UK’s largest bioethanol plant faces closure as government refuses bailout

Britain’s largest bioethanol production facility is set to close permanently after the government confirmed it would not provide financial support to the struggling Vivergo Fuels plant in Hull. The closure, expected by September 13, will result in approximately 150 job losses and affect thousands more across the agricultural supply chain.

Associated British Foods (ABF), the plant’s owner, announced the decision following extensive discussions with government officials about regulatory and financial solutions that would enable profitable operations. The company cited unfavourable regulations and the removal of tariffs on US bioethanol imports as key factors undermining the facility’s commercial viability.

The government’s trade deal with the United States, which eliminates a 19% tariff on American ethanol imports, has devastated demand for domestic production. Vivergo managing director Ben Hackett warned that customers “vanished overnight” following the agreement, creating an unsustainable business environment.

The closure represents a significant blow to the UK’s domestic renewable fuel industry and the broader agricultural sector. The Saltend facility processes over one million tonnes of British wheat annually from more than 4,000 farms, primarily in Yorkshire and Northern Lincolnshire. Additionally, the plant produces animal feed as a by-product and CO2 used throughout the food supply chain.

National Farmers’ Union Combinable Crops Board Chair Jamie Burrows described the closure as “a huge blow” affecting not only direct employees but thousands of people dependent on the supply chain, including local farmers who have lost a vital market for their produce. The facility has purchased wheat from 12,000 different farms over the past decade.

Industry representatives had appealed for targeted government support rather than indefinite subsidies, proposing measures such as increasing the ethanol content in standard petrol from 10% to 15%. A joint statement from Saltend Chemicals Park industry figures emphasised the need for “targeted action” to grow UK bioethanol demand.

A government spokesperson stated that direct funding would not provide “value for the taxpayer or solve the long-term problems the industry faces”.

However, officials acknowledged the difficult situation and pledged to work with unions, local partners, and companies to support affected workers through the transition.