Rescue funding will not be provided to the Ƶ's two largest bioethanol producers, with at least one set to close.
The Department for Business and Trade has confirmed it will not support Vivergo Fuels near Hull and Ensus on Teesside, both of which suffered the end of a 19% tariff on US imported bioethanol as part of the recent Ƶ-US trade deal. Vivergo owner Associated British Foods (ABF) has indicated the Hull plant - which employs about 160 directly and more in the regional supply chain - will close.
A spokesperson for ABF said: "We have been fighting for months to keep this plant open. We initiated and led talks with Government in good faith. 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.
“In making this decision, the Government has thrown away billions in potential growth in the Humber and a sovereign capability in clean fuels that had the chance to lead the world. Hugely significant investment was lined up to go into the area, from ABF and other companies. Jobs in clean energy will now move overseas – principally to the US but also to other countries with a more sensible regulatory environment.
“This plant should always have been profitable under the right regulatory environment, as similar plants in Western Europe demonstrate. The Government’s own commissioned analysis spells out that Vivergo could and should be profitable under that environment.
“The loss of Vivergo will be felt most acutely by our dedicated workforce and their families and by the thousands whose livelihoods depend on our supply chain – from farmers to hauliers and engineers. We are hugely disappointed, on their behalf, that the press was informed of this decision before we were told – and before we had a chance to communicate to our staff. Our focus is now on supporting the working people at our plant in Hull.”
Ensus, which employs more than 100 people and thousands more indirectly via its supply chain, is also the Ƶ's last remaining producer of CO2 - a byproduct of the bioethanol process and a vital part of the food production supply chain, and with uses in hospitals and nuclear power. It is hoped a deal can be done to protect the supply from that facility - which can be up to 60% of the nation's needs.
Grant Pearson, chairman of Ensus Ƶ, said: " “I met with Sarah Jones, the Minister for Business, today to receive the Government's response to our request for financial support and the policy changes required to ensure that the Ensus facilities can continue to operate. The Minister confirmed that they value both our contribution to the Ƶ economy, the jobs we provide and support in the North East of England and in particular our production of biogenic CO2 which is a product of critical national importance.
"They are therefore 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 and therefore urgent discussions will be taking place to provide a level of assurance to the Sudzucker and CropEnergies Boards that there is a very high level of confidence that an acceptable long term arrangement can be reached."
Redcar MP Anna Turley said the Ensus plant at Wilton was in a "very different position" to Vivergo and that she is involved in going talks to secure its future. She said: "This plant matters – not just for our local economy but for our national supply chains and our industries of the future. I’m determined to make sure Ensus stays here in Redcar & Cleveland and continues to play its vital role in both our green economy and our food security."
A Government spokesperson said: “This Government will always take decisions in the national interest. That’s why we negotiated a landmark deal with the US which protected hundreds of thousands of jobs in sectors like auto and aerospace.
“We have worked closely with the companies since June to understand the financial challenges they have faced over the past decade, and have taken the difficult decision not to offer direct funding as it would not provide value for the taxpayer or solve the long-term problems the industry faces.
“We recognise this is a difficult time for the workers and their families and we will work with trade unions, local partners and the companies to support them through this process. We also continue to work up proposals that ensure the resilience of our CO2 supply in the long-term in consultation with the sector.”
Unions have criticised the Government's decision. Unite general secretary Sharon Graham said: "This is a short-sighted decision that totally disregards the benefits the domestic bioethanol sector will bring to jobs and energy security. Once again, the government total lack of a plan to support oil and gas workers as the industry transitions is glaring.”
The farmers’ union described the imminent closure of the Vivergo plant as a “huge blow”.
NFU combinable crops board chairman Jamie Burrows said: “Not only is it terrible news for those hundreds of workers who will lose their jobs but also for the thousands of people whose livelihoods depend on this supply chain – that includes local farmers who have lost a vital market for their product. Bioethanol production in the Ƶ is such an important industry.”
Mr Burrows said the bioethanol sector used up to 1.2m tonnes of wheat a year at its peak – which was 8% of the Ƶ crop. He said: “We need Government to recognise the potential economic growth and value of this market by ensuring crops grown for biofuels are used increasingly in road transport and aviation. This will open up further market opportunities to incentivise growers to support the country’s biofuel plants.”
