A major bioethanol plant in Hull, owned by Associated British Foods (ABF), is facing a serious risk of closure following the UK government’s decision to remove import taxes on ethanol from the United States as part of a new trade agreement, reports Biofuels International.
The company has warned that the Vivergo bioethanol plant, which is already losing money, might have to shut down unless the government provides more support, according to a report by Reuters.
The new trade deal will get rid of the 19% import tax that the UK currently charges on US ethanol. It will also allow a large amount of US ethanol, up to 1.4 billion litres (370 million gallons), to be imported without any tax. This amount is much greater than what the US has exported to the UK in the past year.
ABF Chief Executive George Weston said in April that their ethanol business has been facing “big trouble” because of what he described as “imports that are basically being helped out financially.”
The company argues that the current rules in the UK, along with the new trade agreement, are making it very difficult for their Hull plant to make money. The plant produces bioethanol for use as fuel and also supplies animal feed.
ABF is strongly asking the UK government to change the rules about importing bioethanol. The company warns that if the government doesn’t change its policy, they might be forced to stop operations or close down the Hull plant, which could put about 150 jobs at risk.
“We’ve made it clear what needs to happen to help the ethanol business—it’s a problem with the rules that the government needs to fix,” Weston stated.
A spokesperson for ABF added that the decision to allow US ethanol imports without tariffs is causing “a lot of worry” among people in northeast England, including the workers at the plant, the companies that supply it, and local farmers. The company is now talking to the government to understand all the effects of this policy change.
The National Farmers’ Union has also expressed concerns, saying that this move could take away an important market for UK farmers who grow crops that are used by the domestic bioethanol industry.
