The UK’s largest bioethanol plant, operated by Vivergo Fuels in Hull, is set to close following the government’s refusal to provide emergency funding. This decision comes after months of negotiations, during which Vivergo sought support to sustain operations. The plant’s closure is attributed to a trade deal with the United States that has adversely affected its financial viability.
In a statement released on Friday, Vivergo Fuels, a subsidiary of ABF (Associated British Foods), confirmed it would cease operations after the UK government decided not to support a business that could thrive under a favorable regulatory framework. The firm specifically pointed to the Labour administration, led by Keir Starmer, for creating conditions that opened the UK market to cheaper bioethanol produced in the US.
In June 2023, the UK and US reached a trade agreement allowing greater access for US agricultural products in exchange for reduced tariffs on automotive and steel exports. This included a decrease in tariffs on US beef and bioethanol, a fuel derived from wheat and other cereals. Vivergo had expressed concerns that these terms rendered the Hull plant unsustainable, prompting the company to enter emergency discussions with the government.
Despite ongoing negotiations, the Department for Business confirmed on Friday that it would not provide any emergency loans or grants. A government spokesperson stated, “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.”
Reports indicate that the Vivergo plant has not turned a profit since 2011. An independent consultant’s report commissioned by the government concluded that any financial investment to save the plant would not be a prudent use of taxpayer money. The closure is expected to result in significant job losses, affecting many of the plant’s 160 staff. While some employees may be reassigned within ABF, others will likely face unemployment.
Vivergo has warned that the closure will have broader implications for the agricultural supply chain. The plant plays a crucial role in supporting the wheat market, and its by-products are commonly utilized as cattle feed. A company spokesperson stated, “We have been fighting for months to keep this plant open. We initiated and led talks with 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.”
The firm criticized the government’s decision, claiming it jeopardizes not just local employment, but also the potential for billions in investment in the Humber region. The spokesperson added, “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.”
As the situation unfolds, the impact of this closure is expected to resonate throughout the local economy, raising concerns about the future of bioethanol production in the UK and its implications for sustainable energy initiatives.
