U.K. Bioethanol Sector Facing Collapse

---

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--The U.K. 's only two bioethanol plants are facing closure unless the government provides urgent financial aid.

Associated British Foods (ABF) (London) has threatened to close the largest bioethanol plant in Hull, England, by the middle of September citing a tariff deal struck by the U.K. with the U.S. that removes an existing 19% tariff on imports of U.S. ethanol. In its place, the deal will allow a tax-free quota of up to 1.4 billion liters to be imported - equal to the U.K.'s annual demand for ethanol, a move that U.K. suppliers claimed will drive them out of business. Fellow bioethanol supplier Ensus U.K. (Redcar), which operates the only other supplier in Teesside, said the deal threatens its future. The bioethanol from both plants is typically blended with petrol to produce more environmentally friendly fuels, such as E10 petrol in the U.K. Despite ongoing talks with the government, ABF has threatened to shut its Hull plant, run by Vivergo Fuels (Hull), in September with the loss of 160 jobs unless it can reach a settlement deal with the government. The company stated that the wider bioethanol industry supports up to 4,000 jobs in the U.K. including farmers who grow the crops, mainly wheat, that are used to make the fuel. It said it stopped buying wheat in mid-June.

The company is looking for a short-term injection to cover its losses and a longer stern solution to remain in business. In its latest statement, ABF said: "We are extremely pleased to be entering the next phase of formal negotiations with Government over the future of Vivergo. We believe it is a very positive signal that Government recognises the strategic importance of a domestic bioethanol industry, and is serious about working with the sector to find a sustainable long-term future. ABF cannot continue to absorb losses at the plant. That is why a timely solution is vital. In parallel, we have entered into a consultation process with our employees - a necessary step given there can be no guarantee that the negotiations with Government will be successful."

The company said that the future potential for the plant is "enormous," citing a recent £1.25 billion (US$1.7 billion) memorandum of understanding with Meld Energy (Surrey, England) to anchor a "world-class Sustainable Aviation Fuel facility at the site." Last June, Meld Energy received the green light to build a 100-megawatt (MW) green hydrogen plant at the Saltend Chemicals Park, which is also home to Vivergo and a number of major chemicals firms. Subscribers to Industrial Info's Global Market Intelligence (GMI) Project Database can click here for the reports.

In Redcar, Teesside, Ensus U.K. warned that the removal of the 19% tariff on U.S. ethanol imports had "fundamentally undermined its business position" and may force the imminent closure of its plant with the loss of more than 100 jobs. The plant produces roughly 400 million litres (88 million gallons) of bioethanol each year while the byproducts, including 350,000 tonnes high-protein animal feed, is sold black to the farming industry. A further 250,000 tonnes of CO2 is supplied to a partner company for use in the Food & Beverage Industry. Industrial Info is tracking a planned high-protein animal feed unit addition project at the site worth more than US$82 million. Ensus chairman Grant Pearson said: "We are at the eleventh hour and the Government urgently needs to find a solution to a crisis of its own making. We need a solution which will not only save these skilled jobs on Teesside, but also prevent a catastrophic knock on effect in other vital sectors of the economy. The closure of Ensus - a profitable, growth generating business - would be a disaster for the U.K.'s ability to develop a green industrial base as we are part of the solution to decarbonising the U.K.'s chemical industry and producing important products for the future such as sustainable aviation fuel."

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).