UK’s Largest Bioethanol Plant to Close After Trade Deal Fallout

The closure of the UK’s largest bioethanol plant has been confirmed by its owner, Vivergo Fuels, following the government’s decision not to provide emergency funding. Located in Hull, the plant has been struggling for viability after months of negotiations with the UK government regarding its future.

Vivergo Fuels, a subsidiary of the conglomerate ABF, had been in discussions with the Department for Business since June 2023. The negotiations aimed to secure financial support for the struggling facility. However, on Friday, the company announced that the government would not back the plant, stating it would not “support a business that would be profitable under a sensible regulatory environment.”

The company’s leadership has pointed to the trade deal with the United States as a significant factor contributing to the plant’s impending closure. As part of a pact agreed in June, the UK government, under Prime Minister Keir Starmer, granted the US greater access to the UK agricultural market. In exchange, tariffs imposed by former President Donald Trump on automotive, steel, and aluminum exports were reduced. This included a lowering of tariffs on US beef and bioethanol, a fuel derived from wheat and cereals produced by British farmers.

Vivergo Fuels expressed concern that the terms of the trade agreement rendered the Hull plant unsustainable. Following the announcement, Vivergo sought emergency discussions with the government but faced multiple missed deadlines. Ultimately, the Department for Business confirmed it would not provide any emergency loans or grants, citing the need to ensure taxpayer value and addressing long-standing financial challenges in the bioethanol sector.

According to sources familiar with the situation, the plant has not been profitable since 2011. An independent report commissioned by the government concluded that saving the facility would not represent an effective use of taxpayer funds. The decision is expected to lead to significant job losses, impacting several of the plant’s approximately 160 staff. While some employees may find positions within ABF, others are likely to face unemployment.

Vivergo has warned that the plant’s closure will have broader implications, affecting “thousands whose livelihoods depend on [its] supply chain.” Bioethanol production has a vital role in supporting the wheat market, with its byproducts often utilized as cattle feed.

“We have been fighting for months to keep this plant open,” said a spokesperson for Vivergo. “We initiated and led talks with the government in good faith, presenting a clear plan to restore profitability within two years under policy levers aligned with the government’s own green industrial strategy.”

The spokesperson criticized the government’s decision, stating it undermines potential growth in the Humber region and hinders the UK’s capability in clean fuel production. They noted that significant investment was poised to flow into the area from ABF and other companies, emphasizing that jobs in clean energy may now relocate overseas, particularly to the US and other nations with more favorable regulatory environments.

The closure of the Vivergo plant represents not only a setback for the bioethanol industry in the UK but also raises concerns about the future of renewable energy production in the country.