Associated British Foods has announced the closure of Vivergo Fuels, its bioethanol production plant in Hull.
The company had warned last week that the UK’s bioethanol industry and its future capacity to produce CO2, which is critically important to the food sector, was days away from collapse without government support.
The government has since said it will not be supporting the business, and the company has begun closure, putting 160 jobs at risk.
ABF has said the US-UK trade deal which allowed for tariff-free access to the UK for up to 1.4 billion litres of US ethanol “severely worsened” the already challenging regulatory situation for bioethanol producers.
The deal led to warnings of impending closure by the UK’s two largest producers of the fuel: Vivergo and Ensus, which has a plant on Teesside.
On 9 May, the UK’s two major bioethanol producers jointly wrote to the prime minister warning that the removal of the 19% tariffs on American ethanol made domestic production “commercially unviable”. Formal negotiations began on 26 June.
“It is deeply regrettable that the government has chosen not to support a key national asset,” said a spokesperson for ABF. “We have been left with no choice but to announce the closure of Vivergo and we have informed our people.”
“We know this is a concerning time for workers and their families which is why we entered into formal discussions with the company on potential financial support in June,” said a government spokesperson. “We have engaged with the company and industry extensively since then.
“We will continue to take proactive steps to address the long-standing challenges it faces and remain committed to a way forward that protects supply chains, jobs and livelihoods.”
Ensus has said the government is “looking at options to secure an ongoing supply of CO2 from the Ensus facility”.
“This is positive news, however it is likely to take time to agree upon and finalise,” said chairman of Ensus UK Grant Pearson. “Therefore, urgent discussions will be taking place to provide a level of assurance to the Südzucker and CropEnergies boards that there is a very high level of confidence that an acceptable long-term arrangement can be reached.”
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