Britain Has 12 Days to Save Bioethanol Industry, Says AB Foods

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June 04, 2025

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by James Davey (Reuters) Industry warns last month's UK-US trade deal will hit operations; Seeks short-term financial aid of up to 150 million pounds; Says thousands of jobs at stake

LONDON, June 3 (Reuters) - One of Britain's biggest bioethanol producers warned the government on Tuesday that unless it steps in with a support package for the industry within the next 12 days it will have to start closure processes at its plant.

ABF Sugar, part of Associated British Foods (ABF.L) and Ensus together account for nearly all of the UK’s bioethanol production capacity.

"We have 12 days to save this industry," Paul Kenward, CEO of ABF Sugar, told lawmakers on parliament's Business and Trade Committee.

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ABF Sugar and Ensus have warned that last month's U.S.-UK trade deal, which will see the UK's 19% tariffs on U.S. ethanol fall to zero, on top of existing regulations giving overseas producers an advantage in the British market, have made the operating environment impossible.

They have said their plants at Hull and Teesside in northern England face closure.

Along with supply chain partners, the plants support thousands of jobs.

Kenward told lawmakers that by June 15 he needed to tell farmers whether he could sign new contracts for wheat supply.

"Why would I do that unless I have some confidence that the government's going to step in?" he said.

Kenward called on the government to urgently level the regulatory playing field, increase the amount of ethanol in UK petrol from 10% to 15% and support the development of sustainable aviation fuel.

He also wants the industry to have access to short-term financial aid of up to 150 million pounds ($203 million).

Kenward said AB Foods had invested 700 million pounds in the Hull site.

“Once it goes, it goes. Think what that does to future investors in green industries," he said.

A government spokesperson said business minister Jonathan Reynolds had met members of the bioethanol sector and senior officials "continue to consider what options may be available to support the impacted companies". READ MORE

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Excerpt from BBC: Ensus, which runs the Redcar plant, said the recent UK-US tariff deal "fundamentally undermined its business position", as it removed a 19% tariff on US ethanol imports.

The firm's chairman Grant Pearson said the government needed to come up with a "urgent" solution to save skilled jobs in the region.

A Department for Business and Trade (DBT) spokesperson said it was working closely with the bioethanol industry to understand the impacts of the deal.

The company's warning follows a similar announcement made by Associated British Foods (ABF), which operates the only other bioethanol plant in the UK.

It said the new deal, which is still being worked on, was the "final blow" to its Vivergo Fuels Site at Saltend, near Hull.

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Ensus's Redcar plant sources feed grain from farms in the UK and Europe to produce about 400 million litres (88 million gallons) of bioethanol each year.

It also sells the byproducts from this process, such as high protein animal feed, to farmers.

The firm said it employed more than 100 people at the plant and that it supported a wider supply chain of about 3,000 people in northern England.

It is understood the influx of US produced bioethanol into the UK would severely undercut Ensus and ABF's businesses.

Mr Pearson said the loss of the Teesside plant would also mean a "catastrophic knock-on effect in other vital sectors of the economy".

The UK is already the second-highest destination for US ethanol exports, according to US ethanol lobby group Renewable Fuels Association. READ MORE

Excerpt from London Daily: The company said it had begun consultations with staff to “effect an orderly wind-down” and had already halted the purchase of wheat – its key raw material – as of 11 June. Although formal negotiations with the government are ongoing, ABF signalled that unless substantial support is secured, the plant will shut its doors by 13 September.

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The crisis was sparked by the terms of the new bilateral trade agreement with the United States, brokered in May and due to take effect next week. The deal includes a provision that removes the existing 19% tariff on US ethanol imports, replacing it with a tariff-free quota of 1.4 billion litres — roughly equivalent to the entire current size of the UK ethanol market.
While the agreement has been hailed by Downing Street as a boost for British automotive and steel exports — notably through the reduction of US import tariffs on 100,000 British cars and ongoing negotiations to ease steel tariffs — critics say the benefits come at a steep cost to the UK’s green fuel sector. The government, however, insists that bioethanol producers have long faced economic difficulties unrelated to the US deal.

