The UK’s bioethanol sector is facing a severe crisis after the government confirmed it will not provide financial support to its two largest producers, leaving hundreds of jobs and a vital clean energy supply chain at risk.
Hull-based Vivergo Fuels and Ensus, located in Redcar, Teesside, have warned they may be forced to shut down following the removal of a 19% tariff on US ethanol imports. The change, part of a recent US-UK trade agreement, allows up to 1.4 billion litres of American ethanol to enter the country tariff-free — roughly equal to the entire UK market.
Both companies say the decision has rendered domestic production commercially unsustainable, threatening 270 direct jobs and thousands more in agriculture, transport, and manufacturing. Industry leaders also warn that the closures would undermine the UK’s ability to produce low-carbon fuels, a key component of the country’s climate and energy strategy.
Associated British Foods (ABF), owner of Vivergo, condemned the government’s stance as “deeply regrettable” and accused ministers of abandoning a “key national asset.” The firm said it had submitted a viable recovery plan but claimed the lack of policy support would shift clean energy jobs overseas. “This plant should always have been profitable under the right regulatory environment, as similar plants in Western Europe demonstrate,” the company stated.
The German-owned Ensus facility plays an additional strategic role, producing bioethanol from wheat while supplying 30% of the UK’s commercial carbon dioxide — a critical resource for industries ranging from soft drinks and food packaging to healthcare and nuclear power. The sector is also a significant buyer of British wheat, supporting the country’s farming industry.
A government spokesperson said ministers had engaged with both companies to understand their financial pressures over the past decade but concluded that direct subsidies “would not provide value for the taxpayer or solve the long-term problems the industry faces.” The government pledged to work with trade unions, local authorities, and the companies to assist affected workers and their families.
Industry figures argue that policy delays have compounded the crisis, particularly the slow rollout of higher bioethanol fuel blends such as E10 petrol. While the government has set a target for 10% of aviation fuel to come from sustainable sources — including bioethanol — by 2030, producers say immediate action is needed to protect the industry’s survival.
Ministers have committed to exploring ways to strengthen the UK’s CO₂ supply chain in light of the potential shutdowns, but with no rescue package on the table, the country’s bioethanol sector warns it is now fighting for its future.
