Up to 4,000 livelihoods at risk as ABF prepares to pull plug on bioethanol plant
As many as 4,000 livelihoods are at risk after the owner of Britain’s largest bioethanol plant has warned it could shut within days, citing UK-US tariff policy.
ABF, which owns the Vivergo Fuels plant in Yorkshire, has written to farmers warning it planned to suspend purchases of wheat used in the production process unless the government urgently steps in.
The plant is capable of producing up to 420 million litres of bioethanol from over 1 million tonnes of feed grade wheat sourced from thousands of farms mostly across Yorkshire and Lincolnshire. Over 160 skilled workers are employed by the plant with a supply chain supporting around 4,000 livelihoods.
ABF said the plant’s future could become untenable following the UK-US trade deal which removed a 19 per cent tariff on ethanol imports, allowing heavily subsidised US ethanol to undercut British producers.
The leaders of the UK’s two largest bioethanol plants wrote to the Prime Minister on 9 May before meeting Business and Trade Secretary Jonathan Reynolds on 14 May where Reynolds said he would act in “days not weeks” – but the firms claim there has been “little evidence of urgency” from the government since.
Vivergo Fuels Managing Director Ben Hackett said: “This is not a position we ever wanted to be in.
“We have asked government to increase domestic demand for bioethanol through a simple change to regulation, and for the short term and affordable support we need until that demand materialises. So far, nothing has been forthcoming.
“The removal of tariffs on US ethanol, combined with ongoing regulatory obstacles, has left us unable to compete on a level playing field. As a result, we will have to scale back wheat purchasing to meet only our current contractual commitments…time is rapidly running out.”
‘Unbeatable cost advantage’
Last month, ABF CEO George Weston told City PM the plant had been hamstrung by the government’s decision to double-count renewable fuel certificates for overseas producers, which “gives them an unbeatable cost advantage.”
“We don’t believe that the government’s been obliged to do that, they’ve chosen to, and they’ve put this business in an impossible position by the action they’ve taken,” he said.
“We really are doing everything we can to save that plant, we don’t want to mothball or shut it but we may be forced to.”
Problems at the Yorkshire plant, as well as a general downturn in sugar prices, helped push ABF’s sugar division to a loss of £122m for the six months to March, down from a profit of £121m the previous year.
A Government spokesperson said: “We signed a deal with the US in the national interest to secure thousands of jobs across key sectors.
“We are now working closely with the industry to understand the impacts of the UK-US trade deal on the UK’s two bioethanol companies and are open to discussion over potential options for support.
“The Business Secretary has met members of the bioethanol sector and senior officials continue to consider what options may be available to support the impacted companies.”