Rescue of UK's biggest bioethanol plant snags on wrangle over CO2
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.'
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