The closure of the UK’s largest bioethanol plant has been announced following the government’s refusal to provide emergency funding. Vivergo Fuels, located in Hull, has struggled to remain profitable for over a decade and had been in discussions with the UK government since June 2023 about its future. In a statement released on Friday, the firm, owned by ABF, confirmed that it would cease operations after the government decided not to support a business that could thrive under more favorable regulatory conditions.
Vivergo executives held the current administration, led by Keir Starmer, accountable for the plant’s impending shutdown. They argued that the recent trade deal with the United States had allowed cheaper fuel imports, significantly impacting the bioethanol market in the UK. Under the agreement reached in June, the UK government agreed to lower tariffs on US agricultural products, including bioethanol. In exchange, the US granted the UK reduced tariffs on automotive, steel, and aluminium exports.
The terms of the trade agreement have created an unsustainable environment for Vivergo, prompting the company to enter emergency negotiations with the government. According to the firm, the deal has detrimental implications for domestic producers, particularly as it reduces the competitive edge of bioethanol derived from UK-grown crops such as wheat and other cereals.
The UK government ultimately decided against offering emergency loans or grants to Vivergo, citing that such funding would not provide value for taxpayers or resolve the long-term issues facing the bioethanol industry. A spokesperson for the Department for Business stated, “We have worked closely with the companies since June to understand the financial challenges they have faced over the past decade,” adding that an independent report concluded that saving the plant would not be a prudent use of public resources.
Since its inception, the Hull plant has not turned a profit, with reports indicating it has been unprofitable since 2011. The closure is expected to result in significant job losses, affecting many of the plant’s approximately 160 staff. While some employees may be reassigned within ABF, others will inevitably face unemployment. Vivergo has expressed concern that the closure will also impact the livelihoods of thousands tied to its supply chain, as bioethanol plays a crucial role in stabilizing wheat prices and provides feed for livestock.
In a statement, a Vivergo spokesperson lamented the decision, saying, “We have been fighting for months to keep this plant open. We initiated and led talks with government in good faith.” They emphasized that a viable plan had been presented to restore profitability within two years, aligning with the government’s own green industrial strategy.
The spokesperson further stated, “In making this decision, the government has thrown away billions in potential growth in the Humber and a sovereign capability in clean fuels that had the chance to lead the world.” They highlighted that significant investment opportunities were on the horizon, which will now likely shift overseas, primarily to the United States and other markets with more favorable regulatory frameworks.
The closure of Vivergo Fuels not only signifies a setback for the bioethanol industry in the UK but also raises broader questions about the future of domestic energy production and agricultural sustainability in an increasingly globalized market. As the UK navigates these challenges, the impacts of the trade deal with the US are likely to resonate throughout the agricultural sector and beyond.