Unlock Editor’s Digest Lock for Free
FT editor Roula Khalaf will select your favorite stories in this weekly newsletter.
The proposed £250 million investment in the green fuel “Superhub” will be put on hold unless the government intervenes to protect the UK’s bioethanol industry from the risks posed by a trade deal with the US, executives warn.
Ultimatum was issued as the owner of ABF Sugar, the UK’s largest bioethanol factory, and was trapped in 11-hour negotiations with the government for the future of Vivergo Plant in Saltend, Hull.
Vivergo set a deadline this Wednesday before holding redundant consultations for the factory’s 160 staff if no transactions are made to mitigate the impact of the US-UK transaction.
With the agreement signed on May 8, ethanol producers provided a tariff-free quota of 1.4 billion litres equivalent to the total bioethanol demand across the UK.
The owners of Vivergo and other major UK bioethanol plants owned by Ensus in Wilton, Teesside, have said the size of the quota would force them to shut down.
The warning comes at a potentially embarrassing moment for British Prime Minister Kiel Stage, who launched an industrial strategy with the promise of promoting high quality green growth. A local Labour MP in the northeast of England urged the government to intervene.
Executives from both companies said on Monday that plans to explore a partnership between Vivergo and Green Hydogen Producer Meld Energy, which is expected to attract an initial investment of £250 million, could be a victim of a trade contract if the pastor fails to intervene.
MELD is part-backed by World Kinect Corporation, a global distributor and reseller of fuels and one of the largest independent traders of sustainable aviation fuels (SAF).
The hub is used in grain dryers used to manufacture bioethanol using green hydrogen from melt energy, while Vivergo fuses to feed Ethanol to create SAF.
The memorandum, which will be seen in the Financial Times, was signed between both sides on Friday, June 20th.
Meld Energy CEO Chris Smith said if ABF Sugar closes the Vivergo Plant, it would result in a two-3 year delay in opening the planned hub at Saltend Chemical Park in Hull, where Vivergo is based.
“The core components of Vivergo are essential to the development of a clean fuel superhub, which is necessary to ensure that the project moves forward without delay,” Smith said.
Vivergo CEO Ben Hackett said a series of government decisions “put the bioethanol industry at risk” © Andrew McCaren/ft
Vivergo Managing Director Ben Hackett said the contract proposal with Meld Energy will create up to £1 billion in jobs with much needed additional investments for Hull over the next decade.
“It is well known now that a series of government decisions, including a recent trade agreement with the US, put the bioethanol industry in severe danger.
Before the UK-US trade agreement, the Vivergo plant had already lost between £30 million and £40 million a year, which denounced pollution permit regulations that handed out US rivals de facto double subsidies and called for making UK production uneconomical.
Industry bosses are calling for changes in regulations. This is rising with an increase in the proportion of bioethanol used to partially decarbonize UK gasoline by 10 to 15 percent, and a short-term grant of £75 million a year to cover losses while new regulations are in effect.
The Business and Trade spokesperson said, “We can work closely together across the government and the bioethanol industry to find a path forward.”
