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Britain’s only two bioethanol production plants are facing closure after the UK agreed to remove tariffs on US ethanol imports under its recent trade pact with America, the industry has warned.
The so-called “prosperity deal” signed with US President Donald Trump on May 8 offered US ethanol producers a 1.4bn litre tariff-free quota, equivalent to the UK’s entire annual demand for the product, which is used to make petrol greener.
UK producers have been locked in talks with Sir Keir Starmer’s government over a support package to save the industry from being swamped by US imports when the current 19 per cent tariff wall is removed.
Three major trade bodies reliant on UK bioethanol industry have written to business secretary Jonathan Reynolds, warning that unless ministers offer financial support the domestic industry will not survive.
“If the government does not step in and provide the support that is needed by the end of June it will be too late, and the plants will inevitably close,” they said in a letter seen by the Financial Times.
The industry intervention comes nearly two weeks after the Department for Business and Trade announced it was “open to discussion” over support for the plants, recognising the need for “urgent next steps”.
Industry figures said the US-UK deal, which was the first to be signed with any trade partner by the Trump administration, had blindsided the Department for Environment, Food and Rural Affairs.
In the deal, the UK won a partial reprieve on auto tariffs when a 25 per cent tariff on imported cars was cut to 10 per cent for the first 100,000 vehicles exported, but conceded tariff-free quotas on both ethanol and 13,000 tonnes of beef.
The letter from the Renewable Transport Fuel Association was also signed by the Food and Drink Federation and the Agricultural Industries Confederation, which both rely on byproducts from the plants, including carbon dioxide gas and animal feed.
Bioethanol is used in the E10 blend of petrol commonly used in Britain, high-protein animal food and CO₂, which is used in the soft drinks and meatpacking industries.
The trade groups warned that allowing the plants to close would leave the UK vulnerable to CO₂ shortages of the kind seen in 2018, 2021 and 2022, and send a negative signal to investors about its plans to develop a sustainable aviation fuel industry.
“We’re on the verge of losing critical UK infrastructure unless the government acts swiftly. These plants need to know there will be support and very soon,” added Gaynor Hartnell, chief executive of the Renewable Transport Fuel Association.
“The impacts will be felt in the supermarket and at the pub because of the CO₂, by farmers in the North East whose feed wheat price will fall, by motorists and the environment, and certainly by the government in terms of its lost credibility,” she added.
Bioethanol is produced primarily from local wheat, providing the country’s arable farmers with an important market, using about 1.2mn tonnes annually. The letter warned shutting the plants could cost farmers up to £200mn a year as a result of a feared price slump.
The bosses of the two plants — Ensus in Wilton on Teesside, and Vivergo in Saltend, near Hull — have warned the deal posed an “existential threat” to their future.
Grocery conglomerate Associated British Foods, which owns the larger Vivergo plant in East Yorkshire, cautioned on Tuesday that it would have to shut down production if the government did not intervene.
“The removal of tariffs on US ethanol, combined with ongoing regulatory obstacles, has left us unable to compete on a level playing field,” said Vivergo Fuels managing director Ben Hackett in a statement.
Prior to the deal, the UK’s industry was already struggling to compete against cheaper US bioethanol, which is produced primarily from maize in the corn belt states of the Midwest.
The industry said it had requested both short-term financial support and regulatory changes from the government that would increase demand for bioethanol. “So far, nothing has been forthcoming,” Hackett added.
The business department said it was “working closely” to understand the impact of the UK-US trade deal on the UK’s two bioethanol companies and was discussing 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,” a spokesperson added.
