Associated British Foods has warned that it will close one of the UK’s two bioethanol plants if it does not receive financial support from the government after a tariff deal was made with the US.
The company stated that although the government has promised to hold formal negotiations, it will start discussions with 150 employees at its Vivergo bioethanol business in Hull to begin an organized closure.
As part of the agreement to reduce US tariffs, the government has announced plans to eliminate a 19% tariff on ethanol exports to the UK and replace it with a tax-free quota of up to 1.4 billion litres of the fuel.
AB Foods has stated that if no assistance is provided, Vivergo will cease production before September 13th.
The Vivergo bioethanol plant is the largest in the UK. The only other plant producing the fuel in the UK is Ensus in Teesside, which is owned by Germany’s Sudzucker Group.
Ensus has also expressed concerns about having to close its site due to the UK-US trade agreement significantly impacting its business.
Under the tariff deal, the US can export 1.4 billion litres of fuel – equivalent to the entire UK ethanol market – without paying taxes, giving American businesses an advantage over those in Britain.
In exchange, the UK secured tariff reductions on exports to the US.
AB Foods has set a deadline of June 25th to reach an agreement with the government for support.
According to the company, “Yesterday, our extended deadline for the government to provide a solution passed.”
While discussions are ongoing, AB Foods has stated that “unless the government can offer both short-term funding for Vivergo’s losses and a long-term solution, we intend to close the plant once the consultation process is completed and the business has fulfilled its contractual obligations.”