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ABF told investors it will only reverse its decision to close Vivergo if the government agrees to underwrite the plant’s short-term losses and devise a long-term solution that safeguards the industry. While the company had delayed its closure decision by 24 hours earlier this week, that window is rapidly closing.

A government spokesperson acknowledged ongoing talks and noted that officials and ministers had “consistently engaged” with both ABF and Ensus in recent months. They stressed that challenges facing the bioethanol sector had emerged well before the US deal was finalised. Nonetheless, the government said it would continue working closely with the companies involved to present a viable plan that “protects supply chains, jobs and livelihoods”.

Industry insiders argue that the situation could undermine the UK’s renewable energy targets and hit rural economies hard. Bioethanol, a petrol substitute derived from crops such as wheat, plays a key role in reducing greenhouse gas emissions from transport and supporting agricultural demand.

One ABF spokesperson said the company was committed to working “intensively and transparently with officials to try to find a viable path forward” but warned that the future of the Hull plant now hinges entirely on the outcome of these last-minute negotiations. Unless a breakthrough is achieved soon, Vivergo’s closure could mark a symbolic and material setback for Britain’s renewable fuel ambitions, with concerns that a precedent is being set where trade diplomacy outweighs domestic industry resilience. READ MORE

Excerpt from Farmers Weekly: The UK-US deal has come into force today (30 June) with tariffs slashed both ways for beef and ethanol.

The deal will remove a previous 19% tariff on US bioethanol imports, allowing the US tariff-free access for 1.4bn litres of ethanol each year.

The UK biofuels sector has warned the consequences could be devastating, with domestic plants, supplied by UK cereal farmers, being forced to shut as they struggle to compete with subsidised imports.

Shadow farming minister Robbie Moore wrote on social media platform X that the removal of tariffs would be “catastrophic for UK farmers”, who are likely to lose a reliable market for feed wheat.

He added: “Higher animal feed prices are likely to follow, as the by-product used for feed will not be available.”

Associated British Foods, which operates the Vivergo Fuels bioethanol plant near Hull, East Yorkshire, has warned government that it cannot continue to absorb losses at the plant.

The site, which is capable of processing more than 1m tonnes of wheat annually, appears destined for closure unless government support is provided.

An ABF spokesperson said the firm had already entered into a consultation process with its employees, ahead of possible redundancies. READ MORE

Excerpt from Argus Media: Vivergo told Argus it wants the government to cover losses of £3mn/month, or £35mn/yr, which it said have been incurred as a result of government decisions.

Previously, ABF proposed a support package of £75mn/yr, for up to two years, for the entire UK sector.

In the longer-term, Vivergo said there is appetite from private investors to finance future projects. It pointed to a recent initial agreement to supply ethanol for a prospective alcohol-to-jet sustainable aviation fuel (SAF) plant planned by hydrogen developer Meld Energy at Saltend.

Meld told Argus that while the project will be "underpinned by government support mechanisms", the "longer term plan is to eventually eliminate reliance on subsidy through reducing cost of production which will likely be through scale, efficiency and technology advancement".

Meld chief executive Chris Smith also told Argus that sourcing bioethanol directly from Vivergo helped "risk management". He said locally-produced bioethanol brings "greater certainty of supply" and "reduces local infrastructure requirements."

Vivergo said failure to support the bioethanol sector would be "shortsighted", because in order to meet projected increases in UK SAF demand by 2035 the country would need "seven more Vivergos", or a more than 3.5 times increase in domestic bioethanol production.

Regulation frustration

Vivergo said another key way for the government to help is to tackle the eligibility of unrefined liquid dextrose ultrafiltration retentate (Uldur) for double counting under the UK's renewable transport fuel obligation (RTFO).

Uldur, which is classfied in the UK as a waste ethanol feedstock, makes up a significant share of the total import pool from the US.

Biofuels made from certain raw materials classed as "wastes" and "residues" under the RTFO receive double the amount of renewable transport fuel certificates (RTFCs) for every litre of fuel produced. RTFCs are tradeable credits primarily generated by the sale of biofuel-blended fuels and are used to help obligated parties meet the RTFO mandate.

