thousands of jobs at risk.
Paul Kenward, chief executive of ABF Sugar, which owns Vivergo, and Grant Pearson, chairman of Ensus, said prime minister Kier Starmer showed real leadership in securing the UK-US trade deal, delivering tariff relief for the car and steel industries.
However, for another strategically essential sector – domestic bioethanol production – this “vital sovereign capability” will be lost, without immediate action.
Vivergo and Ensus operate facilities representing nearly all bioethanol production capacity in the UK. Ensus runs a plant in Wilton on Teesside, while Vivergo refines the fuel at Saltend, near Hull.
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Bioethanol is ethanol produced by processing biological matter, either waste products or crops grown specifically for this purpose. It is used as an alternative or additive to petrol.
The US-UK trade deal is set to remove tariffs on American ethanol and replace it with a zero-tariff quota of 1.4 billion litres, which the firms say is “coincidentally” the size of the UK’s whole ethanol market today. The amount far exceeds previous US exports to the UK.
Kenward and Pearson said in a statement: “This change comes on top of regulations that give overseas producers an unfair advantage in the British market. The operating environment is now impossible.”
They said that government delays in mandating the switch from E5 to E10 petrol forced the sector to scale back production in the years before the change finally took effect in 2021. Since last September, decisions on imports, tariffs and fuel certificates have put that success at very significant risk.
They added: “It’s not the facilities that are unviable, the problem is how British officials apply rules and regulations that undermine their competitiveness.
“Together with our supply chain partners, we support thousands of jobs, mostly in the North East and Yorkshire. These are good, green jobs in exactly the kind of industries ministers say they want to grow.”
They said the bioethanol sector is now facing imminent collapse because of the trade deal. “In our current situation, we will have to close these plants,” they wrote.
Bioethanol plays a critical role in decarbonising transport. It powers the UK’s standard E10 petrol blend, reducing emissions, and also delivers two essential by-products: carbon dioxide, which is used in numerous sectors including healthcare, food packaging and drink; and high-protein animal feed.
Tom Bradshaw, president of the National Farmers’ Union, said: “The inclusion of a significant volume of bioethanol in the deal raises concerns for British arable farmers.”
Biofuels are extremely important for the crops sector, and their domestic demand of up to 2 million tonnes can be important to balance supply and demand and to produce up to one million tons of animal feed as a by-product.
Therefore, opening up our ethanol market to such volume could translate into the loss of this profitable outlet for our arable growers.
“We are working through what this means for the viability of the domestic bioethanol production and therefore the potential impact on our members,” Bradshaw added.
Kenward and Pearson said: “Without urgent government action, the UK’s bioethanol industry will simply vanish, leaving the country dependent on imported ethanol – while also losing significant domestic production of carbon dioxide and high-protein animal feed.”
A government spokesperson said: “This government signed a deal with the US in the national interest to secure thousands of jobs across key sectors — from the auto industry to steel — and lay the groundwork for greater trade in the future.
“We are meeting with leaders from all sectors, including ethanol producers, to discuss the impacts of this deal.”
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