Vivergo Fuels, one of the UK’s two remaining bioethanol production plants, announced it will cease operations and begin laying off its 160 employees from Tuesday, following the government’s decision not to provide financial support for the struggling sector. The closure marks a significant setback for the UK’s bioethanol industry, which faces intensifying competition from imported ethanol, particularly from the United States.
- Vivergo Shutdown Signals Major Blow to UK Bioethanol Industry
- Background: Bioethanol, Trade Deals, and Market Pressures
- ‘Unfair Competition’ and the Government’s Position
- Economic and Community Impact
- Expert Analysis: Risks of Import Dependence and Future Prospects
- Contextualising the Bioethanol Sector in Renewable Energy Policy
- Looking Ahead: Uncertain Future for UK Bioethanol
Vivergo Shutdown Signals Major Blow to UK Bioethanol Industry
Vivergo, owned by Associated British Foods and located near the Humber estuary in Hull, confirmed the plant’s closure after weeks of negotiations with the government. Officials cited the firm’s ongoing “heavily loss-making” position due to market pressures and tariff changes as key factors behind the decision.
Alex Snowden, Vivergo’s operations director, described the closure as “heartbreaking,” emphasizing his personal connection to the site: “I’m from the local area, I live 10 minutes away from the plant. It’s a huge part of my life.” He explained that the plant is now in the process of emptying remaining stocks and winding down operations.
Ben Hackett, managing director of Vivergo, called the government’s refusal for a rescue package a “massive blow to Hull and the Humber,” adding that the industry feels like it has been “traded away” in the broader context of international trade dealings.
The plant, which uses locally grown wheat to produce bioethanol a renewable fuel additive and protein-rich animal feed pellets, has long been seen as a cornerstone of the local agricultural and manufacturing ecosystem. Vivergo warned of significant ripple effects across its supply chain, including impacts on local farmers and related businesses.
Background: Bioethanol, Trade Deals, and Market Pressures
Bioethanol is an important renewable fuel component used to reduce emissions from petrol. In the UK, it is commonly blended into E5 and E10 petrol and contributes to sustainable aviation fuel initiatives. Vivergo’s production process also yields high-protein cattle feed pellets, benefiting dairy farmers in the region.
In May 2023, the UK signed a trade agreement with the United States that removed a 19% tariff on US bioethanol imports, allowing up to 1.4 billion litres annually equivalent to the entire UK bioethanol market. This concession was part of a broader pact that eased President Donald Trump’s threatened tariffs on UK cars and steel exports to the US.
UK bioethanol producers have argued that this deal placed them at an unfair disadvantage since US ethanol is certified as a waste byproduct under UK regulations, while domestically produced bioethanol is not. This classification permits US competitors to undercut prices, intensifying challenges for local firms.
‘Unfair Competition’ and the Government’s Position
Stakeholders in the UK bioethanol sector have repeatedly expressed concerns about “unfair competition.” The British Bioethanol Producers Association highlighted that US imports benefit not only from tariff reductions but also from regulatory classifications that distort the playing field.
Vivergo is the first to announce closure due to these pressures, but its competitor’s plant in Redcar, Teesside owned by German company Ensus remains uncertain about its future. The BBC understands Ensus is in discussions with the government over potential support linked to its CO2 production, a valuable industrial gas used widely in food, healthcare, and manufacturing sectors.
The government stated that it concluded a direct bailout for the bioethanol sector would not represent value for taxpayers or resolve the sector’s underlying challenges. A spokesperson said, “The decision was taken in the national interest and considers the broader trade-offs, including protections for employment in sectors such as aerospace and automotive.”
Economic and Community Impact
The announcement has triggered concerns over significant local economic consequences. Paul Temple, a farmer less than 30 miles from Vivergo, noted his dual reliance on the plant as both a wheat supplier and livestock feed customer. “Trade negotiations that make a plant uneconomic… this is really frustrating for local agriculture,” he said.
Louise Halder, director of a Hull-based haulage company, described the closure’s impact as “massive,” warning that job losses tend to cascade through nearby sectors. “People out of work means less spending in hospitality and retail,” she commented. “It ripples through the whole community.”
Charlotte Brumpton-Childs, GMB union national officer, expressed disappointment that the government’s environmental and “green jobs” promises have not translated into protections for UK renewable energy production facilities. “A clean energy industrial strategy means nothing if we cannot protect plants long enough to deliver sustainable, green jobs here at home,” she said.
Expert Analysis: Risks of Import Dependence and Future Prospects
Andrew Symes, chief executive of OXCCU, a sustainable aviation fuel firm, raised red flags about the UK’s increasing reliance on imported bioethanol and CO2. Speaking on BBC Radio 4’s Today programme, Symes warned that dependence on imports is “risky” for national supply chain resilience. He suggested the risks may not have been fully understood when negotiating the recent trade agreements: “Reducing domestic production capacity could leave the UK vulnerable to external market fluctuations.”
The government has pledged to support Vivergo staff through the closure process and to work on long-term measures to ensure resilient domestic production of CO2 and other critical industrial gases. However, clear indications of future investment in bioethanol production remain absent.
Contextualising the Bioethanol Sector in Renewable Energy Policy
The UK government has made ambitious commitments to carbon reduction and sustainable energy transitions, including increasing the use of biofuels in transport and aviation sectors. Yet the bioethanol industry’s decline illustrates the complexities of balancing free trade commitments with domestic green energy goals.
Industry analysts say that maintaining domestic green fuel production is crucial not only for employment but also for meeting climate targets and energy security objectives.
Professor Karen Smith, energy and environmental policy expert at the University of Leeds, explained: “Bioethanol plants like Vivergo have the potential to contribute significantly to emissions reductions. Their closure risks slowing progress on these fronts and increases import dependence, which can be less sustainable and stable.”
Looking Ahead: Uncertain Future for UK Bioethanol
Vivergo’s closure, expected to culminate in site demolition by year-end, underscores the bioethanol sector’s fragile position within the UK’s energy and trade environment. While the government maintains its stance against further financial intervention, calls from industry, workers, and local communities for a coherent green industrial strategy grow louder.
The fate of the Remain UK bioethanol plant in Redcar will be a critical indicator of the sector’s trajectory.
As environmental policies tighten and global energy markets evolve, experts suggest the UK must reconcile trade policy with industrial strategy to secure its clean energy future and the jobs dependent upon it.
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