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The UK’s bioethanol sector is facing a critical moment as Vivergo Fuels, the country’s largest bioethanol producer, prepares to potentially shutter its Hull facility by mid-September. This move, which would put around 160 jobs on the line, comes in response to recent trade concessions granted in a new bilateral agreement with the United States. The plant’s owner, Associated British Foods (ABF), warns that these changes could dismantle the UK’s domestic bioethanol industry, prompting urgent talks with the government in hopes of finding a viable solution.
I. Impacts of the US-UK Trade Deal on Bioethanol
1. ABF Blames Tariff Removal for Industry Collapse
ABF has openly criticized the UK’s latest trade arrangement with the US, asserting that allowing tariff-free American ethanol into the country will devastate domestic producers. The agreement, enacted in May under Prime Minister Keir Starmer’s leadership, eliminates the existing 19% import tax on US ethanol within a 1.4 billion-litre quota—an amount equivalent to the entirety of the UK’s ethanol market.
2. Local Sourcing Undermined by Free Market Access
Vivergo, which relies heavily on locally sourced wheat for its production, halted wheat purchases on 11 June due to the looming threat of being priced out by cheaper US imports. Bioethanol, produced from agricultural products and used as an alternative fuel, is one of the UK’s key renewable energy solutions. However, without protections for domestic producers, companies like Vivergo argue they can no longer compete.
II. Government Response and Negotiations
1. Downing Street Deflects Blame
Despite Vivergo’s concerns, government officials have denied a direct link between the trade deal and the plant’s potential closure. A spokesperson claimed that challenges facing the bioethanol industry have existed long before the deal was struck, suggesting that the current crisis cannot be attributed solely to recent policy changes.
2. Ongoing Talks with ABF and Ensus
The government has acknowledged it is in regular dialogue with key players in the bioethanol sector, including ABF and Ensus, the latter of which operates another major bioethanol plant in Teesside. Officials emphasized their commitment to exploring feasible solutions, though ABF has signaled that unless both short-term funding and a long-term strategic plan are offered, the Hull plant will likely be closed permanently.
3. Short-Term Relief Hangs in the Balance
ABF extended its decision deadline by 24 hours earlier in the week, hoping that the government would propose a support package. However, without guarantees of financial assistance to offset operational losses or a clear plan to shield the industry from foreign competition, the company informed investors that plant closure by 13 September remains a probable outcome.
III. Broader Industry Implications
1. Thousands of Jobs at Risk
Vivergo and Ensus account for nearly all of the UK’s bioethanol production capacity. Beyond the 160 direct jobs at risk in Hull, the potential closure would disrupt supply chains and threaten thousands of associated roles across the agriculture and transportation sectors.
2. ABF Begins Employee Consultations
In line with corporate responsibility, ABF has commenced formal consultations with its Hull staff to ensure an orderly transition in the event of shutdown. The company stated that this parallel process will proceed even as negotiations with the government continue, though its final decision hinges on the outcome of those talks.
3. Tariff Reductions Beyond Ethanol
The bioethanol dispute isn’t the only area of trade concern. The US deal also includes plans to lower the import tariff on 100,000 British vehicles to 10%, while discussions are ongoing about removing the 25% duty on British steel imports. Uncertainties about the sourcing of steel materials have complicated these negotiations further, highlighting broader tensions in UK-US trade relations.
IV. Political and Economic Reactions
1. Government Pushes Back on Criticism
While ABF has placed the blame squarely on the new trade terms, Keir Starmer’s administration maintains that it has engaged consistently with bioethanol stakeholders. A spokesperson described the company’s announcement as “disappointing,” particularly as it comes amid active negotiations for financial assistance.
2. Commitment to Sector Support Reaffirmed
The government reiterated its dedication to protecting jobs and maintaining the integrity of the UK’s renewable energy initiatives. Officials affirmed that efforts will continue to address long-standing issues in the industry, even if they predate the trade deal. Ministers are also aiming to develop a roadmap that supports both employment and energy sustainability in the UK.
3. Call for Transparent Dialogue
ABF, for its part, has pledged to work closely with the government, stressing the importance of transparent, intensive engagement over the coming weeks. Their goal remains finding a credible path that allows the company to keep operations running while securing long-term stability in the face of external market pressures.
Conclusion
The fate of Vivergo’s Hull bioethanol plant encapsulates a growing tension between international trade liberalization and the protection of domestic industry. While the new UK-US deal promises broader market access and diplomatic cooperation, it also introduces severe risks for sectors already operating under tight margins. Unless the UK government can provide immediate and strategic support, the country’s bioethanol capacity—along with thousands of jobs—could soon be lost. As discussions continue, the coming weeks will be pivotal in determining whether sustainable energy production in the UK can withstand the pressures of global trade.