Vivergo says Uldur-derived ethanol is a co-product of the wet milling process rather than waste, and its eligibility for double counting is inconsistent with the RTFO's decarbonisation aims. It said producers using Uldur are able to make double-counting bioethanol using a more carbon-intensive production process than the fermentation of wheat, yet crop-based ethanol produced by Vivergo is ineligible for double counting.

Vivergo said producers of double counting product get an additional certificate worth around £260/t, meaning it is unable compete with the low prices of Uldur-based bioethanol importers from the US. And these will now be able to enter the UK duty free under the new US-UK trade deal.

The UK government is consulting on whether to continue classing Uldur as eligible for double counting.

Other changes proposed by Vivergo include increasing the ethanol mandate in road fuel, from E10 to E15 or E20. Vivergo previously said an E15 mandate could boost demand in the UK by 660mn l/yr. It also highlighted the potential for increased bioethanol use in marine and aviation sectors.

Capturing the moment

Another key point in the talks with the government is the capture of CO2, a by-product of bioethanol production, Vivergo said.

The company said it is 6-9 months away from having carbon capture facilities ready, at which point it would be capable of meeting around a third of the UK's 600,000 t/yr CO2 demand.

Ensus captures 250,000 t/yr of CO2 at its 400mn l/yr bioethanol refinery in Wilton, northeast England.

Vivergo said losing this would mean increased CO2 imports, and noted its output of high-protein animal feed as a co-product of wheat-to-ethanol production, which agricultural firms would otherwise have to import at a higher environmental cost.

The National Farmers Union has previously said that losing the UK bioethanol industry would be a "huge blow", as it currently has the "capacity to purchase around 2mn t of wheat each year", so without it "farmers would lose a reliable market for their feed wheat." READ MORE

Excerpt from Biofuels International: A major bioethanol facility in Redcar is at risk of shutting down "imminently" unless urgent government intervention is secured, its operator has warned.

Ensus, the company behind the plant, claims that a recent UK-US trade agreement eliminating a 19% tariff on imported US ethanol has seriously jeopardised its ability to remain competitive.

Grant Pearson, chairman of Ensus, urged the government to deliver a swift and effective response to protect highly skilled jobs and the broader supply chain in northern England.

A spokesperson for the Department for Business and Trade (DBT) confirmed that it is in ongoing discussions with the bioethanol sector to assess the implications of the new trade arrangement.

This development echoes concerns raised by Associated British Foods (ABF), which operates the UK’s only other bioethanol plant, Vivergo Fuels in Saltend near Hull. ABF recently described the emerging deal as the “final blow” to its operation.

Both Ensus and ABF produce bioethanol — an essential component of E10 petrol, designed to reduce vehicle emissions.

The Redcar facility alone manufactures roughly 400 million litres of bioethanol annually, using feed grain sourced from farms across the UK and Europe. It also produces valuable byproducts like high-protein animal feed, sold to local farmers.

Ensus employs over 100 workers directly, and its operations support an estimated 3,000 jobs across the regional supply chain.

The influx of cheaper US ethanol, however, threatens to undercut domestic producers, potentially forcing closures that could ripple through agriculture and other connected industries.

Pearson warned that shuttering the Teesside plant would have "a catastrophic knock-on effect" across multiple sectors.

The UK is already the second-largest importer of US ethanol, according to the Renewable Fuels Association.
Its president, Geoff Cooper, welcomed the removal of trade barriers, stating in May that it would "boost our farm economy" and offer UK motorists "lower-cost, cleaner fuel." READ MORE

Excerpt from Bloomberg: Aided by genetically modified crops and yeasts, antibiotic usage during the extraction process and various subsidies, American volumes dwarf British production and undercut on price. Ethanol is mainly used as a biofuel that’s blended with gasoline, but Britain’s domestic producers are part of a supply chain that reaches far beyond motor vehicles. As the two plants make their case for government support to offset the impact of the trade deal, Hackett said there needs to be more understanding on the broader implications of the industry’s potential collapse. READ MORE