The UK’s largest bioethanol plant, Vivergo Fuels, will cease operations due to the government’s refusal to provide emergency funding amid ongoing financial struggles. The decision marks a significant setback for the facility in Hull, which has been in discussion with the UK government since June 2023 regarding its viability.
In a statement released on Friday, Vivergo Fuels, owned by the ABF group, confirmed that the plant would not continue operations. The closure is attributed to the government’s stance against supporting a business that could succeed under a more favorable regulatory environment. Vivergo’s management has criticized the Starmer administration for allowing the UK market to open up to cheaper bioethanol imports from the United States, a situation they argue undermines local production.
Impact of the US Trade Pact
The decision relates closely to a trade agreement established between the UK and the US in June 2023. Under this deal, the UK government permitted greater access for US agricultural products, including bioethanol, in exchange for the reduction of tariffs previously imposed by the Trump administration on UK automotive, steel, and aluminum exports. This trade agreement also included cuts to tariffs on US beef and bioethanol, a product derived from crops like wheat.
Vivergo Fuels had warned that the terms of this trade agreement rendered its Hull plant unsustainable. Following the announcement of the deal, the company entered into emergency negotiations with the government to secure its future. However, despite ongoing discussions, the UK Department for Business confirmed it would not provide any emergency loans or grants. A spokesperson stated, “We have worked closely with the companies since June to understand the financial challenges they have faced over the past decade.”
The spokesperson also noted that providing direct funding would not offer value for the taxpayer and would not effectively address the long-term challenges facing the industry. Reports indicate that the Vivergo plant has not been profitable since 2011, reinforcing the government’s decision not to intervene financially.
Consequences for Employment and the Supply Chain
The closure of the bioethanol plant is expected to lead to job losses for a significant portion of its 160 staff. While some employees may be offered positions elsewhere within ABF, many will face unemployment. Vivergo has warned that the plant’s shutdown will also negatively impact the livelihoods of thousands who depend on its supply chain, which plays a crucial role in supporting the wheat market and providing cattle feed through its by-products.
A spokesperson for Vivergo expressed frustration over the government’s choice, stating, “We have been fighting for months to keep this plant open. 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 spokesperson further lamented the potential loss of billions in economic growth for the Humber region and the chance for the UK to lead in clean fuel capabilities.
The closure of Vivergo Fuels underscores the broader implications of trade agreements on local industries and employment. As the company prepares to shut its doors, the future of bioethanol production in the UK remains uncertain, with calls for a more supportive regulatory environment to foster domestic growth in the sector.
