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Sky News
3 days ago
- Business
- Sky News
Vivergo: How US-UK trade deal could bring about collapse of huge renewable energy plant in Hull
Why you can trust Sky News The smell of yeast still hangs in the air at the Vivergo plant in Hull but the machines have fallen quiet. More than 100 lorries usually pass through here each day, carrying 3,000 tonnes of wheat. It is milled, fermented and distilled. The final product is bioethanol, a renewable fuel that is then blended into E10 petrol. This is a vast operation. It took several years to build, with considerable investment, but it is on the verge of closing down. Management and staff are holding out for a last minute reprieve from the government but time is running out. It's been a turbulent journey. The plant was already being annihilated by US rivals, losing about £3m a month. Vivergo and Ensus, based in Teesside, blamed regulations that enable US companies to earn double subsidies. They were pushing for regulatory change but then a killer blow: The US-UK trade deal, which allows 1.4 billion litres of American ethanol into the UK tariff-free (down from 19%). "We've effectively given the whole of the UK market to the US producers," said Ben Hackett, managing director at Vivergo. "If we were to have the same support that the US industry has, if we could use genetically modified crops, we wouldn't need that tariff. We would be able to compete. If we had the same energy costs. We wouldn't need those tariffs." The government has the weekend to come up with a plan that could keep the business running. If it fails, Vivergo will begin issuing redundancy notices to its 160 staff. It's a devastating prospect for workers, many of them live in Hull and are nervous about alternative opportunities in the area. Mike Walsh, a logistics manager who has been working at the plant for 14 years, said: "It's not a great place to be at the moment. It's a very well paid, very high-skilled role and they've (Vivergo) given everybody an opportunity in an area that doesn't pay that well…. The jobs market isn't as good as what people would like. So it does impact the local economy." He called on the government to "help us, save us, give this industry a future". His colleague Claire Wood, lead productions engineer, said: "I moved here after a career in oil and gas for 10 years, partly because I want to be part of the transition to renewable fuels. I can see so much potential here and it's absolutely devastating to know that this place might be closed very, very shortly and that all that potential just goes away." Thousands more could be affected. Haulage companies may have to lay off truck drivers and farmers could also suffer a blow. Vivergo makes bioethanol using wheat. That wheat is bought from farms from Yorkshire and Lincolnshire. The National Farmers Union has sounded the alarm, saying: "Biofuels are extremely important for the crops sector, and their domestic demand of up to two million tonnes can be very important to balance supply and demand and to produce up to one million tons of animal feed as a by-product." Another bioproduct is carbon dioxide. The gas can be captured and used to put the fizz in drinks or injected into packaging to preserve food. If Vivergo and Ensus were to go, Britain would lose as much as 80% of its output of carbon dioxide. Supplies are already tight across Europe, meaning this decision could compound shortages across a range of sectors, from meat-packing to healthcare. The industry is calling on the government to help. Vivergo says it needs temporary financial support but that the government must create a regulatory and commercial environment in which it can thrive. It says rules that award double subsidies to companies that use waste product in their bioethanol must be changed. At present these rules are being used by US companies that make ethanol from Uldr- a byproduct of processing corn. They argue this is not a genuine waste product. Another option is to grow the market. Industry leaders are calling on ministers to increase the mandated renewable fuel content in petrol from 10% to 15% and for an expansion into aviation fuels. That would allow British companies to carve out a space. The government has been locked in talks with the company since June. It said: "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." However, the time for talking is almost over. Mr Hackett said he had no idea how the government would respond but he was firm with his stance, saying: "In times of global uncertainty, losing that energy certainty and supply from the UK is a problem. "I think what they're missing out on is the future growth agenda. We're the foundation on which the green industrial strategy can be built. We make bioethanol that today decarbonises transport. Tomorrow it will decarbonise marine. It will decarbonise aviation."
Times
12-07-2025
- Business
- Times
Rescue of UK's biggest bioethanol plant snags on wrangle over CO2
Talks to rescue Britain's biggest bioethanol plant are on a knife-edge after the government offered only a partial bailout focusing on the production of carbon dioxide used in fizzy drinks and to preserve food. Vivergo, which is owned by FTSE 100 company Associated British Foods (ABF), is set to close in two months unless a taxpayer rescue can be agreed. The bioethanol sector fell victim to last month's US-UK trade deal after it emerged that Sir Keir Starmer had agreed to a last-minute White House request to let American firms ship 1.4 billion litres of ethanol to Britain each year, free of tariffs. • Britain's biggest bioethanol plant will shut without state rescue, says AB Foods Vivergo operates from its refinery near Hull by taking feed wheat and converting it into bioethanol and high-protein animal feed. The liquid is blended with other fuels such as petrol to reduce their carbon footprint. E10 petrol, for instance, is 10 per cent ethanol derived from renewable sources. Bioethanol production generates CO₂ as a byproduct. The gas can be captured and used to put the fizz in drinks such as lager or injected into packaging to preserve food. The Vivergo works, which employs 160 people directly but helps support 12,000 growers and other businesses, does not currently generate or supply food-grade CO₂. The government wants the works to be adapted so that it can, following a series of summer crises when stocks ran low. Paul Kenward, chief executive of ABF Sugar, said: 'We're not asking for an open-ended subsidy — ABF is not a company that builds its model around long-term state support for any of our businesses, from Primark to Twinings. 'What we need is a stable, predictable regulatory environment that gives British bioethanol a fair shot. If you lifted our plant and placed it in Rotterdam, we'd be profitable. Why? Because other countries haven't skewed the market against domestic producers. And they haven't, as appears to have happened via the US-UK trade deal, accidentally handed their domestic market to another country.' The government said officials would engage this week with Vivergo and Teesside-based Ensus, another bioethanol producer that is reviewing its future. It said: 'This is an industry that has been facing significant challenges for some time, which is why officials and ministers have met Ensus and Vivergo consistently over the last few months to understand and seek options to address some of the challenges.' • Hopes fade of deal to cut US tariffs on British steel exports Kenward said: 'So far, the government's focus in these talks has been on a narrow financial due diligence process and one particular by-product of bioethanol production: carbon dioxide. CO₂ matters — it is critical to the UK's food and medical sectors. 'But support based solely on CO₂ risks locking us into a future that looks like the past of the UK steel industry: a long-term subsidy regime without a path to growth or profitability. That's not what we want, and it's not what taxpayers will want either.' He added: 'If the government persists with this approach to the talks, Vivergo will, unquestionably, close.'